10-K

                            FORM 10-K

               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
(Mark One)
[ X ]   Annual Report Pursuant to Section 13 or 15(d) of the
   Securities Exchange Act of 1934 for the Fiscal Year Ended
   March 31, 2000, 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 Number 0-19847

                   FIRST MORTGAGE CORPORATION
     (Exact name of registrant as specified in its charter)

          California                      95-2960716
(State or other jurisdiction of        (I.R.S. Employer
incorporation or organization)        Identification No.)

    3230 Fallow Field Drive                  91765
    Diamond Bar, California               (Zip Code)
(Address of principal executive
           offices)

                         (909) 595-1996
      (Registrant's telephone number, including area code)

   Securities registered pursuant to Section 12(b) of the Act:
     Title of each class:       Name of each exchange on which
             None                         registered:
                                             None

   Securities registered pursuant to Section 12(g) of the Act:
                   Common Stock, no par value

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 is not contained herein,
and will not be contained, to the best of the 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]

The aggregate market value of the voting stock held by
nonaffiliates of the registrant on June 15, 2000, based on the
average bid and asked prices on that date reported by the OTC
Bulletin Board, was $1,182,000.  Solely for purposes of this
calculation, all executive officers and directors of the
registrant were considered affiliates as were all beneficial
owners of more than 10% of the registrant's Common Stock.  As of
June 15, 2000, 5,250,697 shares of the registrant's Common Stock
were issued and outstanding.

               Documents Incorporated by Reference

Portions of the registrant's definitive proxy statement for the
annual meeting of shareholders of the registrant to be held on
September 20, 2000 are incorporated by reference into Part III
hereof.  The definitive proxy statement will be filed with the
Securities and Exchange Commission within 120 days after March
31, 2000.

                   FIRST MORTGAGE CORPORATION
                    A California Corporation

                   ANNUAL REPORT ON FORM 10-K
                FOR THE YEAR ENDED MARCH 31, 2000


                        TABLE OF CONTENTS


Item No.                   Description                          Page
                             PART I
1.  Business                                                     1
2.  Properties                                                   14
3.  Legal Proceedings                                            15
4.  Submission of Matters to a Vote of Security Holders          15

                             PART II

5.  Market for the Registrant's Common Equity and Related
    Stockholder Matters                                          15
6.  Selected Financial Data                                      16
7.  Management's Discussion and Analysis of Financial Condition
    and Results of Operations                                    17
7A. Quantitative and Qualitative Disclosures About Market Risk   24
8.  Financial Statements and Supplementary Data                  24
9.  Changes in and Disagreements with Accountants on Accounting
    and Financial Disclosure                                     24

                            PART III

10.   Directors and Executive Officers of the Registrant         25
11.   Executive Compensation                                     25
12.   Security Ownership of Certain Beneficial Owners and
      Management                                                 25
13.   Certain Relationships and Related Transactions             25

                             PART IV

14.   Exhibits, Financial Statement Schedules, and Reports on
      Form 8-K                                                   25

      Signatures                                                 29


                             PART I

ITEM 1.  BUSINESS

General

   First Mortgage Corporation ("First Mortgage" or the "Company")
is a mortgage banking firm engaged in the mortgage banking
business since its incorporation in California in 1975.  The
Company originates, purchases, warehouses, sells and services
primarily first mortgage loans for the purchase or refinance of
owner-occupied one-to-four family residences located principally
in California.  The Company originates mortgage loans in
geographic areas with moderately priced housing through a network
of offices located in California and Arizona.  Mortgage loans are
originated by the Company through the following channels:  Retail
production loans are generated by referrals from real estate
agents, builders and other sources.  Refinance loans are
originated by the Direct Marketing division through targeted mail
solicitations and direct telemarketing, and wholesale production
generally represents loans originated through approved mortgage
loan brokers.  The Company's long-term production objective is to
increase loan origination through strategically located new
offices and to promote new products that can be marketed at an
acceptable rate of return to the Company.

   Generally, First Mortgage sells all mortgage loans that it
originates or purchases to institutional investors in the
secondary mortgage market, retaining the servicing rights on a
portion of such loans.  The Company emphasizes the origination of
mortgage loans insured by the Federal Housing Authority ("FHA")
or partially guaranteed by the Veterans Administration ("VA")
(collectively, "FHA/VA loans").  The Company's FHA/VA loans are
pooled to form securities of the Government National Mortgage
Association ("GNMA") which are sold in the secondary mortgage
market to investment banking firms, substantially all of which
are primary dealers in government securities.  Management
believes that the origination of FHA/VA loans benefits the
Company by (i) increased loan servicing income due to the higher
servicing fees and generally longer average loan lives associated
with FHA/VA loans, and (ii) reduced interest rates paid on
warehousing lines of credit due to the Company's ability to
utilize tax and insurance impound accounts associated with FHA/VA
loans as compensating balances with its creditor banks.

   First Mortgage also originates conventional mortgage loans
which comply with the requirements for sale to, or conversion
into securities issued by, the Federal National Mortgage
Association ("FNMA") or the Federal Home Loan Mortgage
Corporation ("FHLMC").  The Company sells a portion of the
conventional mortgage loans that it originates under purchase and
guarantee programs sponsored by FNMA and FHLMC.  These programs
provide for either direct sale of mortgage loans to FNMA or
FHLMC, or for pooling of mortgage loans in exchange for
securities issued by FNMA or FHLMC.  Conventional loans
originated by the Company, including those which do not conform
to government agency requirements, are also sold to banks and
other private institutional investors under the Company's
correspondent relationships with several such investors.  The
Company believes that the ability to originate a substantial
volume of conventional loans is important to the success of its
business.  The origination of



conventional loans enables the Company to offer mortgage loans to
a wider variety of markets and referral sources, thereby
enhancing the Company's overall mortgage loan origination
capability.

   First Mortgage funds mortgage loan originations and purchases
with working capital and short-term borrowings under warehousing
lines of credit.  The Company generally holds or "warehouses"
mortgage loans for a short period of time (on average 25 days)
pending their nonrecourse sale to institutional investors in the
secondary market as individual loans or as mortgage-backed
securities.

   First Mortgage's loan servicing activities include the
collection, remittance and general administration of mortgage
loans.  Over the years, the company has been successful in
retaining servicing rights on a substantial portion of loan
originations.  The current interest environment, however, has
induced much more refinance activities, which has accelerated the
prepayment rate of the servicing portfolio.  The Company has
managed to negate much of the impact of this runoff by retaining
most of the loans eligible for refinance through its own in-house
refinance programs.  The Company's mortgage servicing portfolio
decreased by 3.5% from $1.667 billion at March 31, 1998 to $1.608
billion at March 31, 1999, and it experienced a drop of 6.6% to
$1.502 billion at March 31, 2000 compared to the previous fiscal
year due to one of the Company's sub-servicing clients selling
its entire portfolio, and the new purchaser did not require any
sub-servicing by the Company.

   The various phases of First Mortgage's business are discussed
in greater detail below.

Loan Origination

   The Company originates mortgage loans through three primary
sources:  retail, which represents loans generated through real
estate agents and builders; direct marketing, which represents
loans initiated through direct mail and telephone; and wholesale,
which represents loans solicited from loan brokers.
Substantially all mortgage loans originated through such sources
by the Company are underwritten, funded and closed by the
Company.

   First Mortgage's loan origination activities include (i)
offering a variety of residential mortgage loans, (ii) attracting
suitable loan applicants, (iii) reviewing borrower credit and
mortgaged property title, appraised value and insurance
("underwriting"), (iv) issuing conditional loan commitments, and
(v) funding qualified loans at closing.

   Types of Loans Originated.  The Company originates three types
of residential mortgage loans: (i) FHA/VA loans which qualify for
sale in the form of securities guaranteed by GNMA; (ii)
conventional mortgage loans which comply with the requirements
for sale to, or conversion into securities issued by, FNMA or
FHLMC ("conventional conforming loans"); and (iii) conventional
mortgage loans which comply with other institutional investor
loan requirements ("conventional nonconforming loans").  The
Company does not originate any conventional conforming loans or
conventional nonconforming loans (collectively, "conventional
loans") with loan-to-



value ratios above 80% unless the borrowers obtain private
mortgage insurance for the Company's benefit from companies rated
by Standard & Poor's Corporation or by Moody's Investor Service,
Inc.

   All loan applications, regardless of source, must be approved
by the Company in accordance with its underwriting criteria,
including loan-to-value ratios, borrower income and credit
qualifications, investor requirements, necessary insurance and
property appraisal requirements.  The Company's underwriting
standards also comply with the relevant guidelines set forth by
the FHA, VA, FMHA, FNMA, FHLMC, private institutional investors
and/or conduits and private mortgage insurers, as applicable.

   Management believes that the origination of FHA/VA loans
benefits the Company from (i) increased loan servicing income due
to the higher servicing fees and generally longer average loan
lives customarily associated with FHA/VA loans, and (ii) reduced
interest rates on warehousing lines of credit due to the
Company's ability to utilize tax and insurance impound accounts
associated with FHA/VA loans as compensating balances with its
creditor banks.  However, the Company also originates
conventional loans and maintains a flexible loan origination
network that is capable of increasing the volume of conventional
loan production as market conditions warrant.

   The Company receives fees from borrowers for the origination
of retail loans, generally in the range of one to two percent of
the principal amount of the loan.  The Company also receives fees
in connection with the origination of wholesale loans which
average approximately 0.5% per loan.  The Company may charge
additional fees depending upon market conditions or the Company's
objectives concerning loan origination volume and pricing.  The
Company incurs certain costs in originating loans, including
overhead, out-of-pocket costs, interest on money borrowed to
finance loans and, when the loans are subject to a purchase
commitment from private investors, related commitment fees.  The
volume of and type of loans and commitments made by the Company
vary with competitive and economic conditions, resulting in
fluctuations in revenues from loan originations.  In periods of
rising interest rates, the Company's volume of loan originations,
particularly refinancings, declines, and the Company's revenues
from loan originations decrease.



   The following table sets forth for the periods indicated, the
number, dollar volume, percentage of total volume and average
loan balance of the FHA/VA loans, conventional conforming loans
and conventional nonconforming loans originated and purchased by
the Company:



                                       Year Ended March 31,
                                 2000           1999           1998
                     (Dollars in thousands, except average loan balance data)
                                                       
FHA/VA Loans:
 Number of loans                     1,144          3,728          2,115
 Volume of loans                  $110,875       $336,647       $208,927
 Percent of total volume             46.4%          38.8%          43.8%
 Average loan balance              $96,919        $90,302        $98,783

Conventional Conforming
Loans (1):
 Number of loans                       334          1,153            587
 Volume of loans                   $48,910       $153,971        $71,708
 Percent of total volume             20.5%          17.8%          15.0%
 Average loan balance             $146,437       $133,539       $122,160

Conventional Nonconforming
Loans:
 Number of loans                       320          1,087            577
 Volume of loans                   $78,941       $376,023       $196,351
 Percent of total volume             33.1%          43.4%          41.2%
 Average loan balance             $246,691       $345,927       $340,296

Total Loans (1):
 Number of loans                     1,798          5,968          3,279
 Volume of loans                  $238,726       $866,641       $476,986
 Average loan balance             $132,773       $145,215       $145,467



(1)Includes sub-prime and second priority conventional
   conforming loans which aggregate less than 1% of the total
   dollar volume of loans originated and purchased in each of
   fiscal 2000, 1999, and 1998.


   Mortgage loans originated by the Company are loans which
primarily fund the purchase of owner-occupied residential real
property, or refinance loans which repay and replace existing
mortgage loans on owner-occupied residential real property.  The
volume of refinance loans as a percentage of the Company's total
mortgage loan origination volume for fiscal years 2000, 1999 and
1998 was approximately 45%, 81% and 50%, respectively.  For
fiscal years 2000, 1999 and 1998, approximately 52%, 44% and 33%,
respectively, of the Company's refinance loans were originated
under the FHA's "streamline" refinance program.  Pursuant to this
program, the FHA insures refinance loans intended solely to
reduce the payments on existing FHA-insured mortgage loans.  The
Company believes that in some form, refinance loans will continue
to represent a portion of its total mortgage loan origination
volume, the amount dependent upon the level of interest rates at
any given time.

   Solicitation of Loan Applicants.  First Mortgage follows a
marketing strategy designed to maximize the efficiency of the
Company's loan solicitation and origination activities.  This
strategy includes (i) operating a flexible branch office network,
(ii) utilizing an incentive compensation structure for the
majority of its work force, (iii) employing cost-efficient
consumer marketing techniques, and (iv) emphasizing prompt and
professional customer services.



   In accordance with this strategy, the Company operates a
network of retail branch offices in service areas which are
located near potential borrowers, real estate brokers, builders,
developers and other referral sources. This enhances the ability
of the Company's sales force to solicit potential customers and
referral sources and to develop referral networks which provide
recurring business.  To maintain this strategy, the Company's
senior management actively seeks new service areas and
continually reviews existing service areas to assess whether to
open or close branch offices.  The Company attempts to open new
retail branch offices in areas where the population is growing
and where housing prices are affordable for moderate income
homebuyers.

   While the operation of a productive network of retail branch
offices is essential to mortgage loan originations, the Company
believes that it is equally important to maintain the flexibility
to open or close branch offices in a timely, cost-efficient
manner as local market conditions dictate.  Accordingly, the
Company typically enters into one to two year short-term leases
for 1,000 to 2,000 square foot offices, and does not enter into
long-term employment agreements with branch office employees.
The Company currently operates a retail network of nine offices
located in Covina, Long Beach, Sacramento, Redding, Garden Grove
and Upland, California, as well as Mesa, Phoenix and Scottsdale,
Arizona.  Management plans to add additional branch offices in
order to increase new loan production, some of which may be
located outside existing service areas.  Given the Company's
present high concentration of loan originations in California,
there can be no assurance that its results of operations will not
be adversely affected to the extent California experiences
decreased residential real estate lending activity.

   First Mortgage operates retail branch offices as individual
profit centers.  Scheduled fees for loans originated and other
services provided by the Company's corporate headquarters are
allocated to each branch office in determining the office's
profitability.  Branch offices are staffed entirely by Company
employees.  A typical retail branch office staff consists of a
branch manager, one to four salespersons, one to three loan
processors and one or two clerical office assistants.
Salespersons are full-time employees who work exclusively for the
Company and are contractually obligated to comply with the
Company's business practice guidelines.

   First Mortgage's retail marketing strategy also includes an
incentive compensation system designed to encourage quality
mortgage loan production and to retain productive managers and
salespersons.  A branch manager's compensation includes (in
addition to a base salary) a bonus based upon loan production and
a percentage of the branch office's annual profits.  Salespersons
are compensated solely on commissions based upon revenue
generated from their respective loan closings.  In addition, loan
processors at the branch office level receive, in addition to a
salary, a bonus based on the number of mortgage loans which are
closed and; therefore, have met the Company's underwriting
criteria.  The Company believes that an incentive compensation
system based on the number and quality of loans produced improves
overall profitability, customer and employee relations and the
Company's reputation for providing timely and quality mortgage
banking services.



   The utilization of personal solicitation techniques is another
aspect of the Company's marketing strategy.  The Company believes
that on-going personal relationships between retail branch
salespersons and real estate brokers, builders, developers and
prior customers through regular direct contact represent the most
productive solicitation technique since historically the majority
of the Company's loan originations have been generated through
these referral sources.  The Company engages in only limited mass
media advertising because it believes that the costs associated
with such advertising usually outweigh the benefits.  The Company
also directly solicits borrowers for refinance loans, primarily
through targeted mailings and telemarketing.

   First Mortgage's reputation for prompt and professional
service is an integral component of the Company's marketing
strategy.  The Company believes that its ability to process
retail loan applications quickly has become increasingly
important in the market place.  Despite the speed with which loan
applications are processed, the Company does not compromise its
comprehensive underwriting and quality control criteria.  The
utilization of new technology and computerization of all critical
phases of operations have had a significant impact on the
Company's cost control efforts, especially during upturns in
refinance loan production such as we experienced in fiscal year
1999.

   The Company's wholesale loan origination business utilizes
independent loan brokers to originate mortgage loan applications.
The Company's wholesale operations sales staff solicits loans
meeting the Company's underwriting criteria from loan brokers who
have been approved by the Company.  These broker-referred loan
applications are subject to the same underwriting, verification
and approval process applied to loan applications obtained
through its retail branch offices.  Upon approval, these loans
are funded and closed by the Company.  The Company currently
operates its wholesale regional office in San Jose, California.
Mortgage loan production through wholesale originations as a
percentage of total loan origination volume for fiscal 2000, 1999
and 1998 was 34%, 41% and 55%, respectively.

   Loan Processing and Underwriting.  Upon receipt of mortgage
loan applications, branch office loan personnel verify the
completeness and accuracy of application information.
Verification procedures include, among other things, obtaining
(i) third-party written confirmations of the applicant's income
and bank deposits, (ii) a formal credit report on the applicant
from a credit reporting agency, and (iii) a preliminary title
report and a real estate appraisal.  The Company's underwriting
department is responsible for the selection of the credit
reporting agency, and such agency must issue reports which meet
or exceed the requirements of FHA, VA, FNMA and FHLMC.  The
Company's in-house appraisers, or appraisers approved and chosen
at random by the FHA or VA, prepare property appraisals for FHA
and VA loans.  Appraisals for retail conventional loans are
prepared by the Company's in-house appraisers, or one of a number
of pre-approved independent appraisers who have contractually
agreed to comply with the Company's written appraisal
specification requirements and who meet its experience, education
and reputation standards.  Wholesale loan appraisals are
independently audited through the Company's quality assurance
department.



   Once an application has been verified and reviewed at the
branch office level, a formal loan application is assembled and
submitted to the Company's underwriting department.  Over this
past year, an increasing number of loan applications have been
underwritten through automated underwriting systems, primarily
the Federal National Mortgage Association's (FNMA) Desktop
Underwriter, or the Federal Home Loan Mortgage Corporation's
(FHLMC) Loan Prospector.  These systems are rapidly becoming the
industry standard for conventional loan automated underwriting
and have even been adopted for the underwriting of FHA and VA
loans, as well as by many private institutional investors for
loans which do not meet the requirements of FNMA or FHLMC.  The
underwriting department scrutinizes all loan applications, other
than loans purchased on a wholesale basis, in accordance with the
specific agency or investors' underwriting guidelines, including
loan-to-value ratios, borrower income qualifications, investor
requirements, necessary insurance and property appraisal
requirements.  The Company's underwriting guidelines comply with
the underwriting criteria of FHA, VA, FNMA and FHLMC as
applicable.  The Company's underwriting guidelines for
conventional nonconforming loans are based on the underwriting
standards required by the institutional investors to whom such
loans will be sold.  The Company's underwriting personnel
function independently of the Company's mortgage loan origination
personnel.  The Company believes that the implementation and
enforcement of comprehensive underwriting guidelines has
mitigated the foreclosure loss expense which, as a percentage of
the Company's mortgage servicing portfolio, was 0.028% in fiscal
2000, 0.061% in fiscal 1999 and 0.074% in fiscal 1998.

   First Mortgage's quality assurance department audits a minimum
of 10% of all formal retail loan applications submitted to the
underwriting department in order to enhance the ongoing
evaluation of the loan processing function, including employees,
credit reporting agencies and independent appraisers.
Applications from retail branch offices are chosen for audit in a
manner that assures impartiality.  Higher risk loans, such as
those on three and four-unit properties are audited more
frequently than other loans, and nearly all wholesale loans are
audited.  The quality assurance department re-verifies all
employment and bank information, and obtains a separate credit
report from a second credit reporting agency as well as a written
appraisal critique from a second appraiser or audit agency
familiar with the area of the mortgage property.  The quality
assurance department submits all audit results directly to the
president of the Company.  Management believes that by performing
comprehensive quality assurance audits, mortgage loans of
investment quality will be originated and negligent underwriting,
foreclosure loss expense and overall Company risk will be
minimized.

   Loan Commitments.  First Mortgage does not issue final loan
commitments to fund or acquire mortgage loans unless it is
confident that the loan will meet the acquisition criteria of
institutional investors in the secondary mortgage market.
Subsequent to underwriting approval and prior to loan funding,
the Company issues conditional loan approvals to qualified
applicants.  Conditional approvals indicate loan amounts,
prevailing interest rates, fees, funding conditions and approval
expiration dates.  The interest rate indicated is usually subject
to change in accordance with market interest rate fluctuations
until the final loan closing documents are prepared, at which
time the Company commits to a stated interest rate ("interest
rate lock-in") typically for a maximum of 15 days.  The Company
determines the effective interest rates for



mortgage loans based upon its daily review of prevailing interest
rates in the secondary mortgage market, and interest rate lock-
ins beyond 15 days are not issued unless the Company receives an
appropriate fee premium based upon an assessment of the risk
associated with the longer lock-in period.  For instance, the
Company may issue a conditional loan approval with an interest
rate lock-in for up to 60 days.  In such cases, the Company
charges an extended fee premium average of 0.25% to 0.50% of the
mortgage loan amount.

   Loan Funding.  At closing, First Mortgage funds mortgage loans
first with available working capital, which represents the
Company's lowest cost of funds, and second with short-term
borrowings under warehousing lines of credit which currently
aggregate $85 million.  The Company's current warehousing lines
of credit include a $50 million secured line of credit for 90-day
notes with Bank of America National Trust and Savings Association
("Bank of America") and a $35 million secured line of credit for
90-day notes from Sanwa Bank of California ("Sanwa Bank").  Both
lines are subject to renewal on August 31, 2000.  Advances under
the Company's secured lines of credit are collateralized with the
mortgage loans and/or mortgage-backed securities which they fund.
The Company repays outstanding balances under warehousing lines
of credit and replenishes its working capital with the proceeds
from the sale of mortgage loans.  Accordingly, the Company
depends on mortgage loan sales to originate new mortgage loans
without exceeding the limits of its warehousing lines of credit
and available working capital.

   First Mortgage pays interest on funds advanced under the
warehousing lines of credit at pre-negotiated rates depending on
the level of borrowing and the compensating balance maintained,
which can be satisfied in whole or in part with tax and insurance
impound funds held in custodial accounts for mortgage loans
serviced by the Company.  By maintaining compensating balances in
excess of the minimum requirements, the Company can, and
frequently does, borrow funds under the warehousing lines of
credit at reduced interest rates.  This method of reducing the
Company's cost of borrowing can significantly improve the
profitability of warehousing mortgage loans.  While the Company's
warehousing lines of credit are subject to periodic renewal, the
Company has historically renewed or replaced these lines of
credit at satisfactory rates, and the Company believes that it
maintains an excellent relationship with its current lenders.
There can be no assurance, however, that such financing will
continue to be available to the Company or on favorable terms.

   In addition to the warehouse lines of credit, the Company
utilizes the short-term reverse repurchase agreements provided by
investment banking firms in connection with its inventory of
mortgage-backed securities.  These facilities tend to carry lower
interest rates and allow the Company to better utilize its
warehouse lines by accelerating the turnover of loans in
inventory.

Loan Warehousing

   First Mortgage normally warehouses funded mortgage loans for a
short period of time (on average 25 days), depending upon the
delivery dates negotiated with institutional investors, the
volume of loan originations, the availability of working capital



and the amount available under warehousing lines of credit prior
to purchase of the loans by institutional investors.  The Company
receives, as net interest income, the difference between the
interest received on mortgage loans and mortgage-backed
securities held prior to sale which may be financed under
warehousing lines of credit or the reverse repurchase agreements,
and the interest paid by the Company under such lines of credit.
The Company also receives interest income from mortgage loans
funded with working capital.  The Company may attempt to mitigate
interest rate risk by warehousing mortgage loans for relatively
short period of time.

Loan Sales

   Unlike financial institutions and other lenders which
customarily originate or acquire mortgage loans for long-term
investment, mortgage bankers, including the Company, originate
and purchase mortgage loans with the intention of selling them
shortly after they are funded.  Mortgage loans originated or
purchased by the Company are sold to institutional investors in
the secondary mortgage market with the Company generally
retaining the right to service such loans.

   The majority of the Company's FHA/VA loans are pooled to form
GNMA securities and are sold to investment banking firms,
substantially all of which are primary dealers in government
securities.  Conventional conforming loans are sold for cash as
individual whole loans to FNMA, FHLMC or other institutional
investors. The Company sells its conventional nonconforming loans
to institutional investors in privately negotiated transactions.
In fiscal 2000, approximately 32% of the principal amount of the
Company's mortgage loans were converted into GNMA and FNMA
securities, 9% were sold directly to FNMA or FHLMC for cash and
the remaining 59% of the Company's mortgage loans were sold to
other institutional investors.  The Company expects to continue
to use these methods of selling mortgage loans, but in varying
degrees in accordance with prevailing market conditions and may
also employ other sales methods if management determines that it
is prudent to do so.

   Since the Company's inception, all originated or purchased
mortgage loans have been sold in the secondary mortgage market
without recourse to the Company in the event of borrower default,
subject to certain limitations applicable to VA loans. With
respect to mortgage loans securitized through GNMA programs, the
Company is insured by the FHA against foreclosure losses on FHA
loans, and the VA guarantees against foreclosure losses on VA
loans, subject to a limitation of 25% of the loan or such higher
percentage that does not exceed $50,750.  Mortgage loans sold to,
or securitized through, FNMA or FHLMC are contractually
nonrecourse to the Company upon borrower default.

   In connection with loan exchanges and sales, the Company makes
representations and warranties customary in the industry relating
to, among other things, compliance with laws, regulations,
program standards and information accuracy.  In the event of a
breach of these representations and warranties, the Company could
be required to repurchase such loans.



