Item 1: Business
General THE MORTGAGE BANCFUND OF AMERICA II, L.P. is a California Limited Partnership (the "Partnership") of which the general partners are Robert Y. Strom and the Mortgage BancFund Corporation (the Corporation), a California Corporation wholly owned by Mr. Strom. The Partnership was organized to make first and second trust deed commercial real estate loans in the southern California area.
State of the Economy
The southern California economy continues to be the most important factor which affects the operations of the Partnership. Throughout 1994 and 1995 large industries announced large employee layoffs, plant closings and relocation efforts to other states. All of this has depressed real estate values in the local area. Management is of the opinion that the economy could continue to decline for at least the next two to five years adversely affecting rental rates and property values in general.
Employees
The Partnership does not directly employ personnel. The Corporate general partner handles all the business affairs of the partnership with its remaining full-time staff of one employee.
Item 2:
Item 2: Properties:
The Partnership does not own any real property other than foreclosed properties acquired during the normal course of business which was disposed of during 1996. No other real property is owned by the Partnership.
Item 3:
Item 3: Legal Proceedings
At December 31, 1997 the Partnership was not involved in any adverse legal proceedings.
Item 4:
Item 4: Submission of Matters to a Vote of Security Holders
No matters have been submitted to a vote of the Partnership.
Part II
Item 5:
Item 5: Market for the Registrant's Partnership Units and Related Security Holder Matters
a) There is no established trading market for these securities and no known sales of the securities have taken place during fiscal 1997. b) At December 31, 1997 there were 71,307 limited partnership units outstanding which had been sold in prior years to approximately 512 limited partners. c) No distributions were paid in fiscal 1997.
Item 6:
Item 6: Selected Financial Data
1995 1996 1997
Total Income $ 63,012 $ 282,629 $ 68,002
Net Income(Loss) (896,405) (70,278) (338,022)
Net Income(loss) per LP Unit (12.57) (.99) (4.74)
Total Assets 1,785,274 597,121 239,149
Total Liabilities $ 1,181,716 $ 63,641 $ 43,891
Distributions paid 0 0 0
Item 7:
Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations
General Overview: The Partnership's management continues to collect the accounts receivable on the Partnership books. ll outstanding loan balances were realized in 1997. In 1996 the Partnership concluded a development of single family housing addition acquired through foreclosure. Projections of addiotional cash generated were not realized due to mismanagement of the budget by the development partner in the joint venture.
Liquidity and Capital Resources: Liquidity continues to be a serious problem for the Partnership. Management will depend upon the operations of foreclosed real estate and the ultimate sale of that real estate to generate funds necessary to operate. There are no plans to seek additional capital from outside sources, either debt nor equity.
The capital account has eroded by nearly 97% of the original $100.00 cost to a value of $2.73 per Partnership unit outstanding. This due to losses experienced over the past several years.
Results of Operations: The partnership continues to report poor operating results foe December 31, 1997. As discussed above, book value per Pertnership unit outsatanding is down to $2.73; a 96% decline in value. Management is operating in a liquidation mode to sell all remaining assets and return whatever investment remains to the limited partners.
Item 8:
Item 8: Financial Statements and Supplementary Data
Information required by this item is included under Item 14: Exhibits, financial statement schedules and reports on Form 8-K and is incorporated herein by reference.
Item 9:
Item 9: Disagreements with Accountants on Accounting and Financial Disclosure
None.
Part III
Item 10:
Item 10: Directors and Executive Officers of the Registrant.
The Partnership is managed by the general partner, Robert Y. Strom and by the corporate general partner, Mortgage BancFund Corp. Mr. Strom is the managing officer for the corporation. Sharon Wilhelm is Vice President and Manager of Investor Services.
Item 11:
Item 11: Executive Compensation Although the origional prospectus allows the general partners to collect fees under certain conditions, management has elected not to collect any of those fees and has not for the past four years. The corporate general partner does continue to be reimbursed for actual out of expenses incurred to manage the partnership.
Item 12:
Item 12: Security ownership of Certain Beneficial Owners and Management
The general partners are to own a combined total of 1% of the Partnership including a 1% portion of income and losses.
Item 13:
Item 13: Certain Relationships and Related Transactions
The Partnership does not make mortgage investments with any of the general partners or affiliates of the general partners. Other related transactions are referred to in Item 11 above.
Part IV
Item: 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as a part of the report
	1.	Unaudited financial statements 		a. Balance Sheets 		b. Income Statements 		c. Statements of Partner's Equity 		d. Statements of Cash Flows 	2.	Financial statement schedules: 		None.
