SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

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

For the quarterly period ended ~~September~~December 3031, 2001

orOr

[ ] 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

(State or other jurisdiction of incorporation or organization)

95-2960716

(I.R.S. Employer Identification No.)

3230 Fallow Field Drive

Diamond Bar, California 91765

(Address, including zip code, of principal executive offices)

(909) 595-1996

(Registrant's telephone number, including area code)

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____

As of ~~September~~December 3031, 2001, 5,201,002 shares of the registrant's common stock were outstanding.

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FIRST MORTGAGE CORPORATION

FORM 10-Q

INDEX

Part I - Financial Information	Page
Item 1. Financial Statements:
Item 1. Financial Statements
Balance Sheets September 30, 2001 (Unaudited) and March 31, 2001	3
Balance Sheets December 31, 2001 (Unaudited) and March 31, 2001	3
Unaudited Statements of Income Three Months and Six Months Ended September 30, 2001 and 2000	4
Unaudited Statements of Income Three Months and Nine Months Ended December 31, 2001 and 2000	4
Unaudited Statements of Cash Flows Six Months Ended September 30, 2001 and 2000	5
Unaudited Statements of Cash Flows Nine Months Ended December 31, 2001 and 2000	5
Notes to Unaudited Financial Statements	6-87
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	98-1413
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K	1514
Signatures	1615

~~--------------------------------------------------------------------------------------------------------------------------------------------~~2.

_________________________________________

PART I. FINANCIAL INFORMATION

Item 1.
Financial Statements

FIRST MORTGAGE CORPORATION

BALANCE SHEETS

	September 30, 2001		March 31, 2001
	December 31, 2001		March 31, 2001
	(Unaudited)
ASSETS
Cash	$ 1718,~~765~~252,000		$ 16,202,000
Mortgage loans and mortgage-backed securities held for sale	68103,~~416~~984,000		87,995,000
Other receivables and servicing advances	57,~~735~~114,000		5,340,000
Capitalized servicing rights, net	1213,~~800~~729,000		9,928,000
Property and equipment, net	~~874~~946,000		847,000
Prepaid expenses and other assets	~~227~~158,000		615,000
Prepaid income taxes	44265,000		-
TOTAL ASSETS	$ ~~105~~144,~~861~~448,000		$ 120,927,000
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
LIABILITIES:
Notes payable, banks	$94,546,000		$83,255,000
Notes payable, banks	$ 62,975,000		$ 83,255,000
Note payable, other	3,739,000		-
Sight drafts payable	5,~~724~~520,000		3,784,000
Accounts payable and accrued liabilities	2,~~072~~987,000		1,460,000
Deferred income taxes	34,~~817~~527,000		3,103,000
Total Liabilities	74111,~~588~~319,000	91,602,000	~~91,602,000~~
STOCKHOLDERS' EQUITY
Preferred stock, no par value:
Preferred stock, no par value: Authorized shares - 1,000,000 Issued and outstanding shares - None
Authorized shares - 1,000,000 Issued and outstanding shares - None
Common stock, no par value:
Common stock, no par value:	-		-
Authorized shares - 10,000,000 Issued and outstanding shares - 5,201,002 at December 31, 2001 and 5,208,502 at March 31, 2001	2,407,000		2,430,000
Authorized shares - 10,000,000 Issued and outstanding shares - 5,201,002 at September 30, 2001 and 5,208,502 at March 31, 2001	2,407,000		2,430,000
Retained earnings	30,722,000		26,895,000
Retained earnings	28,866,000		26,895,000
Total Stockholders' Equity	33,129,000		29,325,000
Total Stockholders' Equity	31,273,000		29,325,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$144,448,000		$120,927,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$105,861,000		$120,927,000
See accompanying notes

~~--------------------------------------------------------------------------------------------------------------------------------------------~~See accompanying notes