   The sale of mortgage loans generates a gain or loss to the
Company primarily as a result of the following factors.  First,
the Company may fund a loan at a price (i.e., interest rate and
discount) that is higher or lower than the price the Company
would receive if it immediately sold the loan in the secondary
mortgage market.  These pricing differences occur principally as
a result of competitive pricing conditions in the primary loan
origination market.  In fiscal year 2000 and 1999, price
competition was intensive primarily due to aggressive marketing
actions taken by major banks seeking to increase their market
share.  If the pricing pressure continues, future marketing
results will be negatively impacted.  Second, gains or losses may
result from changes in the market value of the loans, or in the
value of the commitments to purchase loans as a result of
interest rate fluctuations, from the time the Company commits to
a stated interest rate charged to a borrower (i.e., an interest
rate lock-in) until the time the loan is sold or a fixed-price
purchase commitment is obtained in the secondary mortgage market.
Consequently, if the Company anticipates that interest rates will
increase, it seeks to purchase commitments from institutional
investors to buy mortgage loans in amounts in excess of the
Company's current fundings.  If the Company does not deliver
loans to fulfill these commitments, the commitment fees are
expensed.  If interest rates subsequently increase, and if the
Company has obtained such commitments at fixed interest rates and
subsequently funds loans at higher interest rates, it will
benefit from the increased interest rate spread.  However, if the
Company anticipates that interest rates will decrease,
commitments are obtained from institutional investors only for
those loans which the Company expects to fund immediately.  This
practice minimizes the potential commitment fee expense relating
to unused commitments.

   First Mortgage's net gain or loss on sale of mortgage loans
generally equals the difference between the Company's carrying
value and the selling price of the loans, net of commitment fees
paid by the Company.  The gain or loss on mortgage loans was also
impacted by the implementation of Statement of Financial
Accounting Standards No. 125 "Accounting for Mortgage Servicing
Rights" (FAS 125).  FAS 125 requires that a portion of the cost
of originating a mortgage loan be allocated to the mortgage
servicing rights based on its fair value relative to the loan as
a whole.  Gains attributed to the adoption of FAS 125 are
discussed further in Notes to Financial Statements and in
Management's Discussion and Analysis of Financial Condition and
Results of Operations.

Loan Servicing

   Loan servicing is performed at the Company's corporate
headquarters, and includes (i) collecting and remitting loan
payments, (ii) accounting for principal and interest, (iii)
holding and disbursing escrow or impound funds for real estate
taxes and insurance premiums, (iv) contacting delinquent
borrowers, (v) supervising foreclosures, and (vi) otherwise
administering mortgage loans for institutional investors.  At
March 31, 2000, approximately 68% of the aggregate principal
amount of the Company's mortgage servicing portfolio consisted of
FHA/VA loans.  The Company believes that such loans are desirable
to service because they typically command higher servicing fees
(currently weighted average servicing fee is 0.47%) and generally
have longer average loan lives.  Overall, the Company receives
annual loan servicing fees that presently average 0.42% (net of
amortization of capitalized servicing rights and agency



guarantee fees), and range from 0.25% to 1.50% per annum of the
declining principal amount of serviced loans.  The Company also
retains late charges paid by borrowers and other customary fees
associated with loan servicing.  While the Company periodically
has sold a portion of newly funded mortgage loans on a servicing-
released basis, it has never sold any servicing rights from its
mortgage servicing portfolio; however, the sale of such rights
represents an available source of funds.  The Company may also
acquire servicing rights for loans originated by other lenders
whenever attractive opportunities are encountered.

   The following table sets forth certain information regarding
the Company's mortgage servicing portfolio for the periods
indicated:


                                                    Year Ended March 31,
                                                 2000       1999      1998
                                                 (Dollars in thousands,
                                                 except for number of loans
                                               serviced and average loan balance)
                                                          
   Beginning loan servicing portfolio     $1,527,151  $1,570,143   $1,583,837
   Add:  Loans originated and purchased      238,726     866,641      476,986
         Purchase of servicing                73,563       3,046        6,652
   Less: Prepayment of loans                (210,817)   (487,256)    (239,992)
         Amortization                        (23,959)    (24,261)     (24,979)
         Loans sold servicing released      (107,048)   (401,162)    (232,361)
   Ending loan servicing portfolio         1,497,616   1,527,151    1,570,143
   Sub-servicing                               4,476      80,581       96,708
   Total servicing portfolio              $1,502,092  $1,607,732   $1,666,851

   Number of loans serviced (end of year)     16,611      17,676       17,542
   Average loan balance (end of year)        $90,428     $90,956      $95,021



   The interest rate stratification of the servicing portfolio at
March 31, 2000 is as follows:


Interest Rate                  Principal Balance           Percent of Total
                               (Dollars in thousands)
                                                     
7.00% and Under                   $168,015                 11.2%
7.01% to 8.00%                     887,592                 59.1
8.01% to 9.00%                     371,751                 24.7
9.01% to 10.00%                     55,892                  3.7
Over 10.00%                         18,842                  1.3
Total Servicing Portfolio       $1,502,092                100.0%

   The weighted average interest rate of the Company's servicing
portfolio was 7.63% at March 31, 2000 as compared with 7.70% at
March 31, 1999.

   At March 31, 2000, approximately 56% of the Company's mortgage
servicing portfolio was covered by servicing agreements pursuant
to the mortgage-backed securities programs of GNMA.  Under these
agreements, the Company may be required to advance funds
temporarily to make scheduled payments of principal, interest,
taxes or insurance if the borrower fails to make such payments.
Although the Company cannot charge any interest on such advanced
funds, the Company typically recovers the advances within five to
ten days upon receipt of the borrower's payment, or in the
absence of such payment, most of the advances can be recovered
through FHA insurance, VA guarantee, FNMA or FHLMC reimbursement
provisions in



connection with loan foreclosures.  In fiscal year 2000, all
advances were covered by working capital and the monthly average
amount of funds advanced by the Company for mortgage payments,
taxes, insurance, VA buydown, foreclosure expenses and non-
mandatory early removal of foreclosed loans (being processed by
the Company) from GNMA pools amounted to $5,496,000.  The total
advance and foreclosure losses for fiscal 2000 were $375,000.
The balance of the Company's mortgage servicing portfolio is
covered by servicing agreements that require the Company to make
required loan payments only out of funds actually received from
borrowers.

   The following table sets forth the geographic distribution of
the Company's loan servicing portfolio at March 31, 2000.


                 Number of        Percentage     Principal              Percentage
                 Loans            of No. of      Balance                of Principal
State            Serviced         Serviced       Serviced               Balance Serviced
                                                 (Dollars in thousands)
                                                            
California       14,661            88.3%          $1,347,025             89.7%
Nevada              695             4.2               52,072              3.5
Washington          483             2.9               49,103              3.3
Arizona             336             2.0               29,369              2.0
Texas               172             1.0                8,030              0.5
Oregon              105             0.6               10,192              0.7
Other States        159             1.0                6,301              0.3
Total            16,611           100.0%          $1,502,092            100.0%



   The Company believes that its mortgage servicing portfolio
(net of capitalized mortgage servicing assets) has significant
market value, although approximately fifty percent of the
mortgage servicing portfolio has not been treated as an asset for
financial statement reporting purposes.  The two primary risks to
mortgage servicing portfolio revenue (and therefore mortgage
servicing portfolio market value) are loan prepayments and loan
foreclosures which prematurely eliminate or reduce future loan
servicing fees.  The prepayment risk to the mortgage servicing
portfolio increases as (i) mortgage interest rates decline, and
(ii) the percentage of adjustable rate mortgages ("ARM's") in a
servicing portfolio increases because ARM's historically are
prepaid more frequently than fixed-rate loans.  The Company
believes that the composition of its mortgage servicing
portfolio, as measured by interest rates, compares favorably to
that of the mortgage banking industry as a whole.  At March 31,
2000, ARM's represented approximately 10% of the aggregate dollar
amount of loans in the Company's mortgage servicing portfolio.
At March 31, 2000, 0.25% of the number of mortgage loans in the
Company's mortgage servicing portfolio were more than 90 days
past due, and 0.50% of the number of mortgage loans were in
foreclosure.

   First Mortgage believes that its loan servicing and loan
origination operations provide a macro hedge and reduce the risk
of fluctuating interest rates.  As interest rates increase, loan
origination income may decrease; however, this decline is
mitigated by the stabilization of loan administration income
generated by the Company's mortgage servicing portfolio as a
result of diminished loan prepayments.  Conversely, as interest
rates decline, increased loan prepayments may reduce loan
administration income, but this reduction tends to be offset by
increased loan origination fees due to increased loan production.
The Company can also reduce the risk to its loan servicing and
origination revenue resulting from interest rate fluctuations



by selling mortgage loans for a premium on a servicing-released
basis when interest rates are high, and by increasing its
solicitation of refinance loans when interest rates are low.

Seasonality

   The mortgage banking industry is usually subject to seasonal
trends.  These trends reflect the general pattern of nationwide
home sales.  Such sales typically peak during the spring and
summer seasons and decline to lower levels from mid-November
through January.

Competition

   The mortgage banking business is highly competitive and
fragmented.  First Mortgage Corporation competes with other
mortgage bankers, state and national banks, savings and loan
associations, mortgage brokers, credit unions and others for
mortgage loans.  The record refinance surges of 1993 and 1998 led
to a rapid expansion of mortgage providers, resulting in industry
over-capacity whenever interest rates increase and the volume of
new mortgage loans declines accordingly.  Estimated U.S. mortgage
origination volume fell 33% to approximately $1.0 trillion in
calendar year 1999 from the record $1.5 trillion in calendar year
1998, and indications are that the volume for calendar year 2000
will fall to perhaps as low as $800 billion, nearly 50% less than
just two years ago.  During fiscal year 2000 competition for
mortgage loans intensified due to the shrinking market and the
expanded aggressiveness of major banks.  Banks have an advantage
over others in that they can price their mortgages at their lower
short term cost of funds.  And, due to their strengthened capital
position which increases their capacity to hold portfolio loans,
banks have become extremely aggressive with mortgage price
discounting in order to expand their mortgage  base as a platform
from which to cross-sell other bank products.  The result is a
competitive market wherein major banks, through their mortgage
banking subsidiaries, are more aggressively pricing their loans
than the traditional secondary market agencies such as FHLMC and
FNMA.  Recognizing this, the Company has correspondent
relationships with several of the most aggressive major banks.
The Company also competes by operating only in strategically
selected geographic markets, motivating its sales force through
incentive compensation based on loan origination volume,
providing prompt and comprehensive service and otherwise
maintaining strong professional relationships with realtors,
developers and customers.

Regulation

   First Mortgage is an FHA-approved Direct Endorsement
Mortgagee, a VA Automatic Lender, an approved issuer and servicer
under the GNMA mortgage-backed securities program, and an
approved seller and servicer with the FNMA, FHLMC, the California
Housing Financing Agency, the California Public Employees
Retirement System and several private mortgage-backed securities
conduit companies.  As such, the Company's mortgage banking
business is subject to the periodic reporting, examination and
auditing requirements and other rules and regulations of such
governmental agencies with respect to its net worth and its
mortgage loan origination, processing, sales and servicing.
These rules and regulations, among other things,



prohibit race, age and sex discrimination, provide for
inspections and appraisals of properties, require credit reports
on prospective borrowers, fix (in some cases) maximum interest
rates, fees and loan amounts, and mandate the annual submission
of audited financial statements.

   First Mortgage's loan origination activities are also subject
to such federal laws as the Equal Credit Opportunity Act, the
Truth-In-Lending Act, the Real Estate Settlement Procedures Act
and the regulations promulgated thereunder which prohibit
discrimination and require the disclosure of certain information
to borrowers concerning credit and settlement costs.
Furthermore, the Company is licensed to do business in
California, Nevada, Oregon, Arizona, Washington and Texas, and
its mortgage banking operations are subject to the laws of those
states, including those prohibiting usury.  The Company is
licensed by the California Department of Corporations as a
Residential Mortgage Lender.

   The Company employs a full-time compliance officer and Quality
Assurance staff to monitor and audit compliance with all
regulatory requirements.

Employees

   As of March 31, 2000, First Mortgage employed 131 persons.
None of the Company's employees is represented by a labor union,
and the Company believes that it has an excellent relationship
with its employees.

ITEM 2. PROPERTIES

   First Mortgage's executive and administrative headquarters are
located in a 22,000 square foot office building at 3230 Fallow
Field Drive, Diamond Bar, California 91765.  The entire building
is leased by the Company from Fin-West Group ("Fin-West"), an
affiliated corporation which owns 91.5% of the Company's
outstanding common stock at March 31, 2000.  On April 1, 2000,
the Company successfully negotiated a second extension to the
lease originally signed on January 1, 1992.  The second extension
allows the Company to have options to extend the lease for three
one-year terms, starting on January 1, 2001.  The monthly rental
payment will be $23,000 effective January 1, 2001 and $24,000
effective January 1, 2002.  The monthly rental payment for any
lease extension is subject to increase (but not decrease) upon
any such extension.  Such payments may not exceed the fair market
rent for comparable facilities at the time of the extension. The
Company pays for repairs, insurance and utility services for the
entire building.  The Company believes the current facilities are
adequate to meet foreseeable future needs.

   The Company's branch offices each are leased at varying rates
and each office contains approximately 1,000 to 2,000 square
feet.  For the year ended March 31, 2000, the annual aggregate
rental expense for the administrative headquarters and all branch
offices was approximately $538,000.  Many of the Company's branch
offices are on one to two year short-term leases.



ITEM 3. LEGAL PROCEEDINGS

   First Mortgage is currently a defendant in certain litigation
arising in the normal course of its business.  In the opinion of
the Company, any potential liability with respect to such legal
actions will not, in the aggregate, be material to the Company's
financial position, results of operations or cash flows.

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

   No matters were submitted to a vote of the Company's security
holders during the fourth quarter of the fiscal year ended March
31, 2000.

                             PART II

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

   The Company's Common Stock was traded on the NASDAQ National
Market System (the "NASDAQ System") under the symbol FMOR from
April 20, 1992 to April 24, 1997, and is presently traded on the
Over The Counter ("OTC") Bulletin Board under the same trading
symbol.  The reason behind the change was that the Company no
longer retains two registered and active market makers as
required by NASDAQ.

   The following table sets forth the high and low bid quotations
per share of the Company's Common Stock during each of the
quarterly periods indicated below.



Fiscal 2000:                High                Low
                                        
First quarter             $  4.750            $  4.000
Second quarter               4.250               3.875
Third quarter                4.000               2.750
Fourth quarter               3.100               3.040



Fiscal 1999:                High                Low
                                        
First quarter             $  4.500            $  4.000
Second quarter               4.625               4.313
Third quarter                4.375               3.000
Fourth quarter               4.750               3.250




   As of March 31, 2000, there were 30 shareholders of record of
the Company's Common Stock.

   No cash dividends have been paid on the Company's common
stock.  The Company presently intends to retain all earnings for
use in its business and therefore does not anticipate paying cash
dividends on its Common Stock in the foreseeable future.  The
Company's warehousing lines of credit with Bank of America and
Sanwa Bank restrict the Company's ability to pay dividends or to
make other distributions with respect to the Common Stock.  Any
decision to pay cash dividends on the Common Stock will depend on
the Company's circumstances at the time, including the
profitability of operations, availability of cash, lines of
credit restrictions and other factors.



ITEM 6. SELECTED FINANCIAL DATA




                                             Year Ended March 31,
                                             2000           1999           1998           1997          1996
                                             (In thousands, except per share data)
                                                                                         
Income Statement Data:
Revenues:
 Loan origination income                         $2,073        $3,857         $3,303         $3,426        $3,397
 Loan servicing income                            7,763         7,761          7,628          7,137         6,787
 Gain on sale of mortgage loans                   3,189        18,191          7,611          5,374         7,116
 Interest income                                  4,821         3,862          2,527          2,165         2,105
 Other income                                        13             3              5              2            29
  Total revenues                                 17,859        33,674         21,074         18,104        19,434

Expenses:
 Compensation and benefits                        6,806        11,407          8,282          8,217         7,752
 General and administrative
  expenses                                        4,861         8,782          6,285          5,708         5,616
 Amortization of capitalized
  servicing rights                                4,661         4,061          3,174          1,563           878
 Interest expense                                 2,306         1,275            701            690           786
  Total expenses                                 18,634        25,525         18,442         16,178        15,032

Income (loss) before income taxes                  (775)        8,149          2,632          1,926         4,402
Income tax expense (benefit)                       (221)        3,375          1,101            811         1,833

Net income (loss)                                 $(554)       $4,774         $1,531         $1,115        $2,569

Basic and diluted earnings
(loss) per share                                 $(0.10)        $0.87          $0.26          $0.19         $0.44

Weighted average shares outstanding               5,288         5,507          5,848          5,873         5,883

Operating Data:
Loans originated and purchased                 $238,726      $866,641       $476,986       $353,411      $330,896
Loans serviced (end of year)                  1,502,092     1,607,732      1,666,851      1,683,652     1,569,705



                                              At March 31,
                                              2000          1999           1998           1997          1996
                                              (In thousands)
                                                                                         
Balance Sheet Data:
Mortgage loans and mortgage
 backed securities held for sale              $  67,336     $  45,463      $  53,052      $  27,286     $  19,879
Capitalized mortgage servicing rights            11,555        12,475          7,490          6,709         3,547
Total assets                                     97,825        81,861         80,445         50,923        51,131
Notes and sight drafts payable                   19,291        44,919         49,799         22,626        24,852
Stockholders' equity                             28,811        29,730         26,995         25,648        24,647


No cash dividends were paid on common shares for any period.



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

General

   At the beginning of fiscal year 2000, First Mortgage
Corporation had just completed its most successful year ever,
with record new loan originations and all time or near all time
results in every other category.  The economy was performing
well, interest rates were near the record lows, and all three of
our origination channels (retail, wholesale, direct marketing)
were contributing towards our record loan volume.  The average
interest rate for a 30 year fixed-rate conventional loan was
7.00%.

   In May 1999, however, mortgage interest rates began a slow
upward spiral, and the pool of remaining loans available for
refinancing at the higher rates began to shrink very rapidly.  By
that summer, our new loan originations were off by more than 70%
from the year-earlier numbers (although the earlier numbers were
all time highs). The Federal Reserve Board had begun its long
march to slow the economy, and mortgage rates continued to
increase, with the average interest rate for fixed-rate loans
rising to 8.00% by December and to 8.375% by the close of the
fiscal year on March 31, 2000.  New loan production fell and
continued to fall during the entire fiscal year, ending at the
lowest annual level in nearly ten years.  Not surprisingly, our
operating results also began to suffer and turned negative.

   For the entire fiscal year 2000, loan originations and
purchases decreased by 72.5% to $238.7 million from the record
$866.6 million in the previous year.  The total loan servicing
portfolio, including sub-servicing, fell 6.6% to $1.502 billion,
due largely to a sub-servicing client's sale of its entire $76
million sub-serviced portfolio to an investor who did not require
our sub-servicing.  Exclusive of sub-servicing, the servicing
portfolio shrunk only marginally by 1.93% to $1.498 billion from
a year ago.

   The net loss for fiscal year 2000 was $554,000, compared to
the near record net income of $4.77 million in fiscal 1999.
Compared to fiscal 1999, total revenues fell by 47.0%, while
total expenses fell by 27.0%.  As discussed above, the results
were negatively impacted primarily by increasing interest rates
during the course of the year.

Results of Operations

   Revenue

   The Company generates revenue primarily from (i) loan
origination fees, (ii) fees received for servicing (i.e.,
administering) mortgage loans, (iii) net gain on the sale of
mortgage loans in the secondary market and (iv) interest income
received on mortgage loans during the period in which the Company
warehouses loans pending their sale and purchase.  Loan
origination fees, interest income and net gain on the sale of
mortgage loans are largely transaction oriented and volume
driven.  Loan servicing fees constitute a continuing stream of
revenue produced by the portfolio of mortgage loans serviced.
The sale of servicing rights represents a potential revenue
source available to the Company at any time should such need
arise.



   The following table sets forth, for the periods indicated, the
percentage of the Company's total revenue represented by each
source of income:


                                     Year Ended March 31,
                                     2000         1999        1998
                                                     
Loan origination income              11.6%        11.5%       15.7%
Loan servicing income                43.5         23.0        36.2
Gain on sale of mortgage loans       17.9         54.0        36.1
Interest income                      27.0         11.5        12.0
 Total                              100.0%       100.0%      100.0%



   Loan Origination Income.  The Company defers immediate
recognition of loan origination fees paid by the borrower for an
originated mortgage loan.  Instead, fees and direct loan
origination costs are offset and the net amount deferred until
the related loans are sold by the Company.  Historically
speaking, the amount of loan origination fee income correlated
positively to the volume of loan origination.  Loan origination
income showed a decrease of 46.3% to $2.07 million in fiscal 2000
from $3.86 million in fiscal 1999, while new loan production fell
by 72.5% from 1999 to 2000.  This is due primarily to the greatly
reduced volume of wholesale and refinance loans, which often
carry no, or much lower, front-end origination fees as compared
to retail loan originations.

   In recent years, loan origination income does not precisely
track loan origination volume as it used to because a majority of
borrowers now elect to pay slightly higher mortgage rates to
reduce some or all of the amount of their loan origination fees.
The Company is then able to obtain a premium upon the sale of
such mortgage loans in the secondary market because of their
higher interest rates, and those premiums are reflected in the
gain on sale of mortgage loans.

   Loan Servicing Income.  Loan servicing income represents loan
servicing fees, late charges and other fees earned by the Company
for administering loans on behalf of permanent investors.  The
Company's annual loan servicing fee for mortgage loans ranges
from 0.25% to 1.50% of the principal amount of the loan serviced
depending on the type of mortgage loan, and on average is
approximately 0.42% net of amortization of capitalized service
rights and agency guarantee fees.  During fiscal year 2000, the
Company's mortgage servicing portfolio dropped 6.6% after one of
its sub-servicing clients sold its entire servicing portfolio.
The loan servicing income, however, remained steady at $7.76
million in fiscal 2000 compared to a growth of 1.7% to $7.76
million in fiscal 1999 from $7.63 million in fiscal 1998.  The
stability can generally be attributable to higher weighted
average servicing fees as the composition of the servicing
portfolio has shifted to administrating more FHA loans.  As of
March 31, 2000, approximately 68% of the aggregate principal
amount of the mortgage servicing portfolio consisted of FHA/VA
loans compared to 62% in fiscal 1999.

   Gains on Sale of Mortgage Loans.  Gains and losses from the
sale of mortgage loans result from:  (a) competitive market
forces affecting our pricing structure at the time of
origination; and (b) interest rate increases or decreases between
the time that the Company commits to originate or purchase loans
and when the Company commits to sell the loans in the secondary
markets.  It is also impacted by two other factors:



price subsidies and the recognition of gains relating to
originated mortgage servicing rights ("OMSRs").

   Since 1995, price competition has grown increasingly intense.
Commercial banks in particular have been very aggressive with
mortgage pricing in order to capture a higher percentage of the
market, with the Company's wholesale operations particularly
impacted.  The Company therefore is often forced to set prices
below the secondary markets for some of its loan programs.  To
the extent that the pricing pressure continues, it will have a
negative impact on the Company's future gains on selling of
mortgages.

   Gain on mortgage sales decreased by 82.5% to $3.19 million in
fiscal 2000 from $18.19 million in fiscal 1999.  This decrease
was attributable to the lower loan originations generated by the
Company and the generally rising interest rate environment which
existed during most of fiscal year 2000.

   Net Interest Income.  Net interest income consists of the
difference between the interest income received on mortgage loans
held for sale and the interest paid by the Company on the short-
term bank borrowings used to finance mortgage loans prior to
settlement of purchase.  The conditions that affect net interest
income from period to period include the relationship between
prevailing mortgage rates and short-term bank borrowing rates,
the mix of fixed-rate and adjustable rate mortgage loans held for
sale and the average holding period before the loans are sold.
The Company also uses cash generated from operations in lieu of
bank borrowings to fund a portion of its mortgage loans to reduce
interest expense and increase net interest income.  Interest
income earned by the Company on mortgage loans held for sale has
exceeded interest expense on the Company's short-term bank
borrowings in every fiscal year.

   The following table sets forth certain data regarding net
interest income:


                               Year Ended March 31,
                               2000          1999       1998
                               (Dollars in Thousands)
                                               
   Interest income             $4,821        $3,862      $2,527
   Interest expense             2,306         1,275         701
     Net interest income       $2,515        $2,587      $1,826



   Interest income, which consisted mostly of the interest
received on mortgage loans held for sale, increased by 24.8% in
fiscal 2000 from fiscal 1999 and by 52.8% in fiscal 1999 from
fiscal 1998.  The increase was due largely to a higher mortgage
inventory and mortgage-backed securities portfolio carried by the
Company.

   Interest expense increased by 80.9% in fiscal 2000 from fiscal
1999, and by 81.9% in fiscal 1999 from fiscal 1998.  The chief
reason behind this increase in both years was higher mortgage
inventory portfolio and rising interest rates.



   Expenses

   The major components of the Company's total expenses are (i)
compensation and benefits, (ii) general and administrative
expenses, (iii) amortization of capitalized servicing rights, and
(iv) interest expense.  Total expenses decreased 27.0% to $18.63
million in fiscal 2000 from $25.53 million in fiscal 1999,
compared to an increase of 38.4% to $25.53 million in fiscal 1999
from $18.44 million in fiscal 1998.

   As the amount of mortgage loans originated by the Company
decreases, a decrease in total employee compensation results from
lower commissions paid to loan originators, processors and
underwriters and other staff necessitated to support the loan
origination volume.  Compensation and benefits expenses therefore
decreased 40.3% to $6.81 million in fiscal 2000 from $11.41
million in fiscal 1999.

   Amortization of capitalized servicing rights increased by
14.8% to $4.66 million in fiscal year 2000 compared to fiscal
year 1999. It also rose by 27.9% in fiscal year 1999 from fiscal
year 1998. The higher amortization expense was due mainly to
larger investment in mortgage servicing rights and/or higher
volume of prepayments over the prior period.

   General and administrative expenses decreased 44.6% to $4.86
million in fiscal 2000 from $8.78 million in fiscal 1999,
compared to an increase of 39.7% from fiscal 1998 to fiscal 1999.
The decreases in fiscal 2000 expenses were a direct result of
contraction in loan origination and direct marketing expenditures
during fiscal 2000.

   Income Taxes

   The Company's combined effective federal and state income tax
rate was 28.5%, for fiscal year ended March 31, 2000 due
primarily to the loss of tax benefits of California net operating
losses.  Effective tax rates were 41.4% and 41.8% for the fiscal
years ended March 31, 1999 and March 31, 1998, respectively.  The
rates differ from the federal statutory rate of 34% due primarily
to state income taxes.