(b) Reports on Form 8-K
	None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
The Mortgage BancFund of America II, L.P. (a California Limited Partnership)
______________________________ Robert Y./Strom General Partner Date:____________
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By:	Mortgage BancFund Corporation, a California Corporation General Partner of the Registrant
	By:____________________________ 		Robert Y. Strom, President 	Date:___________________________
By:	_______________________________ 	Robert Y. Strom, General Partner, 	Chief Executive Officer, Chief Financial 	Officer and Chief Accounting Officer of 	Registrant, and President and Director of 	Mortgage BancFund Corporation
	Date:___________________________
THE MORTGAGE BANCFUND OF AMERICA II, L.P. (a California Limited Partnership) CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS Dec 31, 1996 Dec 31, 1997 Cash 26,124 174,169 Loans receivable (Note 1) 552,018 0 Accounts receivable (Note 2) 18,979 64,980 Total Assets 597,121 239,149
LIABILITIES & PARTNER'S EQUITY Liabilities Accounts payable 0 0 Due to affiliates 63,841 43,891 Total liabilities 63,841 43,891 Partner's equity 533,280 195,258 Total liabilities & partner's equity 597,121 239,149
Book value per limited partner unit outstanding 7.48 2.73
CONSOLIDATED INCOME STATEMENTS For the Twelve Months Ended
12/31/94 12/31/95 12/31/96 12/31/97 Unaudited Unaudited Unaudited Unaudited REVENUES: Interest Loans 62,747 63,012 462,204 37,507 Loan Fees 1,132 0 0 0 Other Income 2,401 0 220,425 30,495 Total Income 66,280 63,012 682,629 68,002
COSTS & EXPENSES: Cost of loans 37,592 41,050 225,941 16,856 Real estate owned expenses 1,092,659 28,162 0 0 General & Admin costs 209,884 85,512 126,966 127,150 Provision for loan Losses 364,135 804,693 0 262,018 Loss on Disposal of Assets 0 0 400,000 0 Total costs & expenses 1,704,270 959,417 752,907 406,024 Net Loss (1,637,990) (896.405) (70,278) (338,022) Net loss per partnership unit outstanding (22.97) (12.57) (.99) (4.74) Partnership units outstanding 71,307 71,307 71,307 71,307
THE MORTGAGE BANCFUND OF AMERICA II, L.P. (a California Limited Partnership) CONSOLIDATED STATEMENTS OF PARTNER'S EQUITY (Unaudited)
General Limited Partner Partner Total
Balance, December 31, 1995 (169,656) 773,214 603,558 Allocation of net loss (3,514) (66,764) (70,278) Balance, December 31, 1996 (173,170) 706,450 533,280 Allocation of net loss (16,901) (321,121) (338,022) Balance, December 31, 1997 (190,071) 385,329 195,258
STATEMENTS OF CASH FLOW For the Twelve Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES: Dec.31,95 Dec.31,96 Dec.31,97 Net (loss) (896,405) (70,278) (338,022) Loss on Disposal of real estate owned 0 400,000 0 Adjustments to reconcile net income to cash provided by operating activiteis: Decrease (icrease in accrued interestrec. (7,411) 13,084 0 (Decrease) increase in accounts payable (81,152) (123,517) 0 (Increase) in accounts receivable 878 102,041 (46,001) (Increase) Dec. in due to general partner 130,290 (91,480) (19,950) Increase in provision for loan losses 804,693 0 0 NET CASH PROVIDED (USED) IN OPR.ACTIVITIES (49,107) 229,850 (403,973)
CASH FLOW FROM INVESTING ACTIVITIES: Net change in loan receivable 276,202 (303,893) 552,018 Proceeds from Disposal of real estate owned 0 100,000 0 Net change in other real estate owned (226,203) 0 0 NET CASH PROVIDED BY INVESTING ACTIVITIES 49,999 (203,893) 552,018
CASH FLOWS FROM FINANCING ACTIVITIES: Increase (Decrease) in notes payable 0 0 0 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 0 0 0
NET INCREASE (DECREASE) IN CASH 892 25,957 148,045 Cash, Beginning of period (725) 167 26,045 Cash, End of period 167 26,124 174,169
MORTGAGE BANCFUND OF AMERICA II, L.P. (a California Limited Partnership) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 - Loans Receivable Loans receivable are carried at the unpaid principal balance net of unearned loan fees. Points and other loan fees are deferred over the life of the loan. In management's opinion the book value of these loans is is equal to the estimated net realizable value.
Note 2 - Accounts Receivable This account represents funds owed to the Partnership from affiliate partnerships, and projects which were acquired through foreclosure.
Accounting Policy All adjustments made to the financial statements are of normal recurring nature necessary to present fairly the financial condition of the partnership.
Supplemental Disclosure of Cash Flows Dec, 31, 1996 Proceeds from disposal of real estate owned 100,000 Change in Note Payable 902,877 Change in other real estate owned (1,402,877) Net loss on disposal of real estate (400,000)