4

                                                                          5

                                     
                                     
                  U.S. SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                FORM 10Q-SB

            Quarterly Report Pursuant to Section 13 or 15(d) of
                    the Securities Exchange Act of 1934

For the nine months ended                    Commission File Number
September 30, 1998                           33-48017-A
-------------------                          -----------------------

                   FEDERAL MORTGAGE MANAGEMENT II, INC.
                          (a Florida corporation)
          (Exact name of Registrant as specified in its Charter)
              Florida                                  65-0025618
------------------------------                   ----------------
State or other jurisdiction of                    I.R.S. Employer
incorporation or organization               Identification Number

           1800 Second St., Suite 780, Sarasota, Florida  34231
           ----------------------------------------------------
            (Address of principal executive offices, zip code)

Registrant's telephone number, including area code:  (941) 365-4200

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

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 /   /.

For  the  nine months ended September 30, 1998, the Registrant had revenues
of $345,992.

As  of  September  30, 1998, the Company had 145 secured  promissory  notes
payable (Notes) with a total of $2,368,500 principal balance outstanding.


                 PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements

      Set forth below are the unaudited financial statements reflecting the
Company's  financial condition as of September 30, 1998,  and  the  related
statements of operations and shareholders' equity for the nine months ended
September 30, 1998 and 1997.


                   FEDERAL MORTGAGE MANAGEMENT II, INC.
                                     
                               BALANCE SHEET
                                     
                      SEPTEMBER 30, 1998 (Unaudited)
<TABLE>
<CAPTION>

                                  ASSETS
<S>                                          <C>      
CURRENT ASSET
      Cash                                    $ 423,608
      Residential mortgage notes                849,781
      Account receivable                         66,413
      Prepaid expenses                           71,100
      Certificates of deposit                   324,823
                                              ----------
                   Total current assets       1,735,725

OTHER ASSET
      Deferred financing costs, net of
           accumulated amortization             457,915
      Equipment at cost, net of
           accumulated depreciation              16,538
                                              ----------
                   Total other assets           474,453
                                              ----------

TOTAL ASSETS                                  $2,210,178
                                              ==========



                 LIABILITIES AND STOCKHOLDER'S DEFICIENCY
                                     
CURRENT LIABILITIES
      Accounts payable                        $   20,738
      Notes payable                            2,368,500
                                              ----------
                  TOTAL LIABILITIES            2,389,238


                   FEDERAL MORTGAGE MANAGEMENT II, INC.
                                     
                               BALANCE SHEET
                                     
                      SEPTEMBER 30, 1998 (Unaudited)

STOCKHOLDERS EQUITY

      Common stock, $.01 par value
        1,000 shares authorized, 100 shares
          issued and outstanding                     1
      Additional paid-in capital                   999
       Accumulated deficit                    (180,060)
                                            -----------
          Total Stockholders deficiency       (179,060)
                                            -----------

TOTAL LIABILITIES AND 
             STOCKHOLDERS DEFICIENCY        $2,210,178
                                            ===========
                                     
</TABLE>
                                     
                                     
                          STATEMENT OF OPERATIONS

              Nine Months and Three Months Ended September 30
                                (Unaudited)
<TABLE>
<CAPTION>

                         Nine Months Ended    Three Months Ended
                      September 30 (Unaudited)September  30 (Unaudited)

                            1998       1997       1998        1997
                          --------   ---------  --------    --------
<S>                       <C>        <C>         <C>        <C>
REVENUE
  Interest income         $107,041   $ ---       $ 47,676   $---
  Gain on sale of
     mortgage loans        226,283     ---         68,018    ---
  Other income              12,668     ---          4,794    ---
                          --------   ---------  --------- -------- 
     Total Revenue         345,992     ---        120,488    ---
                           

EXPENSES
  Accounting and legal      17,617     2,508       5,000     ---
  Advertising                7,757     ---           588     ---
  Amortization/
    Depreciation            43,421     ---        25,894     ---
  Commission                25,829     ---        14,252     ---
  Consulting                19,997     1,500       1,000      1,500
  Insurance                  1,669     ---           576     ---
  Interest                 166,037    13,060      58,778     13,060
  Licenses, fees 
    and reports             ---          165       ---      ---
  Management fees           27,839     ---         ---      ---
  Miscellaneous              5,144     ---           558    ---
  Office expenses           10,156        51       4,014    ---
  Rent                       8,594     ---         2,865    ---
  Salaries and Wages        51,916     ---         9,112    ---
  Service fees              12,844     ---         1,863    ---
  Taxes                      6,338     ---         1,787    ---
  Travel                     3,577     ---         1,104    ---
                          ---------  ---------  --------  --------

Total expenses             408,735    17,284     127,392    14,560
                          ---------  ---------  --------  ---------