Disclosure About Market Risk

   The Company manages many risks in its normal course of
business; however, management considers interest rate risk to be
the most significant market risk which could materially impact
its financial position and results of operations. The movements
in interest rates affect the value of capitalized mortgage
servicing rights, the mortgage inventory held for sale, volume of
loan production and total net interest income earned.

   The Company has been managing this risk by striving to
balance its loan origination and loan servicing segments, which
generally are counter cyclical in nature. In an environment of
raising interest rates, loan production will slow down, but the
drop in origination income is mitigated by a decrease in the loan
prepayment rate in its servicing portfolio and hence write-offs,
amortization and impairment charges against income will fall.
Conversely, the opposite scenario is true during a period of
declining interest rates. The overall objective is to offset
changes in the values of the following items arising from
fluctuations in interest rates, such as the production pipeline,

mortgage loan inventory, mortgage-backed securities held for sale
and capitalized mortgage servicing rights. The Company does not
speculate on the direction or movement of the interest rates.

   Based on the information available and on the estimates
quantified by various interest rate calculations, the Company
believes that a 50 basis point change in long-term interest rates
over a twelve month period, up or down and all else being
constant, would increase or decrease the Company's gross income
by approximately $1.5 million dollars. These estimates are
limited by the fact that they are performed at a particular point
in time and do not incorporate many other factors and,
consequently, should not be relied on as a forecast of actual
results.

Liquidity and Capital Resources

   The Company's principal liquidity requirement is the funding
of its new mortgage loans, loan origination expenses, advances of
delinquent payments and escrow balances and other operating
activities.  To meet these needs, the Company relies on warehouse
lines of credit with banks, its own capital and cash flows from
operations.

   At March 31, 2000, maximum permitted borrowings under the
warehouse lines of credit with two nonaffiliated banks were $85
million and the amount outstanding was $19.29 million.
Borrowings under these facilities are secured by mortgage loans
and mortgage-backed securities.  The agreements also contain
various covenants, including minimum net worth, current ratio (as
defined), net income, servicing portfolio balances, debt to net
worth ratio and restrict the Company's ability to pay dividends.
Management believes that the warehouse agreements will be renewed
when the current terms expire on August 31, 2000.

   In addition to the warehouse lines of credit, the Company
utilizes the short-term reverse repurchase agreements provided by
investment banking firms in connection with its inventory of
mortgage loans and mortgage-backed securities.  These facilities
tend to carry lower interest rates and allow the Company to
better utilize its warehouse lines by accelerating the turnover
of loans in inventory.

   From April 1, 1999 to March 31, 2000, the Company repurchased
in open market transactions 94,000 shares of its common stock at
an aggregate cost of $365,000.

   The Company's mortgage servicing portfolio can provide a
source of liquidity since approximately fifty percent of the loan
servicing rights are an unrecorded asset which may be sold.
Although the Company does not intend to sell mortgage servicing
rights solely to increase liquidity, the sale of such rights is a
viable option should the need arise.

   It is the Company's policy to remain strongly capitalized and
conservatively leveraged.  Management believes that its current
financing arrangements are adequate to satisfy its anticipated
operating needs; however, increases in the existing facilities or
other supplementary sources may have to be explored should the
market conditions improve and loan origination volume increase.



Inflation

   Inflation may significantly affect the Company's ability to
originate loans.  Interest rates typically increase during
periods of high inflation and decrease during periods of low
inflation.  Generally, the mortgage banking industry has
experienced increased origination volume in response to low
interest rates and loan originations have generally decreased
during periods of high interest rates. As interest rates decline,
prepayments on the loan servicing portfolio generally increase as
borrowers refinance mortgage loans to take advantage of lower
rates.  A higher prepayment rate on loans serviced decreases the
value of the Company's loan servicing portfolio, accelerating
amortization of mortgage servicing rights and decreases the
amount of servicing income.  As interest rates rise, new loan
originations are likely to fall, but prepayments of existing
loans generally decline and the value of the Company's servicing
portfolio and of the escrow balances collected thereunder may be
enhanced.

Recently Issued Financial Accounting Standards

   In June 1998, the FASB issued SFAS 133, Accounting for
Derivative Instruments and Hedging Activities.  This Statement
provides guidance for the way public enterprises report
information about derivatives and hedging in annual financial
statements and in interim financial reports.  The derivatives and
hedging disclosure is required for financial statements for
fiscal years beginning after June 15, 2000.  The Statement will
require the Company to recognize all derivatives on the balance
sheet at fair value.  Derivatives that are not hedges must be
adjusted to fair value through income.  If the derivative is a
hedge, depending on the nature of the hedge, changes in fair
value of derivatives will either be offset against the change in
fair value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in earnings.  The ineffective
portion of a derivative's change in fair value will be
immediately recognized in earnings.  The Company is in the
process of evaluating the effect of Statement 133, if any, will
have on the earnings and financial position of the Company.

Prospective Trends

   Fiscal 2000 was very nearly a complete reversal of fiscal 1999
and 1998, and was only similar in that we saw more of the same in
terms of competitive forces and industry consolidation.  Overall
volume of new mortgage originations plunged dramatically from the
record levels of fiscal 1999, turning the industry on its head as
the interest rate cycle rapidly shifted towards higher interest
rates.

   The industry as a whole continues to suffer from the
confluence of two major developments:  the consolidation of the
industry and the growing presence of the major commercial banks
in the mortgage arena.  The consolidation and now dominant market
share of banks has by itself led to price cutting and reduced
operating margins for all mortgage originators.  Furthermore, the
American consumer is now well-tuned to interest rates, and even
relatively small movements in rates can have fairly dramatic
effects on new mortgage volume and earnings, as can be seen by
the rapid choking off of new mortgage originations, particularly
refinance loans, over the course of this past year.



   In the second instance, as discussed under Competition on page
13, most of the major banks continue to be fiercely competitive
in pricing mortgage products and growing their mortgage banking
operations.  Their present hope that holding a consumer's
mortgage is the gateway to cross-selling many other bank products
has engaged the banks in a virtual price war with one another for
those mortgages.  Their valuation models for loan servicing
rights and the resulting downstream impact on pricing at the
origination level, particularly through their wholesale channel
with its thousands of loan brokers, is having a major impact on
the mortgage banking industry and our ability to compete on the
types of mortgage loans most sought-after by these commercial
banks.

   The Company's strategy in the face of this is to continue to
compete in the channels and with the loan products which are not
the most sought-after by the commercial bank giants.  Although we
will maintain our correspondent relationships with the major
banks who presently have such a strong appetite for certain
mortgage products, our primary emphasis will be on the
origination of FHA and VA loans for which the major banks largely
do not compete and with which we can retain the servicing rights;
to expand our retail branch network into smaller metropolitan
areas in the western states; and to add new non-bank loan
products which have more profit potential for the Company.  Much
of this strategy has been implemented already with the ongoing
expansion of our retail channel, and the introduction of new
adjustable rate mortgage products which have greater customer
appeal in higher interest rate environments.

   Nevertheless, fiscal 2001 is likely to be a very difficult
year for the Company and operating results are expected to be
marginal for the entire year.  If there's a silver lining in this
"cycle cloud," it's that there should be a shake-out of the less
capitalized companies and many of the loan brokers, clearing away
some of the industry over-capacity and enabling the Company to be
better positioned to compete when the interest rate cycle turns
towards improvement once again.

Year 2000 Issues

   The Company's Year 2000 Plan to prepare its entire computer
systems to properly identify and calculate dates beyond December
31, 1999 was successfully implemented.  The Company did not
experience any major Year 2000 related problems during the
rollover.  All internal systems and communication interfaces with
outside vendors have been functioning normally without
disruptions.

   Total expense of the Year 2000 Plan was approximately
$250,000 of which $150,000 was recognized in fiscal year 2000.
The Company does not expect to incur significant additional
expenditures for Year 2000 project for future periods.

Forward-Looking Statements
   From time to time, the Company or its representatives may make
forward-looking statements in this report or elsewhere relating
to such matters as anticipated financial performance, including
projections of revenues, expenses, earnings, liquidity, capital
resources or other financial items; business plans, objectives
and prospects; and




similar matters.  Forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995
frequently are identified by the use of terms such as "expect,"
"believe," "estimate," "may," "should," "will" or similar
expressions.

   The Private Securities Litigation Reform Act of 1995 provides
a safe harbor for forward-looking statements.  In order to comply
with the terms of the safe harbor, the Company notes that a
variety of factors could cause the Company's actual results and
experience to differ materially from the anticipated results or
other expectations expressed in the forward-looking statements
made by the Company or its representatives.  The risks and
uncertainties that may affect the operations, performance,
development and results of the Company's business include the
following, among other factors: (a) the cyclical financial
results traditionally experienced by the mortgage banking
industry, which have been caused in large part by periodic
fluctuations in mortgage interest rates and in consumer demand
for new mortgage loans; (b) the possibility of adverse changes in
the Company's ability to obtain suitable warehousing lines of
credit with which to fund new loans; (c) the possibility of
adverse changes in the Company's ability to sell new mortgage
loans in the secondary mortgage market; (d) increasing
competition faced by the Company, particularly from commercial
banks; (e) the possibility of adverse regulatory changes, such as
changes in the level or terms of programs administered by GNMA,
FNMA or FHLMC or the FHA or VA; (f) dependence on existing
management; (g) credit risks inherent in the lending business;
and (h) periodic fluctuations in general economic conditions,
with corresponding fluctuations in the Company's ability to
originate new mortgage loans.

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
        RISK

   The information required by this Item is contained in Item 7,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Disclosure About Market Risk",
incorporated herein by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   The information with respect to this item is set forth in
"Index to Financial Statements".

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

  Not applicable.



                            PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT*

ITEM 11. EXECUTIVE COMPENSATION*

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

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS*

   * For information called for by Items 10-13, reference is made
to the Company's definitive proxy statement for its annual
meeting of shareholders, to be held on September 20, 2000, which
will be filed with the Securities and Exchange Commission within
120 days after March 31, 2000, and which is incorporated herein
by reference, except that the information included under the
captions "Report of the Compensation Committee on Executive
Compensation" and "Stock Performance Graph" is not incorporated
herein by reference.

                             PART IV

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

   (a) Financial Statements

   The financial statements that are filed as part of this Annual
Report on Form 10-K are set forth in the Index to Financial
Statements at page F-1 of this Annual Report on Form 10-K.

   (b) Reports on Form 8-K

   The Company filed no current report on Form 8-K during the
quarter ended March 31, 2000.

   (c) Exhibits

   The following exhibits are filed as part of this Annual Report
on Form 10-K or are incorporated by reference herein:

Exhibit
Number                         Description

3.1    Restated and Amended Articles of Incorporation of the Compa
       ny (previously filed with the Securities and Exchange
       Commission on March 6, 1992 as Exhibit 3.1 to Amendment
       No. 1 to the Company's Registration Statement on Form S-
       1, File No. 33-45187, and incorporated herein by
       reference).



3.2    Restated Bylaws of the Company (previously filed with the S
       ecurities and Exchange Commission on January 21, 1992 as
       Exhibit 3.2 to the Company's Registration Statement on
       Form S-1, File No. 33-45187, and incorporated herein by
       reference).

10.1   Credit and Security Agreement dated September 1, 1995,
       between Bank of America National Trust and Savings
       Association and the Company (previously filed with the
       Securities and Exchange Commission on June 27, 1996 as
       Exhibit 10.1 to the Company's Annual Report on Form 10-K
       for the fiscal year ended March 31, 1996 and incorporated
       herein by reference).

10.2   Amended and Restated Mortgage Loan Warehousing Agreement
       dated September 1, 1995, among Bank of America National
       Trust and Savings Association and Bank of America
       National Trust and Savings Association as agent for
       various other lenders and the Company (previously filed
       with the Securities and Exchange Commission on June 27,
       1996 as Exhibit 10.2 to the Company's Annual Report on
       Form 10-K for the fiscal year ended March 31, 1996 and
       incorporated herein by reference).

10.3   Eighth Amendment dated April 30, 1998 to Amended and
       Restated Mortgage Loan Warehousing Agreement among Bank
       of America National Trust and Savings Association, Bank
       of America National Trust and Savings Association as
       agent for various other lenders and the Company
       (previously filed with the Securities and Exchange
       Commission on June 25, 1999 as Exhibit 10.3 to the
       Company's Annual Report on Form 10-K for the fiscal year
       ended March 31, 1999 and incorporated herein by
       reference).

10.4   Ninth Amendment dated August 17, 1998 to Amended and
       Restated Mortgage Loan Warehousing Agreement among Bank
       of America National Trust and Savings Association, Bank
       of America National Trust and Savings Association as
       agent for various other lenders and the Company
       (previously filed with the Securities and Exchange
       Commission on June 25, 1999 as Exhibit 10.4 to the
       Company's Annual Report on Form 10-K for the fiscal year
       ended March 31, 1999 and incorporated herein by
       reference).

10.5   Mortgage Loan Warehousing Agreement dated July 22, 1999
       by and among the Company, other lenders from time to time
       party hereto and Nations Bank, as administrative agent.

10.6   First Amendment dated August 30, 1999 to Mortgage Loan
       Warehousing Agreement by and among the Company, Sanwa
       Bank, as collateral agent and Bank of America, N.A.
       (formerly Nations Bank, N.A.), as administrative agent.

10.7   Second Amendment dated October 15, 1999 to Mortgage Loan
       Warehousing Agreement by and among the Company, Sanwa
       Bank, as collateral agent and Bank of America, N.A., as
       administrative agent.



10.8   Amendments dated April 22, 1998 to Variable Terms Letter
       of the Master Mortgage Loan Warehousing and Security
       Agreement between Sanwa Bank of California and the
       Company (previously filed with the Securities and
       Exchange Commission on June 25, 1999 as Exhibit 10.5 to
       the Company's Annual Report on Form 10-K for the fiscal
       year ended March 31, 1999 and incorporated herein by
       reference).

10.9   Amendments dated August 26, 1998 to Variable Terms Letter
       of the Master Mortgage Loan Warehousing and Security
       Agreement between Sanwa Bank of California and the
       Company (previously filed with the Securities and
       Exchange Commission on June 25, 1999 as Exhibit 10.6 to
       the Company's Annual Report on Form 10-K for the fiscal
       year ended March 31, 1999 and incorporated herein by
       reference).

10.10  Amendments dated November 5, 1998 to Variable Terms
       Letter of the Master Mortgage Loan Warehousing and
       Security Agreement between Sanwa Bank of California and
       the Company (previously filed with the Securities and
       Exchange Commission on June 25, 1999 as Exhibit 10.7 to
       the Company's Annual Report on Form 10-K for the fiscal
       year ended March 31, 1999 and incorporated herein by
       reference).

10.11  Lease dated January 1, 1992, between the Company and Fin-
       West Group (previously filed with the Securities and
       Exchange Commission on January 21, 1992 as Exhibit 10.7
       to the Company's Registration Statement on Form S-1, File
       No. 33-45187, and incorporated herein by reference).

10.12  Lease extension dated December 15, 1998 to Standard
       Office Lease-Net dated January 1, 1992 between the
       Company and Fin-West Group (previously filed with the
       Securities and Exchange Commission on June 25, 1999 as
       Exhibit 10.9 to the Company's Annual Report on Form 10-K
       for the fiscal year ended March 31, 1999 and incorporated
       herein by reference).

10.13  1992 Stock Incentive Plan (previously filed with the
       Securities and Exchange Commission on March 6, 1992 as
       Exhibit 10.8 to Amendment No. 1 to the Company's
       Registration Statement on Form S-1, File No. 33-45187,
       and incorporated herein by reference).

10.14  1993 Stock Option Plan for Non-Employee Directors
       (previously filed with the Securities and Exchange
       Commission on October 25, 1993 as Exhibit 4.6 to the
       Company's Registration Statement on Form S-8, File No. 33-
       70760, and incorporated herein by reference).

10.15  Extension of 1993 Stock Option Plan for Non-Employee
       Directors adopted by the Board of Directors on July 1,
       1999.

10.16  Profit Sharing Plan for Employees of the Fin-West Group,
       dated April 5, 1990 (previously filed with the Securities
       and Exchange Commission on January 21, 1992 as Exhibit
       10.9 to the Company's Registration Statement on Form S-1,
       File No. 33-45187, and incorporated herein by reference).



10.17  Fin-West Group 401(k) Savings Plan, dated April 5, 1990
       (previously filed with the Securities and Exchange
       Commission on January 21, 1992 as Exhibit 10.10 to the
       Company's Registration Statement on Form S-1, File No. 33-
       45187, and incorporated herein by reference).

10.18  Employee Pre-Tax Premium Plan of Fin-West Group, a
       California corporation, dated January 1, 1990 (previously
       filed with the Securities and Exchange Commission on
       January 21, 1992 as Exhibit 10.12 to the Company's
       Registration Statement on Form S-1, File No. 33-45187,
       and incorporated herein by reference).

10.19  Renewal of Employment Agreement dated April 30, 1998
       between Clement Ziroli and the Company (previously filed
       with the Securities and Exchange Commission on June 29,
       1998 as Exhibit 10.18 to the Company's Annual Report on
       Form 10-K for the fiscal year ended March 31, 1998 and
       incorporated herein by reference).

10.20  Renewal of Employment Agreement dated April 30, 1998
       between Bruce G. Norman and the Company (previously filed
       with the Securities and Exchange Commission on June 29,
       1998 as Exhibit 10.19 to the Company's Annual Report on
       Form 10-K for the fiscal year ended March 31, 1998 and
       incorporated herein by reference).

10.21  Renewal of Employment Agreement dated April 30, 1998
       between Pac W. Dong and the Company (previously filed
       with the Securities and Exchange Commission on June 29,
       1998 as Exhibit 10.20 to the Company's Annual Report on
       Form 10-K for the fiscal year ended March 31, 1998 and
       incorporated herein by reference).

23.1   Consent of Independent Auditors.

27.1   Financial Data Schedule (included only in the electronic
       filing).

   Exhibits filed herewith or incorporated by reference herein
will be furnished to shareholders of the Company upon written
request and payment of a fee of $.20 per page, which fee covers
only the Company's reasonable expense in furnishing such
exhibits.  Written requests should be addressed to Robyn S.
Fredericks, Secretary, First Mortgage Corporation, 3230 Fallow
Field Drive, Diamond Bar, California 91765.





                           SIGNATURES

   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.

                                FIRST MORTGAGE CORPORATION


Dated June 26, 2000             By   /S/Clement Ziroli
                                     Clement Ziroli, Chairman of
                                     the Board of Directors and
                                     Chief Executive Officer

   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 Company and in the capacities indicated on June
26, 2000.


                                By   /S/Clement Ziroli
                                     Clement Ziroli, Chairman of
                                     the Board of Directors and
                                     Chief Executive Officer
                                     (Principal Executive Officer)


                                By   /S/Pac W. Dong
                                     Pac W. Dong, Director, Chief
                                     Financial Officer, Controller
                                     and Executive Vice President
                                     (Principal Financial and
                                     Accounting Officer)


                                By   /S/Bruce G. Norman
                                     Bruce G. Norman, Director,
                                     President and Chief Operating
                                     Officer.


                                By   /S/Harold Harrigian
                                     Harold Harrigian, Director


                                By   /S/Robert E. Weiss
                                     Robert E. Weiss, Director





                 First Mortgage Corporation

                Index to Financial Statements




Report of Independent Auditors                                 F-2

Financial Statements

Balance Sheet as of March 31, 2000 and 1999                    F-3
Statement of Income for the years ended March 31, 2000, 1999
 and 1998                                                      F-4
Statement of Stockholders' Equity for the years ended March
 31, 2000, 1999 and 1998                                       F-5
Statement of Cash Flows for the years ended March 31, 2000,
 1999 and 1998                                                 F-6
Notes to Financial Statements                                  F-7

All other schedules are omitted because they are not
required, are not applicable or because the information is
included in the Company's financial statements or the notes
thereto.












               Report of Independent Auditors

Board of Directors
First Mortgage Corporation

We have audited the accompanying balance sheets of First
Mortgage Corporation as of March 31, 2000 and 1999, and the
related statements of income, stockholders' equity and cash
flows for each of the three years in the period ended March
31, 2000. 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 auditing
standards generally accepted in the United States. 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, the financial statements referred to above
present fairly, in all material respects, the financial
position of First Mortgage Corporation at March 31, 2000 and
1999, and the results of its operations and its cash flows
for each of the three years in the period ended March 31,
2000 in conformity with accounting principles generally
accepted in the United States.



Ernst & Young LLP

Orange County, California
May 30, 2000



                 First Mortgage Corporation

                        Balance Sheet


                                                              March 31
                                                              2000          1999
                                                                      
Assets
Cash                                                          $11,264,000   $14,839,000
Mortgage loans and mortgage-backed securities held for sale    67,336,000    45,463,000
Other receivables and servicing advances, net                   5,558,000     7,378,000
Capitalized servicing rights, net                              11,555,000    12,475,000
Property and equipment, net                                       581,000       761,000
Prepaid expenses and other assets                               1,531,000       765,000
Total assets                                                  $97,825,000   $81,681,000

Liabilities and stockholders' equity
Liabilities:
Notes payable, banks                                          $19,291,000   $35,469,000
Notes payable, other                                           43,787,000             -
Sight drafts payable                                              393,000     9,450,000
Accounts payable and accrued liabilities                          564,000     2,967,000
Deferred income taxes                                           4,979,000     4,065,000
Total liabilities                                              69,014,000    51,951,000

Commitments and contingencies (Note 13)

Stockholders' equity:
 Preferred stock, no par value:
   Authorized shares - 1,000,000
   Issued and outstanding shares - None                                -              -
 Common stock, no par value:
Authorized shares - 10,000,000
   Issued and outstanding shares - 5,253,197 in
    2000 and 5,347,197 in 1999                                 2,559,000      2,924,000
Retained earnings                                             26,252,000     26,806,000
Total stockholders' equity                                    28,811,000     29,730,000
Total liabilities and stockholders' equity                   $97,825,000    $81,681,000


See accompanying notes.

                 First Mortgage Corporation

                     Statement of Income


                                 Year ended March 31
                                  2000          1999        1998
                                                   
Revenues:
 Loan origination income           $2,073,000   $3,857,000  $3,303,000
 Loan servicing income              7,763,000    7,761,000   7,628,000
 Gain on sale of mortgage loans     3,189,000   18,191,000   7,611,000
 Interest income                    4,821,000    3,862,000   2,527,000
 Other income                          13,000        3,000       5,000
Total revenues                     17,859,000   33,674,000  21,074,000

Expenses:
 Compensation and benefits          6,806,000   11,407,000   8,282,000
 General and administrative
  expenses                          4,861,000    8,782,000   6,285,000
 Amortization of capitalized
  servicing rights                  4,661,000    4,061,000   3,174,000
 Interest expense                   2,306,000    1,275,000     701,000
Total expenses                     18,634,000   25,525,000  18,442,000

Income (loss) before income taxes    (775,000)   8,149,000   2,632,000

Income tax expense (benefit)         (221,000)   3,375,000   1,101,000
Net income (loss)                   $(554,000)  $4,774,000  $1,531,000

Basic and diluted
 earnings (loss) per share          $    (.10)  $      .87  $      .26


See accompanying notes.


                 First Mortgage Corporation

              Statement of Stockholders' Equity



                             Common Stock           Retained
                             Shares      Amount      Earnings     Total
                                                       
Balance at March 31, 1997    5,859,117   $5,147,000  $20,501,000   $25,648,000
 Net income                          -            -    1,531,000     1,531,000
 Repurchase of shares          (50,420)    (184,000)           -      (184,000)
Balance at March 31, 1998    5,808,697    4,963,000   22,032,000    26,995,000
 Net income                          -            -    4,774,000     4,774,000
 Repurchase of shares         (461,500)  (2,039,000)           -    (2,039,000)
Balance at March 31, 1999    5,347,197    2,924,000   26,806,000    29,730,000
 Net loss                            -            -     (554,000)     (554,000)
 Repurchase of shares          (94,000)    (365,000)           -      (365,000)
Balance at March 31, 2000    5,253,197   $2,559,000  $26,252,000   $28,811,000


See accompanying notes.




                 First Mortgage Corporation
                   Statement of Cash Flows


                                                             Year ended March 31
                                                             2000           1999           1998
                                                                                  
Operating activities
Net income (loss)                                               $(554,000)    $4,774,000     $1,531,000
Adjustments to reconcile net income to net cash provided
 by (used in) operating activities:
Provision for deferred income taxes                               914,000      1,806,000        426,000
Provision for losses on foreclosure                              (324,000)      (344,000)      (459,000)
Amortization of originated mortgage servicing rights,
 excess service fee and purchased servicing rights              4,712,000      4,157,000      3,310,000
Depreciation of property and equipment                            256,000        269,000        220,000
Originations and purchases of mortgage loans held for sale   (238,726,000)  (866,641,000)  (476,986,000)
Sales and principal repayments of mortgage loans held for
 sale                                                         216,853,000    874,230,000    451,220,000
Change in other receivables and servicing advances              2,144,000      3,532,000       (484,000)
Change in prepaid expenses and other assets                      (766,000)      (404,000)       185,000
Change in accounts payable and accrued liabilities             (2,403,000)     1,575,000        576,000
Loss (gain) on sale of assets                                      19,000         (1,000)             -
Net cash provided by (used in) operating activities           (17,875,000)    22,953,000    (20,461,000)

Investing activities
Originated mortgage servicing rights                           (3,274,000)    (9,119,000)    (3,436,000)
Purchase of mortgage servicing rights                            (518,000)       (23,000)      (655,000)
Note receivable, Fin-West                                               -        130,000              -
Purchase of property and equipment                               (109,000)      (369,000)      (306,000)
Proceeds from sale of assets                                       14,000          4,000         14,000
Change in due from affiiates                                            -              -        134,000
Net cash used in investing activities                          (3,887,000)    (9,377,000)    (4,249,000)

Financing activities
Change in notes payable, banks                                (16,178,000)    (4,958,000)    20,255,000
Change in sight drafts payable                                 (9,057,000)        78,000      8,418,000
Change in note payable, other                                  43,787,000              -     (1,500,000)
Repurchase of common stock                                       (365,000)    (2,039,000)      (184,000)
Net cash provided by (used in) financing activities            18,187,000     (6,919,000)    26,989,000

Increase (decrease) in cash                                    (3,575,000)     6,657,000      2,279,000
Cash at beginning of year                                      14,839,000      8,182,000      5,903,000
Cash at end of year                                           $11,264,000    $14,839,000     $8,182,000

See accompanying notes

                 First Mortgage Corporation
                Notes to Financial Statements
                       March 31, 2000

1. Summary of Significant Accounting Policies

Business and Basis of Presentation

First Mortgage Corporation (the Company) is a mortgage
banking company that originates, purchases, warehouses,
sells and services primarily first deed of trust loans
(mortgage loans) for the purchase or refinance of owner-
occupied one-to-four family residences through a network of
branch offices located in the states of California and
Arizona.

