EXHIBIT 99.1

                                 [SUNSET LOGO]
        10245 CENTURION Parkway North, Suite 310, Jacksonville, Fl. 32256

                              FOR IMMEDIATE RELEASE

July 2, 2004

          SUNSET FINANCIAL RESOURCES SECURITIZES ITS INITIAL PORTFOLIO

Jacksonville, FL - July 2, 2004 - Sunset Financial Resources, Inc. (NYSE:SFO)
announced today that on June 29 it successfully securitized $219.4 million in
residential mortgage loans. Sunset contributed these loans to J.P.Morgan
Mortgage Trust 2004-A3 and received a like amount of investment securities.

"This securitization represents a significant milestone in the execution of our
business plan," remarked Sunset's Chief Investment Officer, Byron Boston. "To
successfully convert our whole loan purchases to mortgage-backed securities in
the first full quarter of our operating history is a solid accomplishment. By
participating in this securization with JPMorgan, we shortened dramatically the
time it took Sunset to get to the market. We are grateful to JPMorgan for
allowing us to participate with them and look forward to future opportunities
together."

Sunset also reported today that it executed an amendment to its $250 million
Senior Secured Credit Agreement with JPMorgan on June 24. This amendment creates
an $18.75 million sub-limit relating to commercial mortgage bridge loans that
meet specific criteria.

"Critical to the financial execution of our business plan is our ability to
leverage our commercial loan portfolio" commented Sunset's Chief Financial
Officer, Mike Pannell. "The amendment to our credit agreement with JPMorgan is
the first step in that direction. In addition, we continue to establish
repurchase lines and trading agreements with key mortgage securities dealers.
These relationships allow us to continue to grow our balance sheet through the
use of leverage."

Sunset has scheduled a conference call to discuss these milestones and the
changing interest rate environment at 11:00AM EDT on Tuesday, July 6, 2004.
Byron Boston, Vice Chairman and Chief Investment Officer, will host the
conference call. Those wishing to listen to the conference call by telephone may
dial (866)-660-0170. Please call ten minutes prior to the scheduled conference
call time. The conference call will also be archived on the company's web site
through July 31 at www.sunsetfinancial.net.

Sunset Financial Resources, Inc. is a self-managed real estate investment trust
(REIT) that went public on March 17, 2004. Sunset seeks to deliver attractive
dividend income and steady growth to its shareholders through the acquisition
and management of a portfolio of



high quality residential mortgage loans and commercial mortgage bridge loans in
the United States.

Certain statements in this news release may constitute "forward-looking
statements" within the meaning of the federal securities laws and involve risks,
uncertainties and other factors which may cause the actual performance of Sunset
Financial Resources, Inc. to be materially different from the performance
expressed or implied by such statements. These risks include the failure of
Sunset to successfully execute its business plan, gain access to additional
financing, the availability of additional loan portfolios for future
acquisition, continued qualification as a REIT, the cost of capital, as well as
the additional risks and uncertainties detailed in Sunset's periodic reports and
registration statements filed with the Securities and Exchange Commission.

For further information, call Tom Manuel, EVP at (904) 425-4353.

10245 Centurion Parkway North, Suite 305, Jacksonville, Florida 32256

                                      -30-