NET LOSS/INCOME           $(62,743)  $(17,284)  $(6,903) $ (14,560)
                          =========  =========  ========  =========
</TABLE>


             STATEMENT OF CHANGES IN STOCKHOLDER'S DEFICIENCY
                                     
               NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                (UNAUDITED)
<TABLE>
<CAPTION>

                                  Additional    Accumu-
                       Common     Paid-In       lated
                       Stock      Capital       Deficit       Total
                       -------    ----------   --------      ------
<S>                    <C>        <C>          <C>         <C>
Balance
 January 1, 1997       $     1    $     999    $ (3,057)   $ (2,057)
Net Loss                                        (17,284)    (17,284)
                       -------    ----------   ---------   ---------
Balance
 September 30, 1997    $     1    $     999    $(20,341)   $(19,341)
                       =======    ==========   =========   =========

                                 Additional    Accumu-
                      Common     Paid-In       lated
                      Stock      Capital       Deficit       Total
                      -------    ----------    --------     --------

Balance
 January 1, 1998      $     1    $      999    $(117,317)  $(116,317)

Net Loss                                         (62,743)    (62,743)
Balance               -------    ----------    ----------  ----------
 September 30, 1998   $     1    $      999    $(180,060)  $(179,060)
                      =======    ==========    ==========  ==========
</TABLE>

                   FEDERAL MORTGAGE MANAGEMENT II, INC.
                                     
                          STATEMENT OF CASH FLOWS
                                     
               FOR THE NINE  MONTH PERIOD ENDED SEPTEMBER 30

                                (UNAUDITED)

<TABLE>
<CAPTION>

                                                    1998          1997
                                               ------------   ----------
<S>                                            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                  $(62,743)      $(17,284)

(Increase) decrease in operating assets:
     Accounts receivable                        (53,063)        ---
     Portfolio of residential mortgage notes    160,728         ---
     Prepaid expenses                           (59,100)       (7,500)
     Purchase of assets                         (18,330)        ---
     Depreciation/Amortization                   43,421         ---
     Deferred financing costs                  (190,582)      (19,242)
Increase (decrease) in operating liabilities:
     Accounts payable                           (33,075)        55,861
                                              ------------   ----------
          Total adjustments                    (150,001)        29,119
                                              ------------   ----------
     Net cash used in operating activities:    (212,744)        11,835

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of certificates of deposit       (324,822)        ---
     Sale of certificates of deposit            175,539         ---

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from note issuance                762,000        917,000
                                              ------------   ----------
          Net cash provided by
            financing activities                612,417         ---
                                              ------------   ----------

INCREASE IN CASH                                399,673        928,835

CASH AT BEGINNING OF PERIOD                      23,935            449
                                              ------------   ----------

CASH AT END OF PERIOD                          $423,608       $929,284
                                              ============   ==========
</TABLE>
                                     
                                     
                       NOTES TO FINANCIAL STATEMENTS
                                     
           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                (UNAUDITED)

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Federal  Mortgage  Management  II, Inc.  (the  Corporation),  a  Florida
corporation, was organized in November 1995.  The Company was formed and
is  being capitalized primarily to originate, underwrite, acquire,  hold
and  deal  in  a portfolio of primarily first lien residential  mortgage
loans.   The  purchase  of  mortgage loans and  insured  instruments  of
deposit  have  been  acquired in accordance with a specific  acquisition
policy described in the registration statement.

Portfolio of Residential Mortgage Loans

Residential  mortgage loans are recorded at lower of cost  or  fair  market
value.  Purchase discounts are not amortized because the mortgage loans are
held  for  resale and typically sold after being owned by the  Company  for
several  months. The amortization of the discount would not  be  materially
significant to the operating results of the Corporation.

NOTE 2 -  INVESTMENT IN SECURITIES

The Corporation's investments in securities are classified in three
categories and accounted for as follows:

 Trading Securities.  Securities held for resale in the near term.
     Unrealized gains and losses on securities are included in other
     income.

 Securities  to be Held to Maturity.  Instruments for which the Corporation
     has  the  positive intent and ability to hold to maturity are reported
     at  cost,  adjusted  for  amortization of premiums  and  accretion  of
     discounts  which are recognized in interest income using the  interest
     method over the period to maturity.

 Securities Available for Sale.  Securities available for sale consist of
     zero coupon certificates of deposit which are not classified as
     trading securities nor as securities to be held to maturity.

Declines in the fair value of individual held-to-maturity and available-for-
sale securities below their costs that are other than temporary would
result in write-downs of the individual securities to their fair value.
The Corporation presently has experienced no such declines.

Gains and losses on the sale of securities available for sale are
determined using the specific-identification method.