Fin-West Group (Fin-West), an affiliated company, owns 91.5%
of the Company's outstanding common stock.

Mortgage Loans Held for Sale

Mortgage loans held for sale are stated at the lower of cost
or aggregate market value. Market value is determined by
purchase commitments from investors and prevailing market
prices.

The Company's mortgage-backed securities ("MBS") held for
sale in the near term are classified as trading. Trading
securities are recorded at fair value, with the change in
fair value during the period included in earnings. The fair
value of MBS held for sale in the near term is based on
quoted market price.

Originated Mortgage Servicing Rights and Purchased Servicing
Rights

    Originated Mortgage Servicing Rights (OMSR)

   In accordance with Accounting for Transfers and
   Servicing of Financial Assets and Estinguishments of
   Liabilities (FAS 125), the Company recognizes OMSRs as
   an asset separate from the underlying originated
   mortgage loan by allocating the total cost of
   originating a mortgage loan between the loan and the
   servicing right based on their respective fair values.
   Mortgage servicing rights are carried at the lower of
   cost, less accumulated amortization, or fair value.

   FAS 125 requires that a portion of the cost of
   originating a mortgage loan be allocated to the mortgage
   servicing right based on its fair value relative to the
   loan as a whole. To determine the fair value of the
   mortgage rights created during the year, the Company
   used quoted market prices of comparable servicing
   transactions.

                 First Mortgage Corporation
          Notes to Financial Statements (continued)

1. Summary of Significant Accounting Policies (continued)

Originated Mortgage Servicing Rights and Purchased Servicing
Rights (continued)

   Purchased Servicing Rights

   The purchase price paid for contractual rights to
   service mortgage loans (not exceeding the present value
   of estimated future net servicing income) is capitalized
   and amortized in proportion to, and over, the period in
   which estimated servicing revenue is in excess of
   estimated servicing costs.

   The Company evaluates the net realizable value of
   purchased servicing rights based on a disaggregation
   basis based on loan type, loan origination year and loan
   interest rate.

Amortization of originated mortgage servicing rights and
purchased servicing rights is based upon estimates of future
prepayment rates for the underlying mortgage loans which, in
turn, are affected by changes in general economic conditions
and prevailing interest rates for home mortgages. Prepayment
rates tend to increase (causing faster amortization) as
mortgage interest rates decline, and are inversely affected
as mortgage interest rates increase. The Company adjusts its
amortization rates (which consider differences in mortgage
loans including interest rate, loan type and the loan's age
or seasoning) as estimated prepayment rates vary from those
originally anticipated.

Servicing Advances

Servicing advances consist of advances and costs incurred by
the Company in connection with the administration of the
foreclosure process for loans being serviced. The majority
of these amounts will be received from either the insuring
agency or proceeds of the foreclosure sale. The Company
provides a reserve for the estimated portion of the advances
and costs that are not reimbursable by the insuring
agencies.

Loan Origination Fees

Loan origination fees and certain direct loan origination
costs for mortgage loans held for sale are deferred until
the related loans are sold.


                 First Mortgage Corporation
          Notes to Financial Statements (continued)

1. Summary of Significant Accounting Policies (continued)

Loan Origination Fees (continued)

Loan servicing income, which is generally a fee based on a
percentage of the outstanding principal balances of the
mortgage loans serviced by the Company (or by a subservicer
where the Company is the master servicer), is recorded as
income as the installment collections on the mortgages are
received by the Company or the subservicer.

Gain on Sale of Mortgage Loans Held for Sale

Gains or losses on the sale of mortgage loans held for sale
are recognized at the date of sale. Included in gain on sale
is the estimated present value of any servicing fees to be
received by the Company and included in capitalized
servicing rights.

Property and Equipment

Property and equipment is stated at cost, net of accumulated
depreciation and amortization. Depreciation is provided
using the straight-line method, except for automobiles,
which are being depreciated using the double declining
basis, over the estimated useful lives of the assets which
range from three to eight years. Leasehold improvements are
being amortized over the lesser of the estimated useful
lives of the improvements or the lease terms, using the
straight-line method.

Income Taxes

The Company files a separate federal income tax return and
is included in the State of California combined return of
Fin-West.

Statement of Cash Flows

The Company paid interest in 2000, 1999 and 1998 of
$2,249,000, $1,282,000 and $540,000, respectively.

The Company paid income taxes in 2000, 1999 and 1998 of $0,
$1,855,000 and $615,000, respectively.


                 First Mortgage Corporation
          Notes to Financial Statements (continued)

1. Summary of Significant Accounting Policies (continued)

Net Income (Loss) per Share

As of  March 31, 1998, the Company adopted Statement No.
128, Earnings Per Share, and restated all prior period
earnings per share (EPS) data, as required. Statement No.
128 replaced the presentation of primary and fully diluted
EPS pursuant to APB Opinion No. 15, Earnings Per Share, with
the presentation of basic and diluted EPS. Basic EPS
excludes dilution and is computed by dividing net income by
the weighted average number of common shares outstanding for
the period. Diluted net income per share is computed by
dividing net income by the weighted average number of common
shares outstanding for the period and the dilutive effect,
if any, of stock options and warrants outstanding for the
period.

Use of Estimates in the Preparation of Financial Statements

The preparation of the financial statements of the Company
requires management to make estimates and assumptions that
affect reported amounts. These estimates are based on
information available as of the date of the financial
statements. Therefore, actual results could differ from
those estimates.

Current Accounting Pronouncements

In June 1998, the FASB issued SFAS 133, Accounting for
Derivative Instruments and Hedging Activities. This
statement provides guidance for the way public enterprises
report information about derivatives and hedging in annual
financial statements and in interim financial reports. The
derivatives and hedging disclosure is required for financial
statements for fiscal years beginning after June 15, 2000.
The Statement will require the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives
that are not hedges must be adjusted to fair value through
income. If the derivative is a hedge, depending on the
nature of the hedge, changes in fair value of derivatives
will either be offset against the change in fair value of
the hedged assets, liabilities, or firm commitments through
earnings or recognized in earnings. The ineffective portion
of a derivative's change in fair value will be immediately
recognized in earnings. The Company is in the process of
evaluating the effect of Statement 133, if any, on the
earnings and financial position of the Company.


                 First Mortgage Corporation
          Notes to Financial Statements (continued)



2. Mortgage Loans and Mortgage-Backed Securities Held for
Sale

Mortgage loans and mortgage-backed securities held for sale
consist of the following at March 31, 2000 and 1999:


                                                    2000        1999
                                                          
Principal balance outstanding                       $69,406,000    $46,575,000
Loan origination discounts and market reserves       (2,037,000)    (1,072,000)
Deferred loan fees                                      (33,000)       (40,000)
                                                    $67,336,000    $45,463,000

All mortgage loans held for sale are collateralized by first
trust deeds on underlying real properties located primarily
in California and may be used as collateral for the
Company's borrowings.

At March 31, 2000, the Company had short-term commitments
amounting to approximately $4,759,000 to fund mortgage loans
subject to credit approval. The Company generally does not
engage in forward delivery contracts to hedge its portfolio.

At March 31, 2000, the Company held MBS with a cost of
approximately $57,856,000 which are used as collateral
against the Company's reverse repurchase agreements. The MBS
are mortgage loans held for sale which have been pooled to
form GNMA securities. The MBS carry an interest rate of 7%
and mature in 2029. In order to record MBS at fair value, a
reserve of $1,609,000 was recorded as of March 31, 2000.

3. Mortgage Servicing Assets

Capitalized mortgage servicing assets consist of originated
mortgage servicing rights and purchased servicing rights.
Activities are summarized as follows:
                                                Capitalized
                                                 Servicing
                                                  Rights

Balance at March 31, 1999                        $12,475,000
 Additions                                         3,792,000
 Amortization and write-offs                      (4,712,000)
Balance at March 31, 2000                        $11,555,000

                 First Mortgage Corporation
          Notes to Financial Statements (continued)


3. Mortgage Servicing Assets (continued)

To determine servicing value impairment at the end of the
year, the post-implementation originated servicing portfolio
was disaggregated into its predominant risk characteristics,
namely loan type, interest rate and investor type. These
segments of the portfolio were then valued, using quoted
market prices of comparable servicing rights. The calculated
value was then compared with the book value of each segment
to determine if a reserve for impairment was required.

4. Other Receivables and Servicing Advances

Other receivables and servicing advances consists of the
following at March 31, 2000 and 1999:

                                                   2000            1999

Foreclosures and advances on real estate owned     $3,322,000      $5,283,000
Servicing advances                                  2,143,000       2,485,000
Other                                                 529,000         280,000
Allowance for possible losses                        (436,000)       (670,000)
                                                   $5,558,000      $7,378,000

5. Property and Equipment

Property and equipment consists of the following at March
31, 2000 and 1999:


                                                  2000        1999
                                                        
Furniture and equipment                           $2,582,000  $2,511,000
Automobiles                                          115,000     137,000
Leasehold improvements                               400,000     403,000
                                                   3,097,000   3,051,000
Less accumulated depreciation and amortization    (2,516,000) (2,290,000)
                                                   $ 581,000   $ 761,000


                 First Mortgage Corporation
          Notes to Financial Statements (continued)


6. Income Taxes

Income tax expense (benefit) for the years ended March 31,
2000, 1999 and 1998 consists of the following:


                             2000       1999         1998
                                            
Current:
Federal                    $(1,136,000)  $1,270,000   $ 583,000
State                            1,000      299,000      92,000
                            (1,135,000)   1,569,000     675,000
Deferred:
Federal                        860,000    1,206,000     224,000
State                           54,000      600,000     202,000
                               914,000    1,806,000     426,000
                             $(221,000)  $3,375,000  $1,101,000

Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Significant components
of the Company's deferred tax assets and liabilities as of
March 31, 2000 and 1999 are as follows:


                                         2000       1999
                                             
Deferred tax assets:
 State income taxes                     $ 463,000    $ 547,000
 Accrued liabilities                       46,000      216,000
 Deferred loan fees                        15,000       18,000
 Provision for foreclosure                 86,000      168,000
 Purchased servicing rights               396,000      379,000
 Mark-to-market adjustments               152,000      356,000
 Net operating loss carryforward          137,000            -
Total deferred tax assets               1,295,000    1,684,000

Deferred tax liabilities:
 Originated mortgage servicing rights  (5,999,000)  (5,517,000)
 Capitalized servicing fees                (5,000)      (4,000)
 Accelerated depreciation                (122,000)     (98,000)
 Other                                   (148,000)    (130,000)
Total deferred tax liabilities         (6,274,000)  (5,749,000)
Net deferred tax liabilities          $(4,979,000) $(4,065,000)


                 First Mortgage Corporation
          Notes to Financial Statements (continued)


6. Income Taxes (continued)

Income tax expense (benefit) computed at the statutory
federal income tax rate (34%) and income tax expense
provided in the financial statements differ as follows for
the years ended March 31, 2000, 1999 and 1998:


                                                     2000         1999         1998
                                                                      
Tax computed at the statutory rate                   $(263,000)   $2,771,000     $899,000
State income tax, net of fedeeral income tax benefit    36,000       594,000      194,000
Other                                                    6,000        10,000        8,000
Income tax expense (benefit)                         $(221,000)   $3,375,000   $1,101,000

7. Notes Payable, Banks

At March 31, 2000, the Company had two line of credit
agreements with banks which provide for borrowings up to
$50,000,000 and $35,000,000 with interest payable monthly at
1.25% per annum or the prime rate of 7.75% at March 31,
2000, depending on the level of borrowings and the
compensating balances maintained. Fiduciary funds are used
by the Company to satisfy compensating balance requirements.
At March 31, 2000, borrowings under these lines of
$17,602,000 are collateralized by mortgage loans held for
sale. The weighted average interest rate for the fiscal year
ended March 31, 2000 was 1.35%.

The lines of credit are subject to renewal on August 31,
2000. Management believes the line of credit agreements will
be renewed prior to their expiration. Under the credit
agreements, the Company must comply with certain financial
and other covenants, including the maintenance of a minimum
net worth, other financial ratios, and a minimum servicing
portfolio size. Further, absent the consent of the lenders,
such covenants prohibit the Company from declaring or paying
any dividends on any shares of the Company's common stock.
At March 31, 2000, the Company was in compliance with the
aforementioned loan covenants.

One of the warehousing lines of credit allows the bank to
act as an agent on behalf of the Company and invest in short
term, highly liquid investment grade securities to the
extent that the warehouse line is not utilized to fund
mortgage loans. All investment securities are considered to
be available for sale and carried at fair value. As of March
31, 2000 there were no investment securities purchased under
this line.

                 First Mortgage Corporation
          Notes to Financial Statements (continued)

8. Notes Payable, Other

Under a presale funding facility with a nonaffiliated
investment banking firm, the Company borrowed $43,787,000 in
reverse repurchase agreements collateralized by $46,856,000
of MBS. The borrowings bear interest at 6.1% per annum. All
MBS underlying reverse repurchase agreements are held in
safekeeping by broker-dealers or banks.

9. Related Party Transactions

The Company leases certain premises from Fin-West, at a
monthly rental of $22,000. Total rent expense for these
premises amounted to $264,000 for each of the years ended
March 31, 2000 and 1999, and $240,000 for the year ended
March 31, 1998.

The Company paid title insurance fees to an affiliated
entity of $103,000, $582,000 and $308,000 for the years
ended March 31, 2000, 1999 and 1998, respectively.

10. Loan Servicing

The Company's loan servicing portfolio at March 31, 2000 and
1999 consisted of the following:


                                  2000            1999
                                            
GNMA mortgage-backed securities   $  846,755,000  $  873,235,000
FHLMC                                178,424,000     249,624,000
FNMA                                 133,650,000     165,403,000
Other                                343,263,000     319,470,000
                                  $1,502,092,000  $1,607,732,000

At March 31, 2000 and 1999, the Company subserviced
approximately $4,476,000 and $80,581,000, respectively, of
mortgage loans for a nonaffiliated company, which is
included above.

Related fiduciary funds held by the Company in noninterest-
bearing accounts totaled approximately $17,651,000 and
$27,467,000 at March 31, 2000 and 1999, respectively. These
funds are not included in the accompanying balance sheets.
The Company is required to pay interest equal to 2% per
annum of the average daily balance of certain fiduciary
funds to mortgagors.

The Company had insurance coverage for errors and omissions
and employee fidelity in the amount of $2,300,000 at March
31, 2000 and 1999.

                 First Mortgage Corporation
          Notes to Financial Statements (continued)

11. Financial Instruments

The Company is a party to financial instruments with off
balance sheet risk in the normal course of business through
the origination and sale of mortgage loans. These financial
instruments include mandatory and optional forward
commitments which involve, to varying degrees, elements of
credit and interest rate risk. At any time the risk to the
Company in the event of default by the purchaser, is the
difference between the contract price and current market
value, which amount is a percentage of the outstanding
commitments. Historically the Company has not incurred
losses due to the failure or lack of performance of the
counter parties to these commitments.

Realized gains and losses on mandatory and optional delivery
forward commitments are recognized in the period settlement
occurs. Unrealized gains and losses on mandatory forward
commitments are included in the lower of cost or market
valuation adjustment to mortgage loans held for sale.
Additionally, unrealized gains and losses on optional
delivery forward commitments to which mortgages have been
allocated are included in the lower of cost or market
valuation adjustment to mortgage loans held for sale.

Statement of Financial Accounting Standards No, 107,
Disclosure About Fair Value of Financial Instruments (FAS
107), requires disclosure of fair value information about
all financial instruments held or owned by a company except
for certain excluded instruments and instruments for which
it is not practicable to estimate fair value. At March 31,
2000, the estimated fair value of mortgage loans held for
sale, mortgage backed securities, mortgage servicing rights
and notes payable approximated the net carrying value of
such accounts.

12. Profit Sharing Plan

The Company is a participant in a profit-sharing plan
maintained by Fin-West, covering all full-time employees who
have completed at least one year of service. Annual
contributions by the Company to the plan are discretionary
and were $0, $150,000 and $50,000 for the years ended March
31, 2000, 1999 and 1998, respectively.


                 First Mortgage Corporation
          Notes to Financial Statements (continued)

13. Commitments and Contingencies

Leases

Minimum annual rental payments under operating leases for
office space are as follows:

2001                                   $504,000
2002                                    421,000
2003                                    374,000
2004                                    225,000
2005                                    -
                                     $1,524,000

Net rental payments to nonaffiliated entities of
approximately $274,000, $268,000 and $242,000 have been
charged to occupancy expense in the accompanying statements
of operations for the years ended March 31, 2000, 1999 and
1998, respectively.

Litigation

The Company is currently a defendant in certain litigation
arising in the ordinary course of business. It is
management's opinion that the outcome of these actions will
not have a material effect on the Company's financial
position, results of operations or cash flows.

14. Stockholders' Equity

Under the Company's 1992 Stock Incentive Plan, the
compensation committee of the Board of Directors is
authorized to grant awards to any officer or employee of the
Company. Awards granted can take the form of incentive stock
options, nonqualified stock options or restricted stock or
any combination thereof. A maximum of 625,000 shares of
common stock may be issued under the Plan. Incentive stock
options are granted at a price not less than 100% of the
fair market value at date of grant, except for employees who
own shares possessing greater than 10% of total combined
voting power whose grant price shall not be less than 110%
of the fair market value at date of grant. The compensation
committee also determines the exercise price of nonqualified
stock options and the purchase price of restricted stock,
provided that the purchase price of restricted stock may not
be less than 25% of its fair market value at the date of
grant. Incentive stock options and nonqualified stock
options become exercisable not less than six months after
the date of grant, as determined by the compensation
committee. Options


                 First Mortgage Corporation
          Notes to Financial Statements (continued)

14. Stockholders' Equity (continued)

remain exercisable until their specified expiration date,
but the expiration date cannot be more than ten years after
the date of grant for incentive stock options.

The Company also has a 1993 Stock Option Plan for Non-
Employee Directors (the Plan) which provides for an
aggregate of 100,000 shares of the Company's common stock to
be available for eligible directors. All options granted
under the Plan are to be nonqualified options with an
exercise price equal to 100% of fair market value of the
common stock on the date the option is granted. Each option
granted under the Plan may be exercised in full on the 185th
day after the date of grant and terminates five years from
the date of grant. Under the Plan, an option to purchase
5,750 shares of the Company's common stock has been granted
to each nonemployee director in office on the last business
day of each July beginning in 1993.

The following summarizes stock option activity under both of
the Company's stock plans for the year ended March 31, 2000:


                                                                          Weighted Average
                                                          Options         Exercise Price   Options
                                                          March 31, 2000  March 31, 2000   March 31, 1999
                                                                                  
Options outstanding at beginning of fiscal year           422,150         $4.54            436,625
  Option granted                                           97,675         $4.23             97,550
  Options exercised                                             -                                -
  Options expired                                        (156,075)        $4.78           (112,025)

Options outstanding at end of fiscal year                 363,750         $4.32            422,150

Exercise price:
Per share for options exercised during the fiscal year        n/a                              n/a



                 First Mortgage Corporation
          Notes to Financial Statements (continued)


14. Stockholders' Equity (continued)


                                     Options     Options
                                   March 31,   March 31,
                                     2000        1999                  March 31, 2000    March 31, 1999
                                                                                   
Per share for options outstanding at end of fiscal year                $4.13-$4.63       $3.50-$5.00
Weighted average fair value of options granted                         $1.43             $1.51
Weighted average contractual life of option outstanding (in years)      2.54             2.2

All outstanding options as of March 31, 2000 were
exercisable. Options available for future grants under the
plans were 361,250 and 302,850 as of March 31, 2000 and
1999, respectively.

The Company currently follows Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees
(APB 25) and related interpretations in accounting for its
stock options. Under APB 25, because the exercise price of
the Company's employee stock options are equal to the
underlying stock on the date of grant, no compensation
expense is recognized. The Company intends to follow the
provisions of APB 25 for future years.

Pro forma information regarding net income and earnings per
share is required by FASB Statement No. 123, Accounting for
Stock-Based Compensation (FAS 123), and has been determined
as if the Company had accounted for its employee stock
options under the fair value method of that Statement. The
fair value of options at date of grant was estimated using
the Black-Scholes model with the following weighted average
assumptions:


                                        2000      1999
                                            
Expected life (years)                   4.33      4.50
Interest rate                           7.00%     6.00%
Volatility                              0.31      0.31
Dividend yield                          0.00%     0.00%




                 First Mortgage Corporation
          Notes to Financial Statements (continued)

14. Stockholders' Equity (continued)

The Black-Scholes option valuation model was developed for
use in estimating the fair value of traded options which
have no vesting restrictions and are fully transferable. In
addition, option valuation models require the input of
highly subjective assumptions including the expected stock
price volatility. Because the Company's employee stock
options have characteristics significantly different from
those of traded options, and because changes in the
subjective input assumptions can materially affect the fair
value estimate, in management's opinion, the existing models
do not necessarily provide a reliable single measure of the
fair value of its employee stock options.

The estimated stock-based compensation cost calculated using
the assumptions indicated totaled $65,000 and $83,000 in
2000 and 1999, respectively. The pro forma result from the
increased compensation cost was net loss of $619,000 ($0.12
per share) and net income of $4,691,000 ($0.85 per share) in
2000 and 1999, respectively. The effect of stock-based
compensation on net income for 2000 and 1999 may not be
representative of the effect on pro forma net income in
future years because compensation expense related to grants
made prior to 1998 is not considered.

15. Earnings (Loss) Per Share

The following table sets forth the computation of basic and
diluted earnings (loss) per share:


                                                                                Year ended March 31
                                                                                 2000         1999       1998
                                                                                                
Numerator:
Net income (loss)                                                                 $(554,000)  $4,774,000 $1,531,000

Denominator:
 Shares used in computing basic earnings (loss) per share                         5,288,431    5,506,690  5,847,906
 Effect of stock options treated as equivalents under the treasury stock method          -        11,498      1,683
Denominator for diluted earnings (loss) per share                                 5,288,431    5,518,188  5,849,589
Basic and diluted earnings (loss) per share                                           $(.10)        $.87       $.26




                   First Mortgage Corporation
            Notes to Financial Statements (continued)
                 Consent of Independent Auditors



We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-70760) pertaining to the First
Mortgage Corporation 1992 Stock Incentive Plan and 1993 Stock
Option Plan for Non-Employee Directors and in the related
Prospectus of our report dated May 30, 2000, with respect to the
financial statements of First Mortgage Corporation included in
its Annual Report (Form 10-K) for the year ended March 31, 2000.



Ernst & Young LLP

Orange County, California
June 26, 2000








                   FIRST MORTGAGE CORPORATION

                          EXHIBIT INDEX


                                                                     Sequential
Exhibit                                                              Page
Number                  Description of Exhibit                       Number

3.1    Restated and Amended Articles of Incorporation of the Company
       (previously filed with the Securities and Exchange
       Commission on March 6, 1992 as Exhibit 3.1 to Amendment
       No. 1 to the Company's Registration Statement on Form S-1,
       File No. 33-45187, and incorporated herein by
       reference).

3.2    Restated Bylaws of the Company (previously filed with the
       Securities and Exchange Commission on January 21, 1992 as
       Exhibit 3.2 to the Company's Registration Statement on
       Form S-1, File No. 33-45187, and incorporated herein by
       reference).

10.1   Credit and Security Agreement dated September 1, 1995,
       between Bank of America National Trust and Savings
       Association and the Company (previously filed with the
       Securities and Exchange Commission on June 27, 1996 as
       Exhibit 10.1 to the Company's Annual Report on Form 10-K
       for the fiscal year ended March 31, 1996 and incorporated
       herein by reference).

10.2   Amended and Restated Mortgage Loan Warehousing Agreement
       dated September 1, 1995, among Bank of America National
       Trust and Savings Association and Bank of America
       National Trust and Savings Association as agent for
       various other lenders and the Company (previously filed
       with the Securities and Exchange Commission on June 27,
       1996 as Exhibit 10.2 to the Company's Annual Report on
       Form 10-K for the fiscal year ended March 31, 1996 and
       incorporated herein by reference).

10.3   Eighth Amendment dated April 30, 1998 to Amended and
       Restated Mortgage Loan Warehousing Agreement among Bank
       of America National Trust and Savings Association, Bank
       of America National Trust and Savings Association as
       agent for various other lenders and the Company
       (previously filed with the Securities and Exchange
       Commission on June 25, 1999 as Exhibit 10.3 to the
       Company's Annual Report on Form 10-K for the fiscal year
       ended March 31, 1999 and incorporated herein by
       reference).

10.4   Ninth Amendment dated August 17, 1998 to Amended and
       Restated Mortgage Loan Warehousing Agreement among Bank
       of America National Trust and Savings Association, Bank
       of America National Trust and Savings Association as
       agent for various other lenders and the Company
       (previously filed with the Securities and Exchange
       Commission on June 25, 1999 as Exhibit 10.4 to the
       Company's Annual Report on Form 10-K for the fiscal year
       ended March 31, 1999 and incorporated herein by
       reference).



10.5   Mortgage Loan Warehousing Agreement dated July 22, 1999
       by and among the Company, other lenders from time to time
       party hereto and Nations Bank, as administrative agent.

10.6   First Amendment dated August 30, 1999 to Mortgage Loan
       Warehousing Agreement by and among the Company, Sanwa
       Bank, as collateral agent and Bank of America, N.A.
       (formerly Nations Bank, N.A.), as administrative agent.

10.7   Second Amendment dated October 15, 1999 to Mortgage Loan
       Warehousing Agreement by and among the Company, Sanwa
       Bank, as collateral agent and Bank of America, N.A., as
       administrative agent.