_________________________________________

FIRST MORTGAGE CORPORATION

UNAUDITED STATEMENTS OF INCOME

	Three Months Ended September 30,			Six Months Ended September 30,
		Three Months Ended December 31,					Nine Months Ended December 31
	~~2001~~		~~2000~~2001	~~2001~~	2000	~~2000~~		2001	2000
REVENUES:
Loan origination income	~~$1,790,000~~		$~~528~~ 2,024,000	~~$3,430,000~~	$581,000	~~$1,011,000~~		$5,454,000	$1,592,000
Loan servicing income	~~1,711,000~~		1,~~814~~799,000	~~3,512,000~~	1,804,000	~~3,658,000~~		5,311,000	5,462,000
Gain on sale of mortgage loans	~~4,941,000~~		16,~~901~~663,000	~~9,553,000~~	1,711,000	~~2,522,000~~		16,216,000	4,233,000
Interest income	~~1,146,000~~		1,~~238~~696,000	~~2,698,000~~	1,110,000	~~2,501,000~~		4,394,000	3,611,000
Other income	~~4,000~~		57,000	~~10,000~~	1,000	~~8,000~~		17,000	9,000
Total revenues	~~9,592,000~~		512,~~486~~189,000	~~19,203,000~~	5,207,000	~~9,700,000~~		31,392,000	14,907,000
EXPENSES:
Compensation and benefits	~~3,711,000~~		13,~~820~~984,000	~~7,031,000~~	1,737,000	~~3,450,000~~		11,015,000	5,187,000
General and administrative expenses	~~1,812,000~~		~~950~~1,992,000	~~3,874,000~~	956,000	~~1,892,000~~		5,867,000	2,837,000
Amortization of capitalized servicing rights	~~2,186,000~~		12,~~133~~279,000	~~3,649,000~~	1,135,000	~~2,389,000~~		5,927,000	3,535,000
Interest expense	~~554,000~~		~~427~~764,000	~~1,420,000~~	883,000	~~1,126,000~~		2,184,000	2,009,000
Total expenses	~~8,263,000~~		49,~~330~~019,000	~~15,974,000~~	4,711,000	~~8,857,000~~		24,993,000	13,568,000
Income before income taxes and cumulative effect of a change in accounting principle	~~1,329,000~~		13,~~156~~170,000	~~3,229,000~~	496,000	~~843,000~~		6,399,000	1,339,000
Income tax expense	~~552,000~~		~~466~~1,314,000	~~1,336,000~~	209,000	~~352,000~~		2,650,000	561,000
Income before cumulative effect of a change in accounting principle	~~777,000~~		~~690~~1,856,000	~~1,893,000~~	287,000	~~491,000~~		3,749,000	778,000
Cumulative effect of a change in accounting principle, net of tax	-		-	~~78,000~~	-	-		78,000	-
NET INCOME	~~$777,000~~		$~~690~~ 1,856,000	~~$1,971,000~~	$ 287,000	~~$491,000~~		$3,827,000	$ 778,000
BASIC AND DILUTED EARNINGS PER SHARE
EARNINGS PER SHARE - BASIC
Income before cumulative effect of a change in accounting principle	~~$0.15~~		$ 0.1336	~~$0.36~~	$ 0.06	~~$0.09~~		$ 0.72	$ 0.15
Cumulative effect of a change in accounting principle	-		$ -	~~.02~~	$ -	-		$ .02	$ -
Net income	$0.15		$0.13	$0.38		$0.09
EARNINGS PER SHARE - DILUTED
See accompanying notes
Income before cumulative effect of a change in accounting principle			$ 0.36		$ 0.06			$ 0.71	$ 0.15
Cumulative effect of a change in accounting principle			$ -		$ -			$ .02	$ -

~~--------------------------------------------------------------------------------------------------------------------------------------------~~See accompanying notes