NOTE 3  -  PORTFOLIO OF RESIDENTIAL MORTGAGE LOANS

The  Corporation purchases residential mortgage loans at a discount from
the face amount of the loans with the intention of selling the loans  at
a  gain after servicing them for a relatively short period of time.  The
mortgage  loans  are  purchased by investors based  on  various  factors
inherent  in  the  group  of  mortgages presented  for  sale  which  are
considered  in the negotiating process.  The fair market  value  of  the
mortgage  loans  at  September 30, 1998 at a minimum, approximates  cost
after assessing the credit risks associated with the portfolio.

The portfolio of residential mortgage loans consist of the following:

<TABLE>
<CAPTION>
               <S>                   <C>
               Face value            $901,510
               Discount               (34,072)
               Principal payments        (157)
               Allowances for losses  (17,500)
                                     ---------
               Carrying value        $849,781
                                     =========
</TABLE>

The mortgages have various maturities ranging from 6 months to 30 years,
and  varying interest rates ranging from 11.56% to 18%.  The residential
mortgage  loans are secured by first liens on residential real property.
The  Corporation s policy is to acquire residential mortgage loans  with
balances  that do not exceed 90% of the fair market value  of  the  real
estate  or  the loan acquisition price does not exceed 80% of  the  fair
market  value  of  the collateral real estate at the time  of  the  loan
acquisition.

NOTE 4  -  NOTES PAYABLE

The  Corporation issued notes through a public offering to  finance  the
purchase  of residential mortgage loans.  The notes have interest  rates
ranging  from 8.0% to 10.0% depending on the terms which range  from  48
months to 72 months.  Interest is paid monthly with principal being paid
at maturity.  Aggregate principal maturities on notes are as follows:

<TABLE>
<CAPTION>
          <S>                      <C>
          2001                         38,000
          2002                         99,000
          2003                      2,231,500
                                   ----------
          Notes payable            $2,368,500

</TABLE>

The  notes are collateralized by all the assets of the Corporation.  For
the  nine  months  ended  September 30, 1998, the  Corporation  incurred
interest expense of $166,037 related to the notes payable.

NOTE 5 -  RELATED PARTY TRANSACTIONS

The  sole  stockholder and affiliated entities enter  into  transactions
with the Corporation as follows.

The  stockholder  is  the  majority stockholder  in  the   best  efforts
managing  underwriter  broker/dealer  which  received  compensation   of
$90,580  during  the nine months ended September 30, 1998.  The  $90,580
consisted   of  $52,480  in  commissions,  $22,860  in   note   offering
management fees and $15,240 in non-accountable expense allowance.

For  the  nine months ended September 30, 1998, the Corporation utilized
office space rented from an affiliate for which it paid $8,594, and none
for the same period ended 1997.

An  affiliated  company services the mortgages of the Corporation.   For
the nine months ended September 30, 1998, the Corporation paid servicing
fees  to  the affiliate in the amount of $12,844.  The Company  did  not
have any mortgages for the same period ended 1997, hence, there were  no
service fees paid during that period.

NOTE 6  -  STOCKHOLDER'S EQUITY

Preferred Stock

The  Board  of  Directors will establish the dividend  rate,  redemption
price and rights of the holders of preferred stock prior to the date  of
issuance of the shares of stock.  No preferred stock has been issued  as
of  September 30, 1998.  The Board of Directors has not established  the
preferred  stockholders' preferences and rights as of the date  of  this
report.

NOTE 7  -  DEFERRED FINANCING COSTS

Deferred financing costs consist of legal and accounting fees associated
with  the  filing of the registration statement with the Securities  and
Exchange Commission as well as costs incurred for the promotion  of  the
issuance  of  the promissory notes. These costs are amortized  over  the
maturity of the notes.


NOTE 8  -  INCOME TAXES

The  Corporation  is  recognized as a sub-chapter S Corporation  by  the
Internal  Revenue Service.  Therefore, the financial statements  include
no  provision  for  federal income taxes since the  income  or  loss  is
reportable on the tax return of the stockholder.

NOTE 9 -  FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

In  addition  to the portfolio of residential mortgage loans,  financial
instruments  that  also  subject the Corporation  to  concentrations  of
credit  risk  consist  principally of cash  deposits.   The  Corporation
places  these investments with a single financial institution.  Deposits
are  insured up to $100,000.  At any time, the Corporation may have cash
deposits   exceeding  the  uninsured  amount.   The  following   details
financial  instruments with off balance sheet risk for  the  Company  at
September 30, 1998:

<TABLE>
<CAPTION>
          <S>                                    <C>
          Certificate of deposit face            $ 373,379
          Certificate of deposit discount          (48,556)
                                                -----------
          Carrying value at
                September 30, 1998               $ 324,823
                                                ===========
</TABLE>

NOTE 10 - FAIR VALUE OF FINANCIAL INSTRUMENTS IN ACCORDANCE WITH THE
          REQUIREMENTS OF SFAS NO. 107

The Corporation's financial instruments consist of all of its assets and
liabilities  with  the  exception  of other  real  estate  and  deferred
financing costs.  The Corporation's management has determined  that  the
fair  value  of  all of its financial instruments is equivalent  to  the
carrying cost.  The mortgage portfolio is purchased with the intent of a
relatively  short  holding  period of several  months.   Therefore,  any
differences  in the value of the mortgage portfolio due  to  changes  in
market interest rates are minimal.  Furthermore, each purchase and  sale
of  mortgages  by the Corporation is a private, negotiated  transaction.
There  is  no readily established market for the Corporation's  mortgage
portfolio.