10.8   Amendments dated April 22, 1998 to Variable Terms Letter
       of the Master Mortgage Loan Warehousing and Security
       Agreement between Sanwa Bank of California and the
       Company (previously filed with the Securities and
       Exchange Commission on June 25, 1999 as Exhibit 10.5 to
       the Company's Annual Report on Form 10-K for the fiscal
       year ended March 31, 1999 and incorporated herein by
       reference).

10.9   Amendments dated August 26, 1998 to Variable Terms Letter
       of the Master Mortgage Loan Warehousing and Security
       Agreement between Sanwa Bank of California and the
       Company (previously filed with the Securities and
       Exchange Commission on June 25, 1999 as Exhibit 10.6 to
       the Company's Annual Report on Form 10-K for the fiscal
       year ended March 31, 1999 and incorporated herein by
       reference).

10.10  Amendments dated November 5, 1998 to Variable Terms
       Letter of the Master Mortgage Loan Warehousing and
       Security Agreement between Sanwa Bank of California and
       the Company (previously filed with the Securities and
       Exchange Commission on June 25, 1999 as Exhibit 10.7 to
       the Company's Annual Report on Form 10-K for the fiscal
       year ended March 31, 1999 and incorporated herein by
       reference).

10.11  Lease dated January 1, 1992, between the Company and Fin-
       West Group (previously filed with the Securities and
       Exchange Commission on January 21, 1992 as Exhibit 10.7
       to the Company's Registration Statement on Form S-1, File
       No. 33-45187, and incorporated herein by reference).

10.12  Lease extension dated December 15, 1998 to Standard
       Office Lease-Net dated January 1, 1992 between the
       Company and Fin-West Group (previously filed with the
       Securities and Exchange Commission on June 25, 1999 as
       Exhibit 10.9 to the Company's Annual Report on Form 10-K
       for the fiscal year ended March 31, 1999 and incorporated
       herein by reference).

10.13  1992 Stock Incentive Plan (previously filed with the
       Securities and Exchange Commission on March 6, 1992 as
       Exhibit 10.8 to Amendment No. 1 to the Company's
       Registration Statement on Form S-1, File No. 33-45187,
       and incorporated herein by reference).


10.14  1993 Stock Option Plan for Non-Employee Directors
       (previously filed with the Securities and Exchange
       Commission on October 25, 1993 as Exhibit 4.6 to the
       Company's Registration Statement on Form S-8, File No. 33-
       70760, and incorporated herein by reference).

10.15  Extension of 1993 Stock Option Plan for Non-Employee
       Directors adopted by the Board of Directors on July 1,
       1999.

10.16  Profit Sharing Plan for Employees of the Fin-West Group,
       dated April 5, 1990 (previously filed with the Securities
       and Exchange Commission on January 21, 1992 as Exhibit
       10.9 to the Company's Registration Statement on Form S-1,
       File No. 33-45187, and incorporated herein by reference).

10.17  Fin-West Group 401(k) Savings Plan, dated April 5, 1990
       (previously filed with the Securities and Exchange
       Commission on January 21, 1992 as Exhibit 10.10 to the
       Company's Registration Statement on Form S-1, File No. 33-
       45187, and incorporated herein by reference).

10.18  Employee Pre-Tax Premium Plan of Fin-West Group, a
       California corporation, dated January 1, 1990 (previously
       filed with the Securities and Exchange Commission on
       January 21, 1992 as Exhibit 10.12 to the Company's
       Registration Statement on Form S-1, File No. 33-45187,
       and incorporated herein by reference).

10.19  Renewal of Employment Agreement dated April 30, 1998
       between Clement Ziroli and the Company (previously filed
       with the Securities and Exchange Commission on June 29,
       1998 as Exhibit 10.18 to the Company's Annual Report on
       Form 10-K for the fiscal year ended March 31, 1998 and
       incorporated herein by reference).

10.20  Renewal of Employment Agreement dated April 30, 1998
       between Bruce G. Norman and the Company (previously filed
       with the Securities and Exchange Commission on June 29,
       1998 as Exhibit 10.19 to the Company's Annual Report on
       Form 10-K for the fiscal year ended March 31, 1998 and
       incorporated herein by reference).

10.21  Renewal of Employment Agreement dated April 30, 1998
       between Pac W. Dong and the Company (previously filed
       with the Securities and Exchange Commission on June 29,
       1998 as Exhibit 10.20 to the Company's Annual Report on
       Form 10-K for the fiscal year ended March 31, 1998 and
       incorporated herein by reference).

23.1   Consent of Independent Auditors.

27.1   Financial Data Schedule (included only in the electronic
       filing).

EX-5

Exhibit 10-5

               MORTGAGE LOAN WAREHOUSING AGREEMENT

THIS MORTGAGE LOAN WAREHOUSING AGREEMENT (the "Agreement") is
made and dated as of the 22nd day of July, 1999, by and among
FIRST MORTGAGE CORPORATION, a California corporation (the
"Company"); the lenders from time to time party hereto, together
with their respective successors and assigns (each a "Lender
and, collectively, the "Lenders"); and NATIONSBANK, N.A., a
national banking association, as administrative agent (in such
capacity, the "Administrative Agent").

                            RECITALS

A.    The Company has requested the Lenders to extend credit to
the Company in the form of a revolving mortgage warehousing line
of credit and that the Administrative Agent agree to act as
administrative agent for the benefit of the Lenders with respect
thereto.

B.    The Company, the Administrative Agent and the Lenders
desire to enter into this Agreement to evidence the willingness
of the Lenders to provide such credit facility and of the
Administrative Agent to act on their behalf with respect thereto
and to set forth the rights and obligations of the parties with
respect to such credit facility on the terms and subject to the
conditions set forth herein and in the other Loan Documents (as
that term and capitalized terms not otherwise defined herein are
used with the meanings given such terms in the Glossary attached
hereto as Appendix I and by this reference incorporated herein).

NOW, THEREFORE, in consideration of the above Recitals and for
other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto hereby
agree as follows:

                            AGREEMENT

1.   Tranche A Credit Facility (Standard Loans).

1(a) Tranche A Lending Limit. On the terms and subject to the
conditions set forth herein, the Lenders severally agree that
they shall from time to time to but not including the Maturity
Date make loans (the "Standard Loans" or a "Standard Loan"), pro
rata in accordance with their respective Percentage Shares, to
the Company in amounts not to exceed, in the aggregate at any
one time outstanding, the lesser of.'

(1)    The Aggregate Credit Limit minus the aggregate dollar
amount of Gestation Loans and Swing Line Loans outstanding on
such date (including all Gestation Loans and Swing Line Loans to
be funded on the proposed date of funding of the requested
Standard Loans but excluding Loans which will be repaid with
proceeds of Loans to be funded on such date); and



(2)    The Collateral Value of the Warehouse Borrowing Base
minus the aggregate dollar amount of all Swing Line Loans
outstanding on such date (including all Swing Line Loans to be
funded on the proposed date of funding of the requested Standard
Loans but excluding Loans which will be repaid with the proceeds
of the Loans to be funded on such date).

1(b) Calculation and Payment of Interest. Standard Loans shall
bear interest from the date disbursed to but not including the
date of payment calculated on the principal amount of Standard
Loans outstanding from time to time hereunder at a per annum
rate equal to, at the option of and as selected by the Company
from time to time (subject to the provisions of Paragraphs 4(c),
4(d) and 4(e) below), (i) the Applicable Eurodollar Rate for the applicable
Interest Period, (ii) the daily average Applicable Effective Fed
Funds Rate during the applicable interest computation period, or
(iii) the Reference Rate during the applicable interest
computation period, said interest to be payable as provided more
particularly in Paragraph 4(b) below.

1 (c) Payment of Principal. Subject to the prepayment
requirements of Paragraph 5(f) below and the conversion and
continuation provisions of Paragraph 4(c) below, the Company
shall pay the principal amount of each Standard Loan being
maintained as a Eurodollar Loan on the last day of the
applicable Interest Period and shall pay the principal amount of
each Standard Loan being maintained as an Effective Fed Funds
Rate Loan or a Reference Rate Loan on the Maturity Date.

2.   Tranche B Credit Facility (Gestation Loans).

2(a) Tranche B Lending Limit. On the terms and subject to the
conditions set forth herein, the Lenders severally agree that
they shall from time to time to but not including the Maturity
Date make loans (the "Gestation Loans" or a "Gestation Loan"),
pro rata in accordance with their respective Percentage Shares,
to the Company in amounts not to exceed, in the aggregate at any
one time outstanding, the least off

(1)    The Aggregate Credit Limit minus the aggregate dollar
amount of Standard Loans and Swing Line Loans outstanding on
such date (including all Standard Loans and Swing Line Loans to
be funded on the proposed date of funding of the requested
Standard Loans but excluding Loans which will be repaid with
proceeds of Loans to be funded on such date);

(2)  The Collateral Value of the Gestation Loans Borrowing Base;
and

(3)  The Gestation Credit Sublimit.

2(b) Calculation and Payment of Interest. Gestation Loans shall
bear interest from the date disbursed to but not including the
date of payment calculated on the principal amount of Gestation
Loans outstanding from time to time hereunder at a per annum
rate equal to, at the option of and as selected by the Company
from time to time (subject to the provisions of Paragraphs 4(c),
4(d) and 4(e) below), the Applicable Eurodollar Rate for the
applicable Interest

Period or the daily average Applicable Effective Fed Funds Rate
during the applicable interest computation period, said interest
to be payable as provided more particularly in Paragraph 4(b)
below.

2(c) Payment of Principal. Subject to the prepayment
requirements of Paragraph 5(f) below and the conversion and
continuation provisions of Paragraph 4(c) below, the Company
shall pay the principal amount of each Gestation Loan being
maintained as a Eurodollar Loan on the last day of the
applicable Interest Period and shall pay the principal amount of
each Gestation Loan being maintained as an Effective Fed Funds
Rate Loan on or before the Maturity Date.

3.   Tranche C Credit Facility (Swing Loans).

3(a)  Tranche C Lending Limit. On the terms and subject  to  the
conditions  set forth herein, the Swing Line Lender agrees  that
it  shall  from time to time to but not including  the  Maturity
Date  make loans (the "Swing Line Loans" or a "Swing Line Loan")
to the Company in amounts not to exceed, in the aggregate at any
one time outstanding, the least of.'

(1)  The Tranche C Credit Limit; and


(2)    The Aggregate Credit Limit minus the aggregate dollar
amount of Standard Loans and Gestation Loans outstanding on such
date (including all Standard Loans and Gestation Loans to be
funded on the proposed date of funding of the requested Swing
Line Loans but excluding Loans which will be repaid with
proceeds of Loans to be funded on such date); and

(3)    The Collateral Value of the Warehouse Borrowing Base
minus the aggregate dollar amount of all Standard Loans
outstanding on such date (including all Standard Loans to be
funded on the proposed date of funding of the requested Swing
Line Loans but excluding Loans which will be repaid with
proceeds of Loans to be funded on such date).

3(b) Funding of Swing Line Loans. Upon receipt by the
Administrative Agent or a Loan and/or Interest Rate Election
Request for a Swing Line Loan, it shall so notify the Swing Line
Lender thereof as provided in Paragraph 5(b) below, and the
Swing Line Lender shall advance the amount of the Swing Line
Loan or Loans requested for the purpose of funding the Company's
operations on a daily basis without requiring daily fundings
from the applicable Lenders.

3(c) Refunding of Swing Line Loans by Lenders. Swing Line Loans
shall be refunded by the Lenders to the Swing Line Lender upon
demand of the Swing Line Lender in its sole discretion through
the Administrative Agent, which demand will be made no less
frequently than weekly (and, in any event, on each Wednesday or,
if any Wednesday is not a Business Day, the immediately
preceding Business Day). All Swing Line Loans shall be
automatically designated as Standard Loans on and as of such
refunding date. Such refundings shall be made by the Lenders
(including the Swing Line Lender) in accordance with their
respective Percentage

Shares and shall, thereafter, be reflected as Standard Loans of
the Lenders on the books and records of the Administrative Agent
and the Lenders. Subject to Paragraph 3(f) below, the
Administrative Agent shall, upon the occurrence of an Event of
Default and acceleration of the Obligations, request a refunding
hereunder of all Swing Line Loans outstanding as of such date.

3(d) Calculation and Payment of Interest. Swing Line Loans shall
bear  interest from the date disbursed to but not including  the
refunding  date  or  the  date  of  payment  calculated  on  the
principal  amount of Swing Line Loans outstanding from  time  to
time hereunder during the applicable interest calculation period
at  the daily average Applicable Effective Fed Funds Rate,  said
interest  to  be  payable  as  provided  more  particularly   in
Paragraph 4(b) below.

3(e) Payment of Principal. Subject to the prepayment
requirements of Paragraph 5(f) below and earlier refunding
pursuant to Paragraph 3(c) above, the Company shall pay the
principal amount of each Swing Line Loan on the Maturity Date.

3(f) Absolute Obligation to Refund. It is expressly acknowledged
and agreed by the Lenders and the Company that the obligation of
the Lenders to refund Swing Line Loans shall be absolute and
unconditional and shall be effected by the Lenders upon
telephonic request of the Administrative Agent regardless of
whether at the proposed refunding date there shall exist an
Event of Default or Potential Default hereunder; provided,
however, that the obligation of the Lenders to refund Swing Line
Loans made by the Swing Line Lender on any date on which the
Swing Line Lender's personnel responsible for administering the
credit facility hereunder had actual knowledge of the existence
of an Event of Default, shall be limited to those Swing Line
Loans made on such date with the consent (which may be
telephonic) of those Lenders with the authority to waive such
Event of Default. In the event for any reason the Lenders shall
be prohibited from refunding their respective ratable portion of
Swing Line Loans as Standard Loans as provided herein, then
instead of refunding Swing Line Loans as Standard
Loans, upon request of the Swing Line Lender and subject to the
proviso of the immediately preceding sentence, each Lender
(other than the Swing Line Lender) shall purchase and take from
the Swing Line Lender an individual participation interest in
all Swing Line Loans outstanding hereunder in the amount of such
Lender's Percentage Share thereof.

4.    Interest Rate and Yield-Related Provisions.

4(a) Initial Rate. All Loans shall initially be funded as
Effective Fed Funds Rate Loans and, thereafter, shall be
maintained, at the election of the Company made from time to
time as permitted herein, as Effective Fed Funds Rate Loans,
Reference Rate Loans and/or Eurodollar Loans.

4(b) Payment of Interest and Fees. Interest accruing on
Effective Fed Funds Rate Loans and Reference Rate Loans shall be
payable monthly, in arrears, as provided hereinbelow; interest
accruing on Eurodollar Loans shall be payable at the end of the
applicable Interest Period. The Administrative Agent shall (1)
in the case of Effective Fed Funds Rate Loans and Reference Rate
Loans, on or before the fifth Business Day of each month, and
(2) in the case of Eurodollar Loans, on the last day of the
applicable Interest Period, deliver to the Company an interest
and fee billing for the immediately preceding month or Interest
Period, as

the case may be, which billing shall set forth interest accrued
and payable on Loans and fees payable hereunder for such period
to be collected by the Administrative Agent for remittance to
the Lenders and which billing shall be payable, in the case of a
billing delivered pursuant to subparagraph (I) above, no later
than the second Business Day following receipt thereof by the
Company and, in the case of a billing delivered pursuant to
subparagraph (2) above, on the last day of the applicable
Interest Period.

4(c) Conversion and Continuation.

(1)    The Company may elect from time to time to convert
Standard Loans and Gestation Loans outstanding as Effective Fed
Funds Rate Loans or Reference Rate Loans to Eurodollar Loans by
giving the Administrative Agent prior irrevocable notice of such
election no later than 9:00 a.m. (Los Angeles time) on the third
Eurodollar Business Day preceding the proposed conversion date
(which notice shall be provided by the Administrative Agent to
the Lenders no later than 9:30 a.m. (Los Angeles time) on such
date).

(2)    The Company may elect from time to time to convert
Standard Loans and Gestation Loans outstanding as Effective Fed
Funds Rate Loans to Reference Rate Loans by giving the
Administrative Agent irrevocable notice of such election no
later than 9:00 a.m. (Los Angeles time) on the proposed
conversion date (which notice shall be provided by the
Administrative Agent to the Lenders no later than 9:30 a.m. (Los
Angeles time) on such date).

(3)    The Company may elect to convert Standard Loans and
Gestation Loans outstanding as Reference Rate Loans to Effective
Fed Funds Rate Loans by giving the Administrative Agent
irrevocable notice of such election no later than 9:00 a.m. (Los
Angeles time) on the proposed conversion date (which notice
shall be provided by the Administrative Agent to the Lenders no
later than 9:30 a.m. (Los Angeles time) on such date).

(4)    The Company may elect to convert Standard Loans and
Gestation Loans outstanding as Eurodollar Loans to Effective Fed
Funds Rate Loans or Reference Rate Loans effective upon the last
day of the applicable Eurodollar Interest Period by giving the
Administrative Agent irrevocable notice of such election no
later than 9:00 a.m. (Los Angeles time) on the conversion
funding date (which notice shall be provided by the
Administrative Agent to the Lenders no later than 9:30 a.m.
(Los Angeles time) on such date).

(5)    Any Eurodollar Loan may be continued as such upon the
expiration of the Interest Period with respect thereto by the
Company giving the Administrative Agent prior irrevocable notice
of such election no later than 9:00 a.m. on the third Eurodollar
Business Day preceding the proposed continuation date (which
notice shall be provided by the Administrative Agent to the
Lenders no later than 9:30 a.m. (Los Angeles time) on such
date). If the Company shall fail to give notice as provided
above, the Company shall be deemed to have elected to convert
any affected


Eurodollar Loan to an Effective Fed Funds Rate Loan on the last
day of the applicable Interest Period.

(6) No Loan shall be funded or continued as a Eurodollar Loan
and no Loan shall be converted into a Eurodollar Loan if an
Event of Default or Potential Default has occurred and is
continuing on the day occurring three Eurodollar Business Days
prior to the date of, or on the date of, any requested funding,
continuation or conversion.

(7)    All or any part of outstanding Standard Loans and
Gestation Loans may be converted pursuant to this paragraph
4(c); provided, however, that partial conversions shall be in
the principal amount of $5,000,000.00 or whole multiples of
$1,000,000.00 in excess thereof, and in the case of conversions
into Eurodollar Loans, after giving effect thereto to the
aggregate of the then number of Eurodollar Loans of each Lender
having a different Interest Period shall not exceed three (3).

(8) Each request for the funding, continuation or conversion  of
a  Loan shall be evidenced by the timely delivery by the Company
to  the Administrative Agent of a duly executed Loan and/or Rate
Request (which delivery may be by facsimile transmission).

4(d) Inability to Determine Rate. In the event that the
Administrative Agent shall have determined (which determination
shall be conclusive and binding upon the Company) that by reason
of circumstances affecting the London interbank eurodollar
market adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for any Interest Period, the
Administrative Agent shall forthwith give facsimile notice of
such determination, confirmed in writing, to each Lender and to
the Company. If such notice is given: (1) any Standard Loan and
Gestation Loan that was to have been converted to a Eurodollar
Loan shall be continued as an Effective Fed Funds Rate Loan, and
(2) any outstanding Eurodollar Loan shall be converted, on the
last day of the then current Interest Period with respect
thereto, to an Effective Fed Funds Rate Loan. Until such notice
has been withdrawn by the Administrative Agent, the Company
shall not have the right to convert a Standard Loan or Gestation
Loan to a Eurodollar Loan or to continue a Eurodollar Loan.

4(e) Illegality. Notwithstanding any other provisions herein, if
any law, regulation, treaty or directive, or any change therein
or in the interpretation or application thereof, shall make it
unlawful for any Lender to make or maintain Eurodollar Loans as
contemplated by this Agreement: (1) the commitment of such
Lender hereunder to make or to continue Eurodollar Loans or to
convert Effective Fed Funds Rate Loans or Reference Rate Loans
to Eurodollar Loans shall forthwith be suspended, and (2) such
Lender's Standard Loans and Gestation Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to
Effective Fed Funds Rate Loans at the end of their respective
Interest Periods or within such earlier period as is required by
law. In the event of a conversion of any Standard Loan or
Gestation Loan prior to the end of its applicable Interest
Period as provided herein, the Company hereby agrees promptly to
pay any Lender affected thereby, upon demand, the amounts

required pursuant to Paragraph 4(h) below, it being agreed and
understood that such conversion shall constitute a prepayment
for all purposes hereof. The provisions hereof shall survive the
termination of this Agreement and payment of the outstanding
Loans and all other Obligations.

4(f) Requirements of Law; Increased Costs. In the event that any
applicable  law,  order, regulation, treaty or directive  issued
after   the  Effective  Date  by  any  central  bank  or   other
Governmental  Authority, or any change after the Effective  Date
in  the  governmental or judicial interpretation or  application
thereof,  or  compliance  by  any Lender  with  any  request  or
directive  (whether  or  not having the  force  of  law)  issued
subsequent  to  the  date hereof by any central  bank  or  other
Governmental Authority:

(1)    Does or shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Loans made
hereunder, or change the basis of taxation of payments to such
Lender of principal, fee, interest or any other amount payable
hereunder (except for a change in the rate of tax on the overall
net income of, or franchise taxes payable by, such Lender);

(2)    Does or shall impose, modify or hold applicable any
reserve, capital requirement, special deposit, compulsory loan
or similar requirements against assets held by, or deposits or
other liabilities in or for the account of, advances or loans
by, or other credit extended by, or any other acquisition of
funds by, any applicable lending office of such Lender making
Loans hereunder which are not otherwise included in the
determination of the Effective Fed Funds Rate or the Eurodollar
Rate; or

 (3) Does or shall impose on such Lender any other condition;
and  the result of any of the foregoing is to increase the  cost
to such Lender of making, renewing or maintaining any Loan or to
reduce any amount receivable in respect thereof or to reduce the
rate  of  return  on the capital of such Lender  or  any  Person
controlling  such  Lender, then, in any such case,  the  Company
shall promptly pay to the Administrative Agent for remittance to
such  Lender,  upon  its  receipt of the  certificate  described
below,  any  additional  amounts necessary  to  compensate  such
Lender for such additional cost or reduced amounts receivable or
rate  of  return  as reasonably determined by such  Lender  with
respect  to this Agreement or Loans made hereunder. If a  Lender
becomes  entitled  to claim any additional amounts  pursuant  to
this Paragraph (f), it shall promptly notify the Company through
the  Administrative Agent of the event by reason of which it has
become  so entitled. A certificate as to any additional  amounts
payable  pursuant  to  the  foregoing  sentence  containing  the
calculation thereof in reasonable detail submitted by a  Lender,
through  the  Administrative Agent,  to  the  Company  shall  be
conclusive  in  the  absence of manifest error.  The  provisions
hereof  shall  survive  the termination of  this  Agreement  and
payment of the outstanding Loans and all other Obligations.

4(g) Funding. Each Lender shall be entitled to fund all or any
portion of Loans held by it in any manner it may determine in
its sole discretion, including, without limitation, in the Grand
Cayman inter-bank market, the London inter-bank market and
within the United States, but all calculations and transactions
hereunder in respect of Eurodollar Loans shall be conducted as
though all Lenders actually fund all Eurodollar Loans through
the purchase in

London of offshore dollar deposits in the amount of the relevant
Eurodollar Loan in maturities corresponding to the applicable
Interest Period.

4(h) Prepayment Premium. In addition to all other payment
obligations hereunder, in the event: (1) any Eurodollar Loan is
prepaid prior to the last day of the applicable Interest Period,
as applicable, whether following a voluntary prepayment,
mandatory prepayment, application of proceeds from the sale of
Collateral or otherwise, or (2) the Company shall fail to
continue or to make a conversion to a Eurodollar Loan after the
Company has given notice thereof as provided in Paragraph 4(c)
above, then the Company shall promptly pay to the Lenders
holding the Loans prepaid or not continued or converted, through
the Administrative Agent, an additional premium sum compensating
each Lender for losses, costs and expenses incurred by such
Lender in connection with such prepayment. The Company
acknowledges that such losses, costs and expenses are difficult
to quantify and that, in the case of the prepayment of or
failure to continue or convert to a Eurodollar Loan, the
following formula represents a fair and reasonable estimate of
such losses, costs and expenses:

Amount            [Applicable       Eurodollar Rate ]   Days Remaining
Being             [Eurodollar Rate  for such Incre- ]   in Interest
Prepaid or        [for Increment    ment for Days   ]x  Period
Being     x       [Being Prepaid    Remaining in    ]   360
Not Convened      [or Not           Interest        ]
or Continued      [Converted        Period          ]
                  [or Continued     (as quoted on the first
                                    Eurodollar Business
                                    Day following Lenders'
                                    receipt of notice thereof)

For purposes of calculating the current Eurodollar Rate for the
days remaining in the Interest Period for the increment being
prepaid or not converted or continued, said current Eurodollar
Rate shall be an interest rate interpolated between Eurodollar
Rates quoted for standard calendar periods for subsequent
months' maturities in accordance with normal conventions.

4(i) Buy-Down Provisions. Notwithstanding anything contained in
this Agreement, the Company and any individual Lender (as used
in this Paragraph 4(i), a "Buy-Down Lender") may notify the
Administrative Agent in writing that the Company and such Buy-
Down Lender have entered into a Buy-Down Agreement with respect
to all or a portion of the Loans from time to time outstanding
held by such Buy-Down Lender, and that, pursuant to said Buy-
Down Agreement, the interest otherwise payable by the Company to
such Buy-Down Lender during any interest calculation period
shall be reduced based on the amount of Available Deposits
maintained by the Company with such Buy-Down Lender. Prior to
the occurrence of an Event of Default and acceleration of the
Obligations, each Buy-Down Lender shall bill the Company
directly for all interest accrued and payable to such Buy-Down
Lender on account of Loans from time to time outstanding held by
such Buy-Down Lender. The Administrative Agent, in rendering any
monthly interest billing pursuant to Paragraph 4(b) above shall
have no obligation to bill any interest payable to a Buy-Down
Lender or to verify the amount of any

Available Deposits supporting the pricing of Loans held by any
Buy-Down Lender or the monthly interest amount payable to any
Buy-Down Lender, including without limitation, any deficiency
fees or other amounts payable to such Lender by the Company
under the applicable Buy-Down Agreement. The Company shall pay
all interest, and any deficiency fees or other amounts payable
under its Buy-Down Agreement with each Buy-Down Lender, directly
to such Buy-Down Lender within ten (10) calendar days of receipt
of a billing statement from such Buy-Down Lender. Any Buy-Down
Lender may elect not to make demand for the payment of
deficiency fees accruing in respect of Available Deposits from
time to time and it is expressly agreed and understood that: (1)
any such deficiency fee shall not, by reason of such failure of
such Buy-Down Lender or otherwise, be deemed to have been waived
by such Buy-Down Lender (except as such waiver is expressly
acknowledged in writing by such Buy-Down Lender from time to
time), and (2) all deficiency fees accrued and unpaid hereunder
and not so expressly waived, whether or not previously declared
due and owing by any such Buy-Down Lender, shall automatically
be due and payable in full upon the Maturity Date.

4(j) Computations. All computations of interest and fees payable
hereunder shall be based upon a year of 360 days for the  actual
number of days elapsed.

4(k) Post-Default Interest. Following the occurrence and during
the continuance of an Event of Default, the Obligations shall
bear interest from the date due until paid in full at a per
annum rate equal to three percent (3%) above the Effective Fed
Funds Rate.

5.   Miscellaneous Lending Provisions.

5(a) Use of Proceeds. Other than the initial Loans funded
hereunder on the Effective Date which shall be utilized to pay
in full all Indebtedness of the Company outstanding under the
Existing Credit Facility, the proceeds of all Standard Loans
and/or Swing Line Loans shall be utilized by the Company solely
for the purpose of originating and/or acquiring Mortgage Loans
(and to repay Swing Line Loans) and to support working capital
needs. The proceeds of all Gestation Loans shall be utilized by
the Company solely for the purpose of financing the gestation of
Mortgage-Backed Securities after their initial certification.

5(b) Request For New Loans; Determination of Availability;
Making of New Loans.

(1)    On any Business Day that the Company desires to borrow
hereunder, it shall deliver a Loan and/or Interest Rate Election
Request to the

Administrative Agent no later than: (i) in the case or a
Standard Loan or a Gestation Loan, 10:00 a.m. (Los Angeles
time), and (ii) in the case of a Swing Line Loan, 1:00 p.m. (Los
Angeles time) on such date. Except for a request for a Swing
Line Loan made after 10:00 a.m. (Los Angeles time) on a given
date, only one Loan and/or Interest Rate Election Notice per
tranche shall be submitted to the Administrative Agent on any
date.


(2)    Upon receipt of a Loan and/or Interest Rate Election
Request, the Administrative Agent shall make a Determination of
Availability with respect to any requested Loans, which
Determination of Availability shall be based upon information


provided to the Administrative Agent by the Collateral Agent
pursuant to Paragraph 5 of the Security Agreement. In the event
the Administrative Agent shall have determined that the
Collateral Value of the Warehouse Borrowing Base or the
Collateral Value of the Gestation Loans Borrowing Base, as
applicable, is sufficient to support the requested borrowings,
the Administrative Agent shall: (i) in the case of any Loan
other than a Swing Line Loan, so notify the Lenders (which
notification may be telephonic) no later than 11:30 a.m. (Los
Angeles time) on the date of the delivery of such Loan and/or
Interest Rate Election Request of each Lender's respective
Percentage Share thereof and (ii) in the case of a Swing Line
Loan, so notify the Swing Line Lender (which notification may be
telephonic) no later than 1:15 p.m. (Los Angeles time) on the
date of delivery of such Loan and/or Interest Rate Election
Request of the Swing Line Loan to be funded with respect
thereto. Thereafter, each Lender shall make its Percentage Share
and the Swing Line Lender shall make the amount of the requested
Swing Line Loan available by wiring such amount in immediately
available same day funds to the Administrative Agent no later
than: (i) in the case of Loans other Swing Line Loans, 12:00
p.m. (Los Angeles time) on the date of request therefor, and
(ii) in the case of Swing Line Loans, 1:30 p.m. (Los Angeles
time) on the proposed funding date.

(3)    Unless the Administrative Agent shall have received
notice from a Lender prior to a proposed funding deadline that
such Lender will not make available to the Administrative Agent
such Lender's portion of the proposed Loan or Loans, the
Administrative Agent may assume that such Lender has made such
portion available on the proposed funding date in accordance
with this Paragraph 5(b) and the Administrative Agent may, in
reliance upon such assumption, make available to the Company on
such date a corresponding amount. If and to the extent such
Lender shall not have so made such portion available, such
Lender and the Company jointly and severally agree to repay to
the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the
date such amount is made available to the Company until the date
such amount is repaid to the Administrative Agent, in the case
of the Company at the interest rate applicable at the time to
the subject Loan or Loans, and in the case of such Lender at the
Effective Fed Funds Rate. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so
repaid shall constitute such Lender's applicable Percentage
Share of such Loan or Loans for all purposes of this Agreement
as of the date such amount is made available to the Company. The
failure of any Lender to make the advances to be made by it as
part of any borrowing shall not relieve any other Lender of its
obligation hereunder to advance its applicable Percentage Share,
but no Lender shall be responsible for the failure of any other
Lender to make any such advance.

(4)    The Administrative Agent shall make the principal amount
of requested Loans approved in accordance with this Paragraph
5(b) available to the Company by wiring such amount in
immediately available same day funds to the Funding Account no
later than: (i) in the case of Loans other than Swing Line
Loans, 11:30 a.m. (Los Angeles time) on the date of such
request, and (ii) in the case of Swing Line Loans, 1:30 p.m.
(Los Angeles time) on the proposed funding date therefor.


(5)  Each  request for a Standard Loan, a Gestation  Loan  or  a
Swing Line Loan shall be in the minimum amount of $500,000.00.

(6)    The Company may elect to convert or continue Effective
Fed Funds Rate Loans, Reference Rate Loans and/or Eurodollar
Loans outstanding on any date consistent with the timing
requirements set forth in Paragraph 4(c) above.

5(c) Notes. The obligation of the Company to repay the Loans
shall be evidenced by notes payable to the order of each Lender,
as applicable, in the forms of those attached hereto as Exhibit
A-I (the "Tranche A Notes"), Exhibit A-2 (the "Tranche B
Notes"), and Exhibit A-3 (the "Tranche C Note"). Upon any
advance, conversion or prepayment of a Loan as provided herein,
each Lender is hereby authorized to record the date and amount
of each such advance and conversion made by such Lender, or the
date and amount of each such payment or prepayment of principal
of such Loan, the applicable Interest Period, if any, and
interest rate with respect thereto, on the schedules annexed to
and constituting a part of its respective Notes (or by any
analogous method any Lender may elect consistent with its
customary practices) and any such recordation shall constitute
prima facie evidence of the accuracy of the information so
recorded absent manifest error. The failure of any Lender to
make any such notation or the inaccuracy of any notation shall
not affect in any manner or to any extent the obligations of the
Company under the Loan Documents.

5(d) Borrowing Base Conformity.

(1)    In support of its obligation to repay Standard Loans and
Swing Line Loans, the Company shall cause the Collateral Value
of the Warehouse Borrowing Base to be not less than, at any
date, the aggregate principal amount of Standard Loans and Swing
Line Loans outstanding on such date (including any Standard
Loans and Swing Line Loans to be funded on such date but
excluding Loans which will be repaid with proceeds of Loans to
be advanced on such date).

(2)    In support of its obligations to repay Gestation Loans
hereunder, the Company shall cause the Collateral Value of the
Gestation Loans Borrowing Base to be not less than, at any date,
the aggregate principal amount of Gestation Loans outstanding on
such date, including any Gestation Loans to be funded on such
date.


(3)    The Company shall promptly prepay, upon telephonic demand
by the Administrative Agent: (i) Standard Loans and/or Swing
Line Loans to the Administrative Agent on behalf of the Lenders
on any day in the amount of any shortfall in the Collateral
Value of the Warehouse Borrowing Base, as determined pursuant to
subparagraph (1) above, and (ii) Gestation Loans to the
Administrative Agent on behalf of the Lenders on any day in the
amount of any shortfall in the Collateral Value of the Gestation
Loans Borrowing Base, as determined pursuant to subparagraph (2)
above.

(4)    If, but only if, at such time as the Company shall be
required to prepay Loans under subparagraphs (3)(i) of this
Paragraph 5(d) there shall not have occurred and be continuing
an Event of Default or Potential Default, in lieu of prepaying

the Standard Loans or Swing Line Loans, the Company may deliver
to the Collateral Agent additional Eligible Mortgage Loans with
an aggregate Unit Collateral Value such that the Company shall
be in compliance with the requirement of subparagraph (1) above.

(5)    If, but only if, at such time as the Company shall be
required to prepay Loans under subparagraphs (3)(ii) of this
Paragraph 5(d) there shall not have occurred and be continuing
an Event of Default or Potential Default, in lieu of prepaying
the Gestation Loans, the Company may deliver to the Collateral
Agent additional Eligible Gestation Mortgage Loans with an
aggregate Unit Collateral Value such that the Company shall be
in compliance with the requirement of subparagraph (2) above.

5(e) Nature and Place of Payments. All payments made on account
of the Obligations shall be made without setoff or counterclaim
in lawful money of the United States of America in immediately
available same day funds, free and clear of and without
deduction for any taxes, fees or other charges of any nature
whatsoever imposed by any taxing authority and must be received
by the Administrative Agent (i) by 10:00 a.m. (Los Angeles time)
on the day of payment on account of Obligations other than Swing
Line Loans and (ii) by 2:00 p.m. (Los Angeles time) in the case
of payments on account of Swing Line Loans, it being expressly
agreed and understood that if a payment is received after 10:00
a.m. or 2:00 p.m. (Los Angeles time), as applicable, by the
Administrative Agent, such payment will be considered to have
been made on the next succeeding Business Day and interest
thereon shall be payable at the then applicable rate during such
extension. Except as otherwise provided in Paragraph 4(i) above,
all payments on account of the Obligations shall be made to the
Administrative Agent through its office located at the address
listed on Schedule I hereof. If any payment required to be made
by the Company hereunder becomes due and payable on a day other
than a Business Day, the due date thereof shall be extended to
the next succeeding Business Day and interest thereon shall be
payable at the then applicable rate during such extension. All
amounts received by the Administrative Agent on account of the
Obligations shall be disbursed by the Administrative Agent
promptly to the Lenders by wire transfer on the date of receipt
if received by the Administrative Agent before 10:00 a.m. or
2:00 p.m. (Los Angeles time), as applicable, or if received
later, by 12:00 noon (Los Angeles time) on the next succeeding
Business Day, without further interest payable by the
Administrative Agent.

5(f) Prepayments.

(1)    Subject to the provisions of Paragraph 4(h), the Company
may prepay Effective Fed Funds Rate Loans and Reference Rate
Loans in whole or in part at any time and the Company may prepay
Eurodollar Loans in whole or in part upon three Business Days'
notice to the Administrative Agent.

(2)  Loans  are  subject  to mandatory  prepayment  pursuant  to
Paragraph  5(d)  above  and,  in  addition,  by  application  of
proceeds  of  the  sale or other disposition  of  Collateral  as
provided in the Security Agreement.

(3)    The Company shall pay in connection with any prepayment
hereunder all interest accrued but unpaid on the Loans to which
such prepayment is

applied (including any prepayment premium that may be due under
Paragraph 4(h) above) concurrently with payment to the
Administrative Agent of any principal amounts.

5(g) Allocation of Payments Received.

(1)     Prior to the occurrence of an Event of Default and
acceleration of all Loans outstanding hereunder or termination
of the commitments of the Lenders to advance Loans hereunder,
amounts received by the Administrative Agent as proceeds of the
sale or other disposition of Eligible Mortgage Loans and
Eligible Mortgage-Backed Securities, including without
limitation all amounts from time to time deposited in the
Settlement Account, shall be allocated among the Lenders as
follows:

(i) First, to the Swing Line Lender to repay all outstanding
Swing Line Advances;

(ii) Then, pro rata to the Lenders in accordance with their
respective Percentage Shares, until the principal amount of the
Loan or Loans initially advanced against such Eligible Mortgage
Loans and/or Eligible Mortgage-Backed Securities has been paid
in full;

(iii) Then, the balance, if any, to the Company.

(2)  Following  the  occurrence  of  an  Event  of  Default  and
acceleration  of all Loans outstanding hereunder or  termination
of  the  commitments of the Lenders to advance Loans  hereunder,
all  amounts received by the Administrative Agent on account  of
the  Obligations shall be disbursed by the Administrative  Agent
as follows:

(i) First, to the payment of fees owing to and expenses incurred
by the Administrative Agent and the Collateral Agent in the
performance of their respective duties and enforcement of their
respective rights under the Loan Documents, including, without
limitation, all costs and expenses of collection, attorneys'
fees, court costs and foreclosure expenses;

(ii) Then, to the repayment of all outstanding Swing Line
Advances;

(iii) Then, to the Lenders, pro rata in accordance with their
respective Percentage Shares, until the principal amount of all
Loans outstanding are paid in full;

(iv) Then, to the Lenders, pro rata in accordance with their
respective Percentage Shares, until all interest accrued on all
Loans is paid in full;

(v) Then, to the Lenders, pro rata in accordance with their
respective Percentage Shares, until all fees and any other
Obligations accrued by and due each Lender and the
Administrative Agent are paid in full; and


(vi) Then, to such Persons as may be legally entitled thereto.

6.    Collateral Security; Additional Documents.

6(a) Security Agreement. As collateral for the Obligations the
Company shall execute and deliver to the Administrative Agent:
(1) a security agreement in the form of that attached hereto as
Exhibit B (the "Security Agreement"), pursuant to which the
Company shall pledge, assign and grant to the Collateral Agent
for the pro rata, pari passu benefit of the Lenders a first
priority, perfected security interest in and lien upon the
Collateral, and (2) such UCC-1 financing statements as the
Administrative Agent may reasonably require.

6(b) Further Documents. The Company agrees to execute and
deliver and to cause to be executed and delivered to the
Administrative Agent on behalf of the Lenders from time to time
such confirmatory or supplementary security agreements,
financing statements and other documents, instruments and
agreements as the Administrative Agent may reasonably request,
which are in the Administrative Agent's judgment reasonably
necessary or desirable to obtain and maintain for the Lenders
and the Administrative Agent the benefit of the Loan Documents
and the Collateral.

7.   Conditions to Making of Loans.

7(a)  First  Loan.  As  conditions  precedent  to  any  Lender's
obligation to fund the first Loan hereunder:

(1) The Company shall have delivered or shall have had delivered
to  the  Administrative Agent, in form and substance  reasonably
satisfactory  to  the  Lenders and their counsel,  each  of  the
following:

(i)  A duly executed copy of this Agreement;

(ii) A duly executed copy of the Security Agreement;

(iii)     Duly executed originals of each of the Notes;

(iv) Duly executed copies of all financing statements and other
documents, instruments and agreements, properly executed, deemed
necessary or appropriate by the Administrative Agent, in its
reasonable discretion, to create and/or continue in favor of the
Collateral Agent for the pari passu benefit of the Lenders a
first priority perfected security interest in and lien upon the
Collateral;

(v)    Certified copies of resolutions of the Board of Directors
of the Company approving the execution and delivery of the Loan
Documents, the performance of the Obligations and the
consummation of the transactions contemplated thereby;



(vi) A certificate of the Secretary or an Assistant Secretary of
the Company certifying the names and true signatures of the
officers of the Company authorized to execute the Loan
Documents;

(vii)     [Intentionally Omitted]

(viii) A copy of the Articles of Incorporation of the Company,
certified by the Secretary of State of the State of California
as of a recent date;

(ix) A copy of the Bylaws of the Company, certified by the
Secretary or an Assistant Secretary of the Company as of the
date of this Agreement as being accurate and complete;

(x)    A certificate of the Secretary of State of the State of
California certifying that the Company is in good standing as of
a recent date;

(xi) A certificate of an executive officer of the Company in the
form of that attached hereto as Exhibit D dated as of the date
of this Agreement;

(xii) A certificate of a Responsible Financial Officer of the
Company, demonstrating in detail satisfactory to the
Administrative Agent the Company's compliance with the financial
covenants set forth in Paragraph 10(m) below at and as of
December 31, 1998 and the financial covenants set forth in
Paragraphs 10(i), (j), (k) and (1) at and as of April 30, 1999;

 (xiii) A Loan Request requesting Loans hereunder in an amount
not less than all Indebtedness of the Company under the Existing
Credit Facilities as if such date; and

(xiv) Evidence reasonably satisfactory to the Administrative
Agent that upon the funding of the first Loan hereunder all
Indebtedness of the Company outstanding under the Existing
Credit Facility will be paid in full and the credit facility
evidenced thereby terminated.

(2)    All acts and conditions precedent (including, without
limitation, the obtaining of any necessary regulatory approvals
and the making of any required filings, recordings or
registrations) required to be done and performed and to have
happened prior to the execution, delivery and performance of the
Loan Documents and to constitute the same legal, valid and
binding obligations of the Company, enforceable in accordance
with their respective terms, shall have been done and performed
and shall have happened in due and strict compliance with all
applicable laws.

(3)    All   documentation,   including,   without   limitation,
documentation for corporate and legal proceedings in  connection
with  the transactions contemplated by the Loan Documents, shall
be  satisfactory in form and substance to the Lenders and  their
counsel.


(4) All fees required to be paid pursuant to Paragraph 40) above
on the Effective Date shall have been paid.

7(b) Ongoing Loans. As conditions precedent to each Lender's
obligation or agreement to make any Loan hereunder (other than
any Standard Loan advanced by the Lenders to repay Swing Line
Loans), including the first Loan and including the conversion of
any Loan from or into a Eurodollar Loan or the continuation of
any Eurodollar Loan after the end of the applicable Interest
Period, at and as of the date of the funding, conversion or
continuation:

(1)  There shall have been delivered to the Administrative Agent
a Loan and/or Interest Rate Election Request therefor;

(2)    The representations and warranties of the Company
contained in the Loan Documents shall be accurate and complete
in all respects as if made on and as of the date of such
funding, conversion or continuance;

(3)    There shall not have occurred an Event of Default or
Potential Default; and

(4)  Following the funding of the requested Loan:

(i) the aggregate principal amount of Loans advanced by any
Lender will not exceed its respective Maximum Commitment; and

(ii) a. the aggregate principal amount of Loans outstanding will
not exceed the Aggregate Credit Limit; b. the applicable
limitations of Paragraphs l(a), 2(a), 3(a) and 5(d) above will
not be exceeded; c. the aggregate principal amount of Standard
Loans and/or Swing Line Loans outstanding will not exceed the
Collateral Value of the Warehouse Borrowing Base, and d. the
aggregate principal amount of Gestation Loans outstanding will
not exceed the Collateral Value of the Gestation Loans Borrowing
Base.

By delivering a Loan and/or Interest Rate Election Request to
the Administrative Agent hereunder, the Company shall be deemed
to have represented and warranted the accuracy and completeness
of the statements set forth in subparagraphs (b)(2) through
(b)(4) above.

8.  Representations and Warranties of the Company and the Company.

As  an inducement to the Administrative Agent and each Lender to
enter  into this Agreement and to make Loans as provided herein,
the  Company represents and warrants to the Administrative Agent
and each Lender that:

8(a) Financial Condition. The financial statements dated the
Statement Date and the Interim Date, copies of which have
heretofore been furnished to each Lender, are complete and
correct and present fairly in accordance with GAAP the financial
condition of the Company and its consolidated Subsidiaries at
such dates and the consolidated (and, in the case of the
financial statements dated the Interim Date, consolidating)
results of their operations and


changes in financial position for the fiscal periods then ended,
subject, in the case of the Interim Date financial statements,
to normal year-end adjustments.

8(b)  No  Change.  Since the Statement Date there  has  been  no
material  adverse change in the business, operations, assets  or
financial  or other condition of the Company or the Company  and
its consolidated Subsidiaries taken as a whole.

8(c) Corporate Existence; Compliance with Law. The Company: (1)
is duly organized, validly existing and in good standing as a
corporation under the laws of the State of California and is
qualified to do business in the State of California and in each
other jurisdiction where its ownership of property or conduct of
business requires such qualification and where failure to
qualify could have a Material Adverse Effect, (2) has the
corporate power and authority to own and operate its property
and to conduct business in the manner in which it does and
proposes so to do, and (3) is in compliance with all
Requirements of Law and Contractual Obligations, the failure to
comply with which is reasonably likely to have a Material
Adverse Effect.

8(d) Corporate Power; Authorization; Enforceable Obligations.
The Company has the corporate power and authority to execute,
deliver and perform the Loan Documents and to obtain extensions
of credit hereunder, and has taken all necessary corporate
action to authorize the execution, delivery and performance of
the Loan Documents, and the borrowing hereunder. The Loan
Documents have been duly executed and delivered on behalf of the
Company and constitute legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with
their respective terms, subject to the effect of applicable
bankruptcy and other similar laws affecting the rights of
creditors generally and the effect of equitable principles
whether applied in an action at law or a suit in equity.

8(e) No Legal Bar. The execution, delivery and performance of
the Loan Documents, the borrowing hereunder and the use of the
proceeds thereof, will not violate any Requirement of Law
applicable to, or any Contractual Obligation of, the Company or
create or result in the creation of any Lien (except the Lien
created by the Security Agreement) on any assets of the Company.

8(f) No Material Litigation. Except as disclosed on Exhibit E
hereto, no litigation, investigation or proceeding of or before
any arbitrator, court or Governmental Authority is pending (or,
to the knowledge of the Company, threatened) by or against the
Company or any of its Subsidiaries or against any of such
parties' properties or revenues which is reasonably likely to be
adversely determined and which, if adversely determined, is
reasonably likely to have a Material Adverse Effect.

8(g) Taxes. The Company and each of its Subsidiaries have filed
or caused to be filed in a timely manner all tax returns that
are required to be filed and have paid all taxes shown to be due
and payable on said returns or on any assessments made against
them or any of their property prior to the time that a penalty
arises with respect thereto, other than taxes which are being
contested in good faith by appropriate proceedings and as to
which the Company or applicable Subsidiary has established
adequate reserves in conformity with GAAP.



8(h) Investment Company Act. The Company is not an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.

8(i) Subsidiaries. Attached hereto as Exhibit F is an accurate
and complete list of all Subsidiaries of the Company existing on
the Effective Date, their respective jurisdictions of
incorporation and the percentage of their capital stock owned by
the Company or other Subsidiaries. All of the issued and
outstanding shares of capital stock of such Subsidiaries have
been duly authorized and issued and are fully paid and non-
assessable.

8(j) Federal Reserve Board Regulations. Neither the Company nor
any of its Subsidiaries is engaged or will engage, principally
or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying"
any "margin stock" within the respective meanings of such terms
under Regulation U. No part of the proceeds of any Loan will be
used for "purchasing" or "carrying" "margin stock" as so defined
or for any purpose which violates, or which would be
inconsistent with, the provisions of the Regulations of the
Board of Governors of the Federal Reserve System.

8(k) ERISA. The Company and each of its Subsidiaries are in
compliance in all respects with the requirements of ERISA and no
Reportable Event has occurred under any Plan maintained by the
Company or any of its Subsidiaries which is likely to result in
the termination of such Plan for purposes of Title IV of ERISA.

8(l) Assets. The Company and each of its Subsidiaries have good
and marketable title to all property and assets reflected in the
financial statements referred to in Paragraph 8(a) above, except
property and assets sold or otherwise disposed of in the
ordinary course of business subsequent to the respective dates
thereof. Except as reflected in the financial statements
referred to in Paragraph 8(a) above or as permitted under
Paragraph 10(a) below, neither the Company nor any of its
Subsidiaries has outstanding Liens on any of its properties or
assets nor are there any security agreements to which the
Company or any of its Subsidiaries is a party, or title
retention agreements, whether in the form of leases or
otherwise, of any personal property.

8(m) Securities Acts. Neither the Company nor any of its
Subsidiaries has issued any unregistered securities in violation
of the registration requirements of Section 5 of the Securities
Act of 1933, as amended (the "Act"), or any other law, and is
not violating any rule, regulation or requirement under the Act
or the Securities Exchange Act of 1934, as amended. The Company
is not required to qualify an indenture under the Trust
Indenture Act of 1939, as amended, in connection with its
execution and delivery of the Notes.

8(n) Consents, etc. Except for consents, approvals and
authorizations previously obtained, no consent, approval or
authorization of, or registration, declaration or filing with,
any Person is required in connection with the execution and
delivery by the Company of the Loan Documents or the borrowing
hereunder (other than filings to perfect the Liens granted by
the Company pursuant to the Security Agreement) or the
performance by the Company of or compliance by the Company with
the terms, provisions and conditions hereof or thereof.


8(o) Year 2000 Compliance. The Company has conducted a
comprehensive review and assessment of the Company's computer
applications and made inquiry of the Company's key suppliers and
vendors with respect to the 'year 2000 problem' (that is, the
risk that computer applications may not be able to properly
perform date-sensitive functions after December 31, 1999) and,
based on that review and inquiry, the Company does not believe
the year 2000 problem will result in a material adverse change
in the Company's business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the
Obligations.

9.     Affirmative Covenants. The Company hereby covenants and
agrees with the Administrative Agent and each Lender that, as
long as any Obligations remain unpaid or any Lender has any
obligation to make Loans hereunder and thereafter as provided in
Paragraphs 9(g) and 9(j) below, the Company shall:

9(a)  Financial Statements. Furnish or cause to be furnished  to
the Administrative Agent and each Lender directly:

(1)    Within ninety (90) days after the last day of each fiscal
year of the Company and its Subsidiaries, consolidated and
consolidating statements of income and statements of changes in
financial position for such year and balance sheets as of the
end of such year presented fairly in accordance with GAAP and,
in the case of the Company, the requirements of HUD Handbook IG
4000.3 REV and accompanied, in all cases, by an unqualified
report of a firm of independent certified public accountants
acceptable to the Administrative Agent; accompanied in each case
by a certificate of the chief financial officer of the Company
demonstrating in detail satisfactory to the Administrative Agent
the Company's compliance with the financial covenants set forth
in Paragraphs 10 (i), 0), (k), (1) and (m) below as of and at
the end of such fiscal year; and

(2)    Within thirty (30) days after the last day of each fiscal
quarter except the last fiscal quarter of each fiscal year of
the Company, consolidated and consolidating statements of income
for such fiscal quarter and balance sheets as of the end of such
fiscal quarter of the Company accompanied in each case by a
certificate of the chief financial officer of the Company
stating that such financial statements are presented fairly in
accordance with GAAP and demonstrating in detail satisfactory to
the Administrative Agent the Company's compliance with the
financial covenants set forth in Paragraphs 10 (i), (j), (k),
(1) and (m) below as of and at the end of such fiscal quarter.