NOTE 11 -  CLASSIFICATION OF MORTGAGE PORTFOLIO IN ACCORDANCE
           WITH  THE REQUIREMENTS OF SFAS NO. 115

The Corporation's mortgage portfolio is a trading security.  As such, it
is  required  to  be carried at fair value, with any unrealized  holding
gains  or  losses included in earnings.  For the reasons,  discussed  in
Note 3, the carrying value of the mortgage portfolio has been determined
by the Partnership's management to be equivalent to its carrying cost.


Management's Discussion and Analysis of Financial Condition and Results of
Operations

The Company, utilizing the Note proceeds from the public offering, has
acquired mortgage loans secured by first liens on real estate, as well as
insured certificates and instruments of deposit or debt securities issued by
the United States and instrumentality s thereof in accordance with an
expressed Acquisition Policy.  On November 26, 1997, the Company had received
gross proceeds in excess of the minimum amount of $1,500,000 to break escrow
under the Prospectus dated July 15, 1997, Commission Number 333-15151.  As of
September 30, 1998, the Company had received gross note proceeds of
$2,368,500.  Presented below is a summary of the use of proceeds from the Note
offering as of September 30, 1998:

<TABLE>
<CAPTION>
     <S>                                          <C>
     Selling commissions                          $  161,800
     Offering management fee                          71,055
     Non-accountable expense allowance                47,370
     Organizational and offering expense             219,319
     Purchase of assets                               18,330
     Purchase of federal instruments                 322,367
     Purchase of residential mortgages
             and interim financings                1,016,121
     Payment of note interest                        141,383
     Organizational expense reimbursement             32,550
     Cash remaining                                  338,205
                                                  ----------
               Gross offering proceeds            $2,368,500
                                                  ==========
</TABLE>

Scheduled principal and interest payments on portfolio loans at September 30,
1998, represent an annualized rate of return of approximately 16% on the basis
of the Company s cost in acquiring such portfolio loans and an annualized rate
of return of approximately 15% (stated rate) on the basis of the unpaid
principal balance of the portfolio loans at September 30, 1998.

At September 30, 1998 the portfolio of the Company consisted  of mortgage
notes with a carrying value of $991,561.  The following table shows the
mortgage notes at face value and carrying value which takes into consideration
the discount and principal payments:

<TABLE>
<CAPTION>

<S>           <C>          <C>          <C>           <C> 
                           Principal    Allowance
Face Value    Discount     Payments     For Losses    Carrying Value
----------    --------     ----------   -----------   ---------------
$901,510      ($34,072)        ($157)   $ (17,500)      $ 849,781

</TABLE>

At September 30, 1998, the underlying real estate collateral of the Company's
portfolio of mortgage loans have an appraised value of approximately
$1,278,955, or a loan value to appraised value ratio of 71%.  The collateral
real estate securing such loans as of September 30, 1998 was residential real
estate.  The Company held no unimproved real estate loans as of September 30,
1998.

There  are  2  mortgage  loans  with a carrying  value  of  $95,705  that  are
delinquent  (in  terms  of scheduled principal and interest  payments)  as  of
September  30, 1998.  These loans represent 12% of the carrying value  of  the
portfolio.   The  Company has initiated foreclosure procedures  on  1  of  the
delinquent   mortgage  loans.   This  loan  has  a  fair   market   value   of
approximately  $75,617,  with a carrying value of  $43,500.   Upon  successful
foreclosure, the Company expects to recognize a gain on the subsequent sale of
the properties.

The Company began operations in December 1997, after attaining the minimum
gross proceeds on November 26, 1997.  The Company began operations in fiscal
1998, hence all revenue and expense items were up substantially over 1997.
(See Statement of Operations, Page 4).


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.
               Not applicable

Item 2.  Changes in Securities.
               Not applicable

Item 3.  Defaults Upon Senior Securities.
               Not applicable

Item 4.  Other Information.
               Not applicable

Item 5.  Exhibits and Reports on Form 8-K.
               None



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

                            FEDERAL MORTGAGE MANAGEMENT II, INC.




November  1998                   By  Guy. S. Della Penna
---------------                  ----------------------------------
                              Guy S. Della Penna, President &
                              Chief Executive Officer