9(b) Certificates; Reports; Other Information. Furnish or cause
to be furnished to the Administrative Agent and each of the
Lenders directly (and in the case of item (4) below, to the
Administrative Agent and the Collateral Agent directly):

(1)    If so requested by the Administrative Agent, no later
than the fifth and twentieth calendar days of each month as of
the last day of the immediately preceding month and the
fifteenth day of such month, respectively, and at such other
times as the Administrative Agent may reasonably request, a
Borrowing Base Certificate;


(2)    No later than the thirtieth day of each calendar month a
Collateral Status Report; and no later than the thirtieth day
after the last day of each fiscal quarter, a warehouse and
commitment position report, a pipeline report and a delinquency
report, all in form and substance satisfactory to the
Administrative Agent;

(3)    At the time any such report is filed with the Securities
and Exchange Commission, a copy of each of the Company's annual
10K and quarterly 10Q reports as so filed;

(4)    No later than 9:00 a.m. (Los Angeles time) on each
Business Day in which any Eligible Mortgage-Backed Security is
included in the Warehouse Borrowing Base, a report on the face
amount of each Eligible Mortgage-Backed Security included in the
Warehouse Borrowing Base, and the purchase price thereof
pursuant to page 305 of the Knight-Ridder report for such day
(with a copy of a print-out of such page); and

(5)    Promptly, such additional financial and other
information, including, without limitation, financial statements
of the Company, any Affiliate or any Approved Investor (other
than FNMA or FHLMC), and information regarding the Collateral as
any Lender, through the Administrative Agent, may from time to
time reasonably request, including, without limitation, such
information as is necessary for any Lender to participate out
any of its interests in Loans hereunder or to enable another
financial institution to become a signatory hereto.

9(c) Payment of Indebtedness. Pay, discharge or otherwise
satisfy at or before maturity or before it becomes delinquent,
defaulted or accelerated, as the case may be, all its
Indebtedness (including taxes), except: (1) Indebtedness being
contested in good faith and for which provision is made to the
satisfaction of the Administrative Agent for the payment thereof
in the event the Company is found to be obligated to pay such
Indebtedness and which Indebtedness is thereupon promptly paid
by the Company, and (2) Indebtedness consisting of taxes so long
as the same are paid prior to the time that a penalty arises
with respect thereto and that the failure to have paid such
taxes has not resulted in the existence of a Lien on any
Collateral included in the computation of the Collateral Value
of the Warehouse Borrowing Base or the Collateral Value of the
Gestation Loans Borrowing Base.

9(d) Maintenance of Existence and Properties. Maintain its
corporate existence and obtain and maintain all rights,
privileges, licenses, approvals, franchises, properties and
assets necessary or desirable in the normal conduct of its
business, including, without limitation, all approvals with
respect to GNMA, FNMA, FHLMC, FHA and VA, and comply with each
Contractual Obligation of and Requirement of Law applicable to
the Company, the failure to comply with which is reasonably
likely to have a Material Adverse Effect. The Company will at
all times be a FNMA, GNMA and FHLMC approved Seller/Servicer and
an approved issuer of GNMA Mortgage-Backed Securities.

9(e) Inspection of Property; Books and Records; Audits.



(1)    Keep proper books of record and account in which full,
true and correct entries in conformity with GAAP and all
Requirements of Law applicable to the Company shall be made of
all dealings and transactions in relation to its business and
activities; and

(2)    Permit representatives of the Administrative Agent or any
Lender to: (i) visit and inspect any of its properties and
examine and make abstracts from any of its books and records at
any reasonable time during business hours and upon not less than
twenty four (24) hours prior notice (which may be telephonic)
and as often as may reasonably be desired by the Administrative
Agent or any Lender, (ii) discuss the business, operations,
properties and financial and other condition of the Company and
its Subsidiaries with officers and employees of such parties,
and with their independent certified public accountants, and
(iii) conduct periodic operational audits of the Company's
business and/or operations.

9(f) Notices. Promptly give written notice to the Administrative
Agent and each Lender directly of:

(1)  The occurrence of any Potential Default or Event of
Default;

(2)    Any litigation or proceeding affecting the Company or any
of its Subsidiaries or the Collateral which is reasonably likely
to be adversely determined and is reasonably likely to have a
Material Adverse Effect.

(3)    The incurrence by the Company of any obligation in
connection with any derivatives transaction outside of the
normal course of business of the Company;

(4)    Any event or anticipated event, including, without
limitation, the unavailability of pool insurance or other forms
of credit enhancement, which the Company anticipates is likely
to adversely affect the timely planned issuance of any Mortgage-
Backed Security which would have been supported by Mortgage
Loans owned by the Company;

(5)    Receipt by the Company of written notice from any Person
that any pooling and servicing contract under which the Company
acts as servicer has been or may in the future be terminated
"for cause;" and

(6)  Any  changes in the President, Chief Executive  Officer  or
Chief Financial Officer of the Company.

9(g) Expenses. Pay all reasonable out-of-pocket costs and
expenses (including reasonable fees and disbursements of
counsel) of: (1) the Administrative Agent incident to the
preparation, negotiation and administration of the Loan
Documents and the protection of the rights of the Lenders and
the Administrative Agent under the Loan Documents, and (2)
following the occurrence and during the continuance of an Event
of Default, the Administrative Agent, the Collateral Agent and
each of the Lenders incident to the enforcement of payment of
the


Obligations, whether by judicial proceedings or otherwise,
including, without limitation, in connection with bankruptcy,
insolvency, liquidation, reorganization, moratorium or other
similar proceedings involving the Company or a "workout" of the
Obligations; provided, however, that in no event shall the
Company be liable hereunder for any cost or expense relating to
the sale of participations or assignments pursuant to Paragraph
13 below. The obligations of the Company under this Paragraph
9(g) shall be effective and enforceable whether or not any Loan
is advanced by any Lender hereunder and shall survive payment of
all other Obligations.

9(h)  Loan  Documents.  Comply with and observe  all  terms  and
conditions of the Loan Documents.

9(i) Insurance. Obtain and maintain insurance with responsible
companies in such amounts and against such risks as are usually
carried by corporations engaged in similar businesses similarly
situated, including, without limitation, errors and omissions
coverage and fidelity coverage, and furnish the Administrative
Agent on request full information as to all such insurance.

9(j) Indemnification. Indemnify, defend and hold harmless the
Administrative Agent, each Lender and their respective
directors, officers, employees, attorneys and agents (each, an
"Indemnified Party") from and against any and all claims,
obligations, penalties, actions, suits, judgments, reasonable
costs and disbursements, losses, liabilities and damages
(including, without limitation, reasonable attorneys' fees) of
any kind whatsoever (collectively and severally, "Claims") which
may at any time be imposed on, assessed against or incurred by
such Indemnified Party in any way relating to or arising out of
the Loan Documents or the transactions contemplated thereby or
any action reasonably taken or omitted to be taken by such
Indemnified Party in connection with the foregoing; provided,
however, that the Company shall not be liable for any portion of
any Claims arising out of or resulting from the gross negligence
or willful misconduct of such Indemnified Party. Each
Indemnified Party agrees that it will promptly notify the
Company of any claim, action or suit asserted or commenced
against it and that the Company may assume the defense thereof
with counsel reasonably satisfactory to such Indemnified Party
at the Company's sole expense, that such Indemnified Party will
cooperate with the Company on such defense, and that such
Indemnified Party will not settle any such claim, action or suit
without the consent of the Company; provided, however, that in
the event such Indemnified Party is not reasonably satisfied
with such defense, such Indemnified Party may assume such
defense with counsel satisfactory to such Indemnified Party at
the Company's sole expense. Notwithstanding the foregoing, the
Company shall not be liable to any Indemnified Party for any
claim (i) arising from lawsuits relating to claims of any
Indemnified Party against any other Indemnified Party, (ii)
arising from disputes among the Indemnified Parties regarding
the allocation among any of such Persons of any payment properly
made by the Company in accordance with the Loan Documents or
(iii) relating to the sale of participations or assignments
pursuant to Paragraph 13 below. The indemnification obligations
of the Company under this Paragraph 90) shall survive
termination of this Agreement and payment in full of the
Obligations.

9(k) Shipment of Collateral. Direct the Collateral Agent to ship
Mortgage  Loans and Mortgage-Backed Securities included  in  the
Warehouse Borrowing Base or the

Gestation  Loans  Borrowing Base only to Approved  Investors  or
otherwise consistent with the provisions of the Loan Documents.

10.    Negative Covenants. The Company hereby agrees that, as
long as any Obligations remain unpaid or any Lender has any
obligation to make Loans hereunder, the Company shall not, nor
shall the Company permit any Subsidiary of the Company to, at
any time, directly or indirectly:

10(a) Liens. Create, incur, assume or suffer to exist, any Lien
upon the Collateral except as contemplated by the Security
Agreement or create, incur, assume or suffer to exist any Lien
upon any of its other property and assets (including servicing
rights) except:

(1)    Liens or charges for current taxes, assessments or other
governmental charges which are not delinquent or which remain
payable without penalty, or the validity of which are contested
in good faith by appropriate proceedings upon stay of execution
of the enforcement thereof, provided the Company or the
Subsidiary, as applicable, shall have set aside on its books and
shall maintain adequate reserves for the payment of same in
conformity with GAAP;

(2)    Liens, deposits or pledges made to secure statutory
obligations, surety or appeal bonds, or bonds for the release of
attachments or for stay of execution, or to secure the
performance of bids, tenders, contracts (other than for the
payment of borrowed money), leases or for purposes of like
general nature in the ordinary course of the Company's or the
Subsidiary's business;

(3)  Purchase  money  security interests for property  hereafter
acquired,  conditional sale agreements, or other title retention
agreements,   with  respect  to  property  hereafter   acquired;
provided,  however, that no such security interest or  agreement
shall  affect  any servicing rights or extend  to  any  property
other than the property acquired; and

(4)  Liens securing Permitted Other Secured Debt.

10(b) Mandatory Commitments. Fail to hold Take-Out Commitments
in an aggregate amount necessary to provide for the sale of all
Mortgage Loans included in the Warehouse Borrowing Base and the
Gestation Loans Borrowing Base other than Eligible Uncommitted
Mortgage Loans.

10(c) Indebtedness. Create, incur, assume or suffer to exist, or
otherwise  become  or be liable in respect of, any  Indebtedness
except:

(1)  The Obligations;

(2)    Indebtedness reflected in the financial statements
referred to in Paragraph 8(a) above other than pursuant to the
Existing Credit Facilities;

(3) Trade debt incurred in the ordinary course of business, paid
within  forty five (45) days after the same has become  due  and
payable or which is being

contested  in  good faith, provided provision  is  made  to  the
satisfaction  of  the  Administrative  Agent  for  the  eventual
payment  thereof  in the event it is found that  such  contested
trade debt is payable by the Company;

(4)    Indebtedness secured by Liens permitted under Paragraph
10(a) above; and

(5)  Permitted Other Debt, including Permitted Other Secured
Debt.

10(d) Consolidation and Merger. Liquidate or dissolve, or enter
into any consolidation, merger, partnership, joint venture,
syndicate or other combination unless: (1) the Company involved
therewith remains as a separate surviving corporation following
any such consolidation, merger, partnership, joint venture,
syndicate or other combination, and (2) no Potential Default or
Event of Default exists immediately prior to, or will occur as a
result of, such consolidation, merger, partnership, joint
venture, syndicate or other combination.

10(e) Acquisitions. Purchase or acquire or incur liability for
the purchase or acquisition of any or all of the assets or
business of any Person other than in the ordinary course of
business (it being expressly agreed and understood that
acquisitions if servicing and mortgage loan inventory are normal
course of business activities).

10(f) Payment of Dividends. Declare or pay any dividends upon
any shares of the Company's stock now or hereafter outstanding,
except dividends payable in the capital stock of the Company, or
make any distribution of assets to its stockholders as such,
whether in cash, property or securities if upon the payment
thereof there would exist an Event of Default or Potential
Default.

10(g) Investments; Advances. Make or commit to make any advance,
loan  or  extension  of credit or capital  contribution  to,  or
purchase any stock, bonds, notes, debentures or other securities
of, or make any other investment in, any Person.

10(h) Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose  of any of its assets (other than obsolete or  worn  out
property),  whether now owned or hereafter acquired, other  than
in  the ordinary course of business and at fair market value (it
being  expressly agreed and understood that the  sale  or  other
disposition of Mortgage Loans with or without servicing released
or  Mortgage  Backed  Securities is in the  ordinary  course  of
business).

10(i) Minimum Net Worth Tests. Permit at any date the Company's
(1) Adjusted Tangible Net Worth be less than $25,000,000.00, or
(2) GAAP Net Worth to be less than $15,000,000.00.

10(j)  Debt to Net Worth Ratio. Permit its ratio at any date  of
Total  Debt  to  Adjusted Tangible Net Worth  to  be  more  than
5.0:1.0.

10(k)  Current  Ratio. Permit its ratio at any date  of  Current
Assets to Current Liabilities to be less than 1.08:1.0.


10(l) Servicing Portfolio. Fail to maintain a servicing
portfolio with respect to residential mortgage loans with an
aggregate outstanding principal balance of at least
$1,000,000,000.00, the servicing rights with respect to which
are subject only to the Lien created by the Security Agreement
and other Liens permitted under Paragraph 10(a) above, excluding
for purposes of determining compliance herewith all Company and
Affiliate-owned residential mortgage loans.

10(m) Net Loss Limitation. Permit its net losses (determined  in
accordance  with  GAAP) for any fiscal year of  the  Company  to
exceed $2,000,000.

10(n) Modification of Policies and Procedures. Make any material
change in (1) its underwriting policies and procedures which
would, due to reduced standards of creditworthiness for
potential Obligors or reduced standards of approval for Property
securing a Mortgage Loan, result in the expansion of the pool of
potential Obligors on Mortgage Loans originated or purchased by
the Company or such Subsidiary, or (2) its hedging policies
relating to Mortgage Loans and Mortgage-Backed Securities, as
such are in effect on the Effective Date.

10(o)  Subsidiaries.  Create  or  permit  the  creation  of  any
Subsidiary not in existence as of the Effective Date.

10(p) Transactions with Affiliates. Purchase, acquire or lease
any property from, or sell, transfer or lease any property to,
lend or advance any money to, borrow any money from, guarantee
any obligation of, acquire any stock, obligations or securities
of, or enter into any management or similar fee arrangement
with, any Affiliate, other than on an arms-length basis upon
terms and conditions comparable to those that could be reached
with a third party.

10(q)  Change  in  Control. Permit any change to  occur  in  the
Company's  senior management, or in the ownership or control  of
the Company.

11.  Events  of  Default.  Upon the occurrence  of  any  of  the
following events (an "Event of Default"):

11(a) The Company shall fail to pay any Obligation on the date
when due; or

11(b) Any representation or warranty made or deemed made by  the
Company  in  any Loan Document or in connection  with  any  Loan
Document shall be inaccurate or incomplete in any respect on  or
as of the date made or deemed made; or

11(c) The Company shall fail to maintain its corporate existence
or  shall  default  in  the observance  or  performance  of  any
covenant or agreement contained in Paragraph 10 above or in  the
Security Agreement; or

11(d)  The  Company shall fail to observe or perform  any  other
term  or  provision  contained in the Loan  Documents  and  such
failure shall continue for ten (10) days; or

11(e) The Company or any of its Subsidiaries shall default in
any payment of principal of or interest on any Indebtedness
(other than the Obligations) or any other event shall

occur, the effect of which other event is to permit such
Indebtedness to be declared or otherwise to become due prior to
its stated maturity; or

11(f) (1) The Company or any of its Subsidiaries shall commence
any case, proceeding or other action (i) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it,
or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (ii) seeking appointment of a
receiver, trustee, custodian or other similar official for it or
for all or any substantial part of its assets, or the Company or
any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or (2) there shall be commenced
against the Company or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (1)
above which (i) results in the entry of an order for relief or
any such adjudication or appointment, or (ii) remains
undismissed, undischarged or unbonded for a period of sixty (60)
days; or (3) there shall be commenced against the Company or any
of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or substantially all of its assets
which results in the entry of an order for any such relief which
shall not have been vacated, discharged, stayed, satisfied or
bonded pending appeal within sixty (60) days from the entry
thereof; or (4) the Company or any of its Subsidiaries shall
take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in (other than in connection with a
final settlement), any of the acts set forth in clauses (1), (2)
or (3) above; or (5) the Company or any of its Subsidiaries
shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or

11(g) (1) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975
of the Internal Revenue Code) involving any Plan,
(2) any "accumulated funding deficiency" (as defined in Section
302 of ERISA), whether or nor waived, shall exist with respect
to any Plan, (3) a Reportable Event shall occur with respect to,
or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or institution of
proceedings is, in the reasonable opinion of the Administrative
Agent, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, and, in the case of a Reportable
Event, the continuance of such Reportable Event unremedied for
ten days after notice of such Reportable Event pursuant to
Section 4043(a), (c) or (d) of ERISA is given or the continuance
of such proceedings for ten days after commencement thereof, as
the case may be, (4) any Single Employer Plan shall terminate
for purposes of Title IV of ERISA, (5) any withdrawal liability
to a Multiemployer Plan shall be incurred by the Company or any
of its Subsidiaries or (6) any other event or condition shall
occur or exist; and in each case in clauses (1) through (6)
above, such event or condition, together with all other such
events or conditions, if any, is likely to subject the Company
or any of its Subsidiaries to any tax, penalty or other
liabilities in the aggregate material in relation to the
business, operations, property or financial or other condition
of the Company or any of its Subsidiaries; or

11(h) Any judgment or decree shall be entered against the
Company or any of its Subsidiaries and shall not have been
vacated, discharged, stayed, satisfied or bonded pending appeal
within sixty (60) days from the entry thereof; or

11(i) Ten percent (10%) or more by number of Mortgage Loans held
by the Collateral Agent as Collateral under the Security
Agreement shall cease to be Eligible Mortgage Loans during any
consecutive sixty (60) day period; or

11(j) A material adverse change occurs, or is reasonably likely
to occur, in the Company's business condition (financial or
otherwise), operations, properties or prospects, or ability to
repay the Obligations;

                              THEN,

(1) Automatically upon the occurrence of an Event of Default
under Paragraph 11(f) above,

(2)  At the option of any Lender upon the occurrence of an Event
of Default under Paragraph 11 (a) above, and

(3) In all other cases, at the option of the Majority Lenders,
each Lender's obligation to make Loans hereunder shall terminate
and/or  the principal balance of outstanding Loans and  interest
accrued  but  unpaid  thereon and all  other  Obligations  shall
become  immediately  due  and payable, without  demand  upon  or
presentment  to the Company, which are expressly waived  by  the
Company.

12.  The Administrative Agent.

12(a) Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender
under the Loan Documents and such Lender hereby irrevocably
authorizes the Administrative Agent, as the agent of such
Lender, to take such action on its behalf under the provisions
of the Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative
Agent by the terms of the Loan Documents, together with such
other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in the
Loan Documents, the Administrative Agent shall not have any
duties or responsibilities, except those expressly set forth
herein or therein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into the Loan
Documents or otherwise exist against the Administrative Agent.

12(b) Delegation of Duties. The Administrative Agent may execute
any of its duties under the Loan Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence
or misconduct of any agents or attorneys-in-fact selected by it
with reasonable care.


12(c) Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-
in-fact or Affiliates shall be (1) liable for any action
lawfully taken or omitted to be taken by it or such Person under
or in connection with the Loan Documents (except for its or such
Person's own gross negligence or willful misconduct)~ or (2)
responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the
Company or any officer thereof contained in the Loan Documents
or in any certificate, report, statement or other document
referred to or provided for in, or received by the
Administrative Agent under or in connection with, the Loan
Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Loan Documents
or for any failure of the Company to perform its obligations
hereunder. The Administrative Agent shall be under no obligation
to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, the Loan Documents or to inspect the properties, books or
records of the Company.

12(d) Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent,
certification, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or
conversation reasonably believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company),
independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and
treat the payee of any note as the owner thereof for all
purposes. As to the Lenders: (1) the Administrative Agent shall
be fully justified in failing or refusing to take any action
under the Loan Documents unless it shall first receive such
advice or concurrence of the Majority Lenders or all of the
Lenders, as appropriate, or it shall first be indemnified to its
satisfaction by the Lenders ratably in accordance with their
respective Percentage Shares against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take any action (except for liabilities and
expenses resulting from the Administrative Agent's gross
negligence or willful misconduct), and (2) the Administrative
Agent shall in all cases be fully protected in acting, or in
refraining from acting, under the Loan Documents in accordance
with a request of the Majority Lenders or all of the Lenders, as
appropriate, and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Lenders.

12(e) Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any
Potential Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the
Company referring to the Loan Documents, describing such
Potential Default or Event of Default and stating that such
notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such
Potential Default or Event of Default as shall be reasonably
directed by the Majority Lenders (or any Lender with respect to
an Event of Default under Paragraph 11 (a) above)), provided
that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Potential Default or
Event of Default as it shall deem advisable in the best interest
of the Lenders.


12(f) Non-Reliance on Administrative Agent or Other Lenders.
Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including any review of
the affairs of the Company, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent that
it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business,
operations, property, financial and other condition and
creditworthiness of the Company and made its own decision to
make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without
reliance upon the Administrative Agent or any other Lender, and
based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking
action under this Agreement, and to make such investigation as
it deems necessary to inform itself as to the business,
operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and
other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder or furnished to
the Administrative Agent for distribution to the Lenders, the
Administrative Agent shall have no duty or responsibility to
provide any Lender with any credit or other information
concerning the business, operations, property, financial and
other condition or creditworthiness of the Company which may
come into the possession of the Administrative Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.

12(g) Back-Up Indemnification. The Lenders agree to indemnify
the Administrative Agent in its capacity as such (to the extent
not reimbursed by the Company and without limiting the
obligation of the Company to do so), ratably according to the
respective amounts of their Percentage Shares, from and against
any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the payment
of the Obligations) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or
arising out of the Loan Documents or any documents contemplated
by or referred to herein or the transactions contemplated hereby
or any action taken or omitted by the Administrative Agent under
or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the
payment of the Obligations.

12(h) Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to,
accept deposits from and generally engage in any kind of
business with the Company as though the Administrative Agent
were not the Administrative Agent hereunder. With respect to
such loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers under
the Loan Documents as any Lender and may exercise the same as
though it were not the Administrative Agent, and the terms
"Lender" and "Lenders'~ shall include the Administrative Agent
in its individual capacity.


12(i) Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent under the Loan Documents upon
ninety (90) days' notice to the Lenders and agrees that it will
so resign in the event it ceases to hold any Percentage Share of
the Obligations. If the Administrative Agent shall resign, then
the Majority Lenders shall appoint from among the Lenders a
successor agent or, if the Majority Lenders are unable to agree
on the appointment of a successor agent, the retiring
Administrative Agent shall appoint a successor agent for the
Lenders (which successor agent, assuming that there does not
exist a Potential Default or Event of Default, shall be subject
to approval by the Company, which approval shall not be
unreasonably withheld), whereupon such successor agent shall
succeed to the rights, powers and duties of the retiring
Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent effective upon its appointment, and
the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative
Agent or any of the parties to this Agreement or any of the
other Loan Documents or successors thereto. After any retiring
Administrative Agent's resignation hereunder as Administrative
Agent, the provisions of this Paragraph 12 shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under the Loan Documents.

13.  Additional Lenders; Assignments and Participations;
Increases in Availability.

13(a)     Addition of New Lender.

(1)    Subject to the limitation on the Maximum Aggregate Credit
Limit, the Company or any Lender may at any time propose that
one or more financial institutions (each, an "Applicant
Financial Institution") become an additional Lender hereunder.
At such time, the Company or such Lender, as applicable, shall
notify the other parties hereto, including the Administrative
Agent, of the identity of such Applicant Financial Institution
and such Applicant Financial Institution's proposed Maximum
Commitment. The addition of any Applicant Financial Institution
shall be subject to:

(i)    If such Applicant Financial Institution is proposed for
inclusion as a Lender hereunder by an existing Lender, the prior
written consent of the Company and the Administrative Agent, and
if such Applicant Financial Institution is proposed for
inclusion as a Lender hereunder by the Company, the prior
written consent of the Administrative Agent, none of which
consents shall be unreasonably withheld and which, if given,
shall be given in writing to the other parties hereto no later
than the tenth day following receipt by the Company and/or the
Administrative Agent of a written request for the inclusion of
such Applicant Financial Institution as a Lender hereunder; and

(ii) Delivery of each of the items and the occurrence of each of
the events described in subparagraph (2) below.

(2)    Assuming delivery of the consent of the Company and/or
the Administrative Agent as required pursuant to subparagraph
(1)(i) above, the Administrative Agent, the Company and, if such
Applicant Financial Institution will be

acquiring a portion of an existing Lender's Maximum Commitment
by way of assignment from such existing Lender, such existing
Lender, shall mutually agree on the Adjustment Date on which
such Applicant Financial Institution shall become a party hereto
and a Lender hereunder. On such Adjustment Date:

(i)    The Administrative Agent shall deliver to the Company and
each of the Lenders a replacement Commitment Schedule to be
effective as of such Adjustment Date, reflecting the Aggregate
Credit Limit and the Lenders' respective Maximum Commitments and
Percentage Shares.

(ii) No later than 11:30 a.m. (Los Angeles time) on such
Adjustment Date, such Applicant Financial Institution shall pay
to the Administrative Agent an amount equal to such Applicant
Financial Institution's Percentage Share of Loans outstanding.
The Administrative Agent shall thereupon remit to the Lenders
their Percentage Shares of such funds. Following such Adjustment
Date, fees and interest accrued on the Obligations to but not
including such Adjustment Date shall be payable to the Lenders
in accordance with their respective Percentage Shares prior to
such Adjustment Date before giving effect to the readjustment
thereof pursuant to the Commitment Schedule provided by the
Administrative Agent on such Adjustment Date.

(iii) If such Applicant Financial Institution is acquiring a
portion of an existing Lender's Maximum Commitment and
Percentage Share by way of assignment from such existing Lender,
the Administrative Agent, the Company, the assigning Lender and
the Applicant Financial Institution shall execute and deliver an
Assignment Agreement, or if such Applicant Financial Institution
is becoming a Lender hereunder as a result of an increase in the
Aggregate Credit Limit, the Administrative Agent, the Company
and the Applicant Financial Institution shall execute and
deliver an Additional Lender Agreement, either of which
Assignment Agreement or Additional Lender Agreement shall
constitute an amendment to this Agreement and the other Loan
Documents to the extent necessary to reflect the inclusion of
the Applicant Financial Institution as a Lender hereunder.

(iv)  The  Company shall execute and deliver to  such  Applicant
Financial Institution a Tranche A Note and a Tranche B Note.

(v)  The  Applicant  Financial  Institution  shall  pay  to  the
Administrative Agent a registration fee of $3,500.00.

Subject to the requirements described above, on the Adjustment
Date the Applicant Financial Institution shall become a party
hereto and a Lender hereunder and shall be entitled to all
rights, benefits and privileges accorded a Lender under the Loan
Documents and shall be subject to all obligations of a Lender
under the Loan Documents.


13(b) Assignments Among Existing Lenders. Any Lender may, with
the consent of the Company, such consent not to be unreasonably
withheld, at any time agree to assign a portion of such Lender's
Maximum Commitment and Percentage Share to an existing Lender (a
"Transferee Lender"). In such event, such Lender and the
Transferee Lender shall so notify the Administrative Agent and
the Company of the Adjustment Date on which such assignment is
to be effective. On such Adjustment Date:

(1)    The Company shall deliver to the Administrative Agent and
each of the Lenders a Commitment Schedule to be effective as of
such Adjustment Date, reflecting the Aggregate Credit Limit and
the Lenders' respective Maximum Commitments and Percentage
Shares.

(2)    The Administrative Agent, the Company, the assigning
Lender and the Transferee Lender shall execute and deliver an
Assignment Agreement, which shall constitute an amendment to
this Agreement and the other Loan Documents to the extent
necessary to reflect such transfer.

(3)    No later than 12:30 p.m. (Los Angeles time) on such
Adjustment Date, the Transferee Lender shall pay to the
Administrative Agent an amount equal to such Transferee Lender's
Percentage Share of Loans outstanding in excess of such
Transferee Lender's previous Percentage Share thereof. The
Administrative Agent shall thereupon remit to the transferring
Lender the amount thereof.

13(c) Minimum Loan Commitment. Notwithstanding anything to the
contrary contained herein, the inclusion of any Applicant
Financial Institution as a Lender hereunder pursuant to
Paragraph 13(a) above and the assignment by an existing Lender
of a portion of such Lender's Maximum Commitment to a Transferee
Lender pursuant to Paragraph 13(b) above shall be subject to the
following restrictions:

(1)    If an Applicant Financial Institution is acquiring a
portion (but not all) of an existing Lender's Maximum Commitment
by way of an assignment from such existing Lender, then such
assignment of Maximum Commitment must be in the minimum amount
of $10,000,000.00 (or if in a higher amount, in integral
multiples of $5,000,000.00 in excess thereof) and such existing
Lender must continue to hold a Maximum Commitment of not less
than $15,000,000.00 following the consummation of the
contemplated assignment;

(2)    If an existing Lender is assigning a portion (but not
all) of its Maximum Commitment to a Transferee Lender, such
assignment of Maximum Commitment is in the minimum amount of
$10,000,000.00 (or if in a higher amount, in integral multiples
of $5,000,000.00 in excess thereof) and such existing Lender
shall continue to hold a Maximum Commitment of not less than
$15,000,000.00 following the consummation of the contemplated
assignment.


13(d) Sub-Participations by Lenders. Any Lender may at any  time
sell  participating interests in any of the Obligations held  by
such  Lender  and  its  Maximum Commitment hereunder;  provided,
however, that:

(1)  No participation contemplated by this Paragraph 13(d) shall
relieve such Lender from its obligations hereunder or under  any
other Loan Document;

(2)   Such  Lender  shall  remain  solely  responsible  for  the
performance of such obligations;

(3)    The Company, the Administrative Agent, and the other
Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations
under the Loan Documents;

(4)    Such Lender shall not enter into participation agreements
with any participants (other than Affiliates of such Lender)
involving the sale of a participation interest in less than
$10,000,000.00 of such Lender's Maximum Commitment for each
$10,000,000.00 of Maximum Commitment held by such Lender;

(5)    The participant under the participation agreement shall
have no rights under the Loan Documents or to control the
actions of the Lender selling such participation other than with
respect to any amendment, modification or waiver which extends
the due date for payment of any principal, interest or fees
payable under the Loan Documents or reduces the interest rate or
the amount of principal or fees applicable to the Obligations
(except reductions contemplated by the Loan Documents);
provided, however, that if such participation agreement grants
rights to participants to approve such amendments, modifications
and waivers, such participation agreement shall contain a voting
mechanism whereby a majority of the portion of the Obligations
owing to the Lender selling such participation (whether held by
such Lender or participated) shall control the vote for all of
that Lender's portion of the Obligations; and

(6)    Except in the case of a sale of a participation to
another Lender (which agrees to be bound by the participation
terms hereof), any such participation agreement shall not permit
the participant thereunder to transfer, pledge, assign, sell sub-
participations in, or otherwise encumber its participation
interest in the Obligations.

13(e) Federal Reserve Bank. Notwithstanding the provisions of
Paragraphs 13(a) and 13(b) above, any Lender may at any time
pledge or assign all or any portion of such Lender's rights
under this Agreement and the other Loan Documents to a Federal
Reserve Bank.

13(f) Increases in Availability. From time to time the Company
and any Lender (an "Increasing Lender") may agree, with the
prior written consent of the Administrative Agent, to
permanently or temporarily increase such Lender's Maximum
Commitment and Percentage Share, the dollar amount of any such
increase to be, subject to the Maximum Aggregate Credit Limit
limitation, in the minimum dollar amount of $10,000,000.00 and
integral multiples of $5,000,000.00 in excess thereof. The
Company and the Increasing Lender shall agree on the


Adjustment Date for said increase and, if the increase is a
temporary rather than permanent increase, the date on which said
increase shall terminate (the "Temporary Increase Termination
Date"). The Company shall deliver to the Administrative Agent
and each of the Lenders a Commitment Schedule to be effective as
of such Adjustment Date, and the Lenders shall purchase and sell
among themselves Loans in amounts necessary to effect the new
Percentage Shares as of such Adjustment Date. On the Temporary
Increase Termination Date the aggregate amount of such
Increasing Lender's Percentage Share of outstanding Standard
Loans and Gestation Loans held by the Increasing Lender in
excess of its Maximum Commitment after giving effect to the
termination of the subject increase shall, if but only if at
such Temporary Increase Termination Date there does not exist an
Event of Default, be payable in full. If at the Temporary
Increase Termination Date there exists an Event of Default, the
temporary increase of the Increasing Lender shall continue in
effect and, unless otherwise agreed by one hundred percent
(100%) of the Lenders, shall be treated thereafter as a
permanent increase in said Increasing Lender's Maximum
Commitment.

14.  Miscellaneous Provisions.

14(a) No Assignment. The Company may not assign its rights or
obligations under this Agreement or the other Loan Documents
without the prior written consent of one hundred percent (100%)
of the Administrative Agent and the Lenders. Any purported
assignment in violation of this Paragraph 14(a) shall
automatically be deemed null and void. Subject to the foregoing,
all provisions contained in this Agreement and the other Loan
Documents or any document or agreement referred to herein or
relating hereto shall inure to the benefit of each Lender, its
successors and assigns, and shall be binding upon the Company
and its respective successors and assigns.

14(b) Amendment. This Agreement may not be amended or terms or
provisions hereof waived unless such amendment or waiver is in
writing and signed by the Majority Lenders, the Administrative
Agent and the Company; provided, however, that without the prior
written consent of one hundred percent (100%) of the
Administrative Agent and the Lenders and (other than with
respect to subparagraph (4) below) the Company, no amendment or
waiver shall: (1) waive or amend any term or provision of
Paragraphs 10 (i), (j), (k), (1) or (m) above or the definition
of any Type of Collateral, (2) reduce the principal of, or
interest on, the Loans, (3) modify the Aggregate Credit Limit or
the Maximum Aggregate Credit Limit, (4) modify any Lender's
Percentage Share, (5) modify the definition of "Majority
Lenders," (6) extend the Maturity Date, or (7) amend this
Paragraph 14(b) or any provision of this Agreement which by its
terms requires the consent or approval of one hundred percent
(100%) of the Lenders. It is expressly agreed and understood
that the failure by the required Lenders to elect to accelerate
amounts outstanding hereunder and/or to terminate the obligation
of the Lenders to make Loans hereunder shall not constitute an
amendment or waiver of any term or provision of this Agreement.

14(c) Cumulative Rights; No Waiver. The rights, powers and
remedies of the Administrative Agent and the Lenders hereunder
and under the other Loan Documents are cumulative and in
addition to all rights, powers and remedies provided under any
and all agreements among the Company, the Administrative Agent
and the Lenders relating hereto and


thereto, at law, in equity or otherwise. Any delay or failure by
the Administrative Agent and the Lenders to exercise any right,
power or remedy shall not constitute a waiver thereof by the
Administrative Agent and the Lenders, and no single or partial
exercise by the Administrative Agent and the Lenders of any
right, power or remedy shall preclude any other or further
exercise thereof or any exercise of any other rights, powers or
remedies.

14(d) Entire Agreement. This Agreement and the other Loan
Documents and the documents and agreements referred to herein
embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and
understandings relating to the subject matter hereof and
thereof.

14(e)  Survival. All representations, warranties, covenants  and
agreements  contained  in  this Agreement  and  the  other  Loan
Documents  on  the  part  of  the  Company  shall  survive   the
termination of this Agreement and shall be effective  until  the
Obligations  are  paid  and  performed  in  full  or  longer  as
expressly provided herein.

14(f) Notices. All notices given by any party to the others to
be given under the Loan Documents shall be in writing (including
facsimile transmission) unless otherwise provided for herein,
delivered personally or by depositing the same in the United
States mail, registered, with postage prepaid, addressed to the
party at the address set forth on Schedule I attached hereto.
Any party may change the address to which notices are to be sent
by notice of such change to each other party given as provided
herein. Such notices shall be effective on the date received or,
if mailed, on the third Business Day following the date mailed.

14(g) Governing Law. This Agreement and the other Loan Documents
shall  be governed by and construed in accordance with the  laws
of  the  State of California without giving effect to choice  of
law rules.

14(h)  Counterparts. This Agreement and the other Loan Documents
may  be  executed in any number of counterparts,  all  of  which
together shall constitute one agreement.

14(i) Sharing of Payments. Subject to the provisions of
Paragraph 5(g) above, if any Lender shall receive and retain any
payment, whether by setoff, application of deposit balance or
security, or otherwise, in respect of the Obligations in excess
of such Lender's Percentage Share or, as applicable, Post-
Default Percentage Share, then such Lender shall purchase from
the other Lenders for cash and at face value and without
recourse, such participation in the Obligations held by them as
shall be necessary to cause such excess payment to be shared
ratably as aforesaid with each of them; provided, that if such
excess payment or part thereof is thereafter recovered from such
purchasing Lender, the related purchases from the other Lenders
shall be rescinded ratably and the purchase price restored as to
the portion of such excess payment so recovered, but without
interest. Each Lender agrees to exercise any and all rights of
setoff, counterclaim or bankers' lien first fully against the
Obligations held by such Lender, and only then to any other
Indebtedness of the Company to such Lender.


14(j)  Waiver  of Jury Trial. EACH OF THE PARTIES HERETO  WAIVES
ITS  RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR  CAUSE
OF ACTION


BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY
TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS PARAGRAPH 14(j) AS TO ANY ACTION, COUNTERCLAIM
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS.

14(k) Limitation on Interest. The Lenders, the Company and the
other parties to the Loan Documents intend to contract in strict
compliance with applicable usury law from time to time in
effect. In furtherance thereof, such Persons stipulate and agree
that none of the terms and provisions contained in the Loan
Documents shall ever be construed to create a contract to pay,
for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged
by applicable law from time to time.

                    [SIGNATURE PAGE FOLLOWS]


IN   WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement  to  be  executed as of the day and year  first  above
written.

FIRST MORTGAGE CORPORATION, a California corporation

By
Name
Title



NATIONSBANK, N.A., as Administrative Agent and as a Lender


By
Name
Title

AGNES J. MCALPINE
Vice President


SANWA BANK CALIFORNIA, as a Lender

By
Name
Title

EX-6

Exhibit 10-6
                         FIRST AMENDMENT
                               TO
               MORTGAGE LOAN WAREHOUSING AGREEMENT

     THIS FIRST AMENDMENT TO MORTGAGE LOAN WAREHOUSING AGREEMENT
(the "First Amendment") is made and dated as of the 30th day of
August, 1999 by and among FIRST MORTGAGE CORPORATION, a
California corporation (the "Company"), the Lenders, SANWA BANK
CALIFORNIA, as collateral agent for the Lenders (in such
capacity, the "Collateral Agent"), and BANK OF AMERICA, N.A.
(formerly NationsBank, N.A.), as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").

                            RECITALS

     A. Pursuant to that certain Mortgage Loan Warehousing
Agreement dated as of July 22, 1999 among the Company, the
Lenders and the Administrative Agent (as amended, extended and
replaced from time to time, the "Credit Agreement," and with
capitalized terms used herein and not otherwise defined used with
the meanings given such terms in the Credit Agreement), the
Lenders agreed to extend credit to the Company on the terms and
subject to the conditions set forth therein.

     B.  The  parties  hereto have agreed  to  amend  the  Credit
Agreement  in  certain respects, as set forth  more  particularly
below.

     NOW,  THEREFORE, in consideration of the foregoing  Recitals
and  for  other good and valuable consideration, the receipt  and
adequacy  of  which are hereby acknowledged, the  parties  hereto
hereby agree as follows:

                            AGREEMENT

1. Amendments.

       (a) Maturity Date. To reflect the agreement of the
parties hereto to extend the Maturity Date, effective as of the
First Amendment Effective Date (as defined in Paragraph 3 below),
the definition of the term "Maturity Date" set forth in the
Glossary is hereby amended by deleting the date "September 1,
1999" set forth therein and inserting in place thereof the date
"August 31, 2000."

       (b) Settlement Account. To reflect the agreement of the
parties hereto to change the Settlement Account, effective as of
the First Amendment Effective Date, the definition of the term
"Settlement Account" set forth in the Glossary is hereby amended
to read in its entirety as follows:

          "'Settlement  Account'-shall mean  'no-access'  Account
No.  3751396510 maintained in the Company's name alone  with  the
Administrative Agent."

The Collateral Agent shall prepare the transmittal letters and
other forms required pursuant to the Security Agreement in
accordance with this amendment.


     2. Reaffirmation of Loan Documents. The Company hereby
affirms and agrees that (a) the execution and delivery by the
Company of and the performance of its obligations under this
First Amendment shall not in any way amend, impair, invalidate or
otherwise affect any of the obligations of the Company or the
rights of the Lenders under the Credit Agreement and the other
Loan Documents or any other document or instrument made or given
by the Company in connection therewith, (b) the term
"Obligations" as used in the Loan Documents include, without
limitation, the Obligations of the Company under the Credit
Agreement as amended hereby, and (c) except as expressly amended
hereby, the Loan Documents remain in full force and effect as
written.

     3. First Amendment Effective Date. This First Amendment
shall be effective as of the date (the "First Amendment Effective
Date") that there shall have been delivered to the Administrative
Agent, duly executed by the parties hereto, this First Amendment.

     4.  No  Other Amendment. Except as expressly amended herein,
the  Credit  Agreement and other Loan Documents shall  remain  in
full force and effect as currently written.

     5. Counterparts. This First Amendment may be executed in any
number of counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together
shall constitute one and the same agreement.

     6.   Representations  and  Warranties.  The  Company  hereby
represents and warrants to the Lenders, the Administrative  Agent
and the Collateral Agent as follows:

       (a) The Company has the corporate power and authority and
the legal right to execute, deliver and perform this First
Amendment and has taken all necessary corporate action to
authorize the execution, delivery and performance of this First
Amendment. This First Amendment has been duly executed and
delivered on behalf of the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against
the Company in accordance with their respective terms.

       (b) At and as of the date of execution hereof and at and
as of the effective date of this First Amendment and both prior
to and after giving effect to this First Amendment: (1) the
representations and warranties of the Company contained in the
Credit Agreement and the other Loan Documents are accurate and
complete in all respects, and (2) there has not occurred an Event
of Default or Potential Default under the Credit Agreement.


     IN  WITNESS  WHEREOF, the parties hereto  have  caused  this
First Amendment to be executed as of the day and year first above
written.

FIRST MORTGAGE CORPORATION

BY:
NAME
TITLE



BANK OF AMERICA, N.A., as the Administrative Agent and a Lender

By
Name
Title

SANWA BANK CALIFORNIA, as the Collateral Agent and a Lender

By
Name
Title

EX-7

Exhibit 10-7
                        SECOND AMENDMENT
                               TO
               MORTGAGE LOAN WAREHOUSING AGREEMENT

     THIS SECOND AMENDMENT TO MORTGAGE LOAN WAREHOUSING AGREEMENT
(the "Second Amendment") is made and dated as of the 15th day of
October, 1999 by and among FIRST MORTGAGE CORPORATION, a
California corporation (the "Company"), the Lenders, SANWA BANK
CALIFORNIA, as collateral agent for the Lenders (in such
capacity, the "Collateral Agent"), and BANK OF AMERICA, N.A.
(formerly NationsBank, N.A.), as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").

                            RECITALS

     A. Pursuant to that certain Mortgage Loan Warehousing
Agreement dated as of July 22, 1999 among the Company, the
Lenders and the Administrative Agent (as amended, extended and
replaced from time to time, the "Credit Agreement," and with
capitalized terms used herein and not otherwise defined used with
the meanings given such terms in the Credit Agreement), the
Lenders agreed to extend credit to the Company on the terms and
subject to the conditions set forth therein.

     B.  The  parties  hereto have agreed  to  amend  the  Credit
Agreement  in  certain respects, as set forth  more  particularly
below.

     NOW,  THEREFORE, in consideration of the foregoing  Recitals
and  for  other good and valuable consideration, the receipt  and
adequacy  of  which are hereby acknowledged, the  parties  hereto
hereby agree as follows:

                            AGREEMENT

1. Amendments.

       (a) Eligible Mortgage-Backed Security. To reflect the
agreement of the parties hereto to change the definition of the
term "Eligible Mortgage-Backed Security," effective as of the
Second Amendment Effective Date (as defined in Paragraph 3
below), the definition of the term "Eligible Mortgage-Backed
Security" set forth in the Glossary is hereby amended by deleting
subparagraph (g) set forth therein.

       (b) Unit Collateral Value. To reflect the agreement of
the parties hereto to change the Unit Collateral Value of
Eligible Mortgage-Backed Securities, effective as of the Second
Amendment Effective Date, subparagraph (f) of the definition of
the term "Unit Collateral Value" set forth in the Glossary is
hereby amended to read in its entirety as follows:

     "(f) With respect to each Eligible Mortgage-Backed Security
that has been included in the Warehouse Borrowing Base for not
more than sixty (60) days, ninety-nine percent (99%) of the least
of: (1) the face amount thereof, (2) the Applicable Take-Out
Price therefor, if any, and (3) the Fair Market Value thereof;
and with respect to each Eligible Mortgage-Backed Security that
has been included in the Warehouse Borrowing Base for more than
sixty (60) days, ninety-two percent (92%) of the least of: (1)
the face amount thereof, (2) the Applicable Take-Out Price
therefor, if any, and (3) the Fair Market Value thereof."

       (c)  Fair  Market Value. To reflect the agreement  of  the
parties  hereto  to  add certain provisions  regarding  the  Fair
Market  Value,  effective  as of the Second  Amendment  Effective
Date,  the term "Fair Market Value" set forth in the Glossary  is
hereby amended to read in its entirety as follows:


     "'Fair Market Value' shall mean at any date with respect to
any Mortgage Loan or Mortgage-Backed Security, the fair market
value thereof as of such date as determined by the Administrative
Agent in its reasonable business judgment in conformity with
standard industry practice for valuing similar Mortgage Loans and
Mortgage-Backed Securities; provided, however, that the
Administrative Agent may rely on information provided by the
Company to the Administrative Agent pursuant to Paragraph 9(b)(4)
of the Agreement; and provided further, that the Fair Market
Value of any Mortgage-Backed Security shall not exceed at any
date the lowest Fair Market Value determined prior to such date
for such Mortgage-Backed Security during the term it is included
in the Warehouse Borrowing Base."

       (d) Applicable Eurodollar Rate. To reflect the agreement
of the parties hereto to modify the Eurodollar Spread in
connection with the Applicable Eurodollar Rate, effective as of
the Second Amendment Effective Date, the definition of the term
"Eurodollar Spread" set forth in the Glossary is hereby amended
to read in its entirety as follows:

     "'Eurodollar Spread' shall mean: (a) with respect to
Standard Loans up to a principal amount equal to the Collateral
Value of the Warehouse Borrowing Base consisting of Eligible
Mortgage-Backed Securities, three-quarters of one percent
(0.75%), (b) with respect to any remaining Standard Loans, one
and one-quarter of one percent (1.25%), and (c) with respect to
Gestation Loans, three-quarters of one percent (0.75%)."

       (e) Applicable Effective Fed Funds Rate. To reflect the
agreement of the parties hereto to modify the Applicable
Effective Fed Funds Rate, effective as of the Second Amendment
Effective Date, the term "Applicable Effective Fed Funds Rate"
set forth in the Glossary is hereby amended to read in its
entirety as follows:

     "'Applicable Effective Fed Funds Rate' shall mean on any day
the Effective Fed Funds Rate on such day plus, (a) with respect
to Standard Loans and Swing Line Loans up to a principal amount
equal to the Collateral Value of the Warehouse Borrowing Base
consisting of Eligible Mortgage-Backed Securities, three-quarters
of one percent (0.75%), (b) with respect to any remaining
Standard Loans and Swing Line Loans, one and one-quarter of one
percent (1.25%), and (c) with respect to Gestation Loans, three-
quarters of one percent (0.75%)."

2. Reaffirmation of Loan Documents. The Company affirms and
agrees that (a) the execution and delivery by the Company of and
the performance of its obligations under this Second Amendment
shall not in any way amend, impair, invalidate or otherwise
affect any of the obligations of the Company or the rights of the
Lenders under the Credit Agreement and the other Loan Documents
or any other document or instrument made or given by the Company
in connection therewith, (b) the terms "Obligations" as used in
the Loan Documents include, without limitation, the Obligations
of the Company under the Credit Agreement as amended hereby, and
(c) except as expressly amended hereby, the Loan Documents remain
in full force and effect as written.

     3.  Second  Amendment Effective Date. This Second  Amendment
shall  be  effective as of July 22, 1999 (the  "Second  Amendment
Effective Date") upon the receipt by the Administrative Agent  of
this Second Amendment duly executed by all parties hereto.

     4.  No  Other Amendment. Except as expressly amended herein,
the  Credit  Agreement and other Loan Documents shall  remain  in
full force and effect as currently written.

     5. Counterparts. This Second Amendment may be executed in
any number of counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together
shall /p constitute one and the same agreement.

     6.   Representations  and  Warranties.  The  Company  hereby
represents and warrants to the Lender as follows:

       (a) The Company has the corporate power and authority and
the legal right to execute, deliver and perform this Second
Amendment and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Second
Amendment. This Second Amendment has been duly executed and
delivered on behalf of the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against
the Company in accordance with their respective terms.

       (b) At and as of the date of execution hereof and at and
as of the effective date of this Second Amendment and both prior
to and after giving effect to this Second Amendment: (1) the
representations and warranties of the Company contained in the
Credit Agreement and the other Loan Documents are accurate and
complete in all respects, and (2) there has not occurred an Event
of Default or Potential Default under the Credit Agreement.

EX-15

Exhibit 10-15
                  ACTION BY UNANIMOUS WRITTEN CONSENT
                     OF THE BOARD OF DIRECTORS OF
                      FIRST MORTGAGE CORPORATION


     The undersigned, being all of the directors of First Mortgage
Corporation, a California corporation, hereby approve the following
resolution and consent to its adoption:

          RESOLVED, that the option grant date of the 1993 Stock Option
Plan for Non-Employee Directors is hereby amended and extended to the
last business day in July 1999.

     This written consent is executed pursuant to Section 307 of the
General Corporation Law of the State of California and shall be filed
in the minute book of the Company.

     Dated:  July 1, 1999




                                   Clement Ziroli




                                   Bruce G. Norman




                                   Pac W. Dong




                                   Harold Harrigian




                                   Robert E. Weiss

EX-27

 

<ARTICLE> 5

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          MAR-31-2000
<PERIOD-END>                               MAR-31-2000
<CASH>                                           11264
<SECURITIES>                                         0
<RECEIVABLES>                                     5558
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                                     0
<PP&E>                                            3097
<DEPRECIATION>                                    2516
<TOTAL-ASSETS>                                   97825
<CURRENT-LIABILITIES>                                0
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                          2559
<OTHER-SE>                                       26252
<TOTAL-LIABILITY-AND-EQUITY>                     97825
<SALES>                                              0
<TOTAL-REVENUES>                                 17859
<CGS>                                                0
<TOTAL-COSTS>                                    18634
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                  (775)
<INCOME-TAX>                                     (221)
<INCOME-CONTINUING>                              (554)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     (554)
<EPS-BASIC>                                     (0.10)
<EPS-DILUTED>                                   (0.10)