_________________________________________

FIRST MORTGAGE CORPORATION

UNAUDITED STATEMENTS OF CASH FLOWS

	Six Months Ended September 30
	Nine Months Ended December 31,
	2001	2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$1 3,~~971~~827,000	$~~491~~ 778,000
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for deferred income taxes	~~714~~1,424,000	~~659~~(872,000)
Benefit (provision) for losses on foreclosure	7,000	(124,000)
Provision for losses on foreclosure	(11,000)	(185,000)
Amortization and write offs of capitalized servicing rights	3,649,000	2,389,000
Amortization of capitalized servicing rights	5,927,000	3,535,000
Depreciation and amortization of property and equipment	~~116~~177,000	~~112~~174,000
Change in excess service fee	-	9,000
(Loss) gain on sale of assets	(3,000)	2,000
Gain (loss) on sale of assets	(3,000)	2,000
Originations and purchases of mortgage loans held for sale	(807,118,000)	(162,940,000)
Originations and purchases of mortgage loans held for sale	(479,353,000)	(103,318,000)
Sales and principal repayments of mortgage loans held for sale	791,129,000	213,903,000
Sales and principal repayments of mortgage loans held for sale	498,932,000	110,430,000
Change in other receivables and servicing advances	(1,763,000)	1,826,000
Change in other receivables	(402,000)	1,984,000
Change in prepaid expenses and other assets	457,000	531,000
Change in prepaid expenses and other assets	388,000	(288,000)
Change in accounts payable and accrued liabilities	1,527,000	242,000
Change in accounts payable and accrued liabilities	612,000	162,000
Change in prepaid income taxes	(265,000)	-
Change in prepaid income taxes	(44,000)	-
Net cash (used in) provided by operating activities	(4,692,000)	56,994,000
Net cash provided by operating activities	26,587,000	12,508,000
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of mortgage servicing rights	-	(23,000)
Originated mortgage servicing rights	(69,~~521~~728,000)	(1,~~149~~797,000)
Purchase of furniture, equipment and leasehold improvements	(~~142~~276,000)	(~~187~~316,000)
Proceeds from sale of assets	23,000	13,000
Net cash used in investing activities	(610,~~661~~001,000)	(12,~~358~~133,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
CASH FLOWS FROM FINANCING ACTIVITIES
Change in notes payable, banks	~~(20~~11,~~280~~291,000)	(85,~~013~~128,000)
Change in sight drafts payable	1,940,000	183,000
Change in note payable, other	3,739,000	(43,787,000)
Change in note payable, other	-	1,646,000
Change in sight drafts payable	1,736,000	601,000
Repurchase of common stock	(23,000)	(123,000)
Net cash used in financing activities	(18,363,000)	(6,307,000)
Net cash provided by (used in) financing activities	16,743,000	(48,437,000)
INCREASE IN CASH	12,~~563~~050,000	46,~~843~~424,000
CASH, BEGINNING OF PERIOD	16,202,000	11,264,000
CASH, END OF PERIOD	$17 18,~~765~~252,000	$16 17,~~107~~688,000
SUPPLEMENTAL CASH FLOW INFORMATION:
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$ 1,~~317~~863,000	$1 2,071,000
Income taxes	~~253~~1,078,000	-915,000
See accompanying notes

~~--------------------------------------------------------------------------------------------------------------------------------------------~~See accompanying notes

_________________________________________

FIRST MORTGAGE CORPORATION

NOTES TO UNAUDITED FINANCIAL STATEMENTS

~~September~~December 3031, 2001

1. BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results for the interim periods have been included. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. In addition, this document should be read in conjunction with the financial statements and footnotes included in the Company's annual report on Form 10-K for fiscal year ended March 31, 2001.

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.

2. CAPITALIZED SERVICING RIGHTS

Activities in capitalized servicing rights are summarized as follows:

		Six Months ended September 30
Nine Months ended December 31
	2001		2000
Beginning balance	$ 9,928,000		$ 11,555,000
Additions	69,~~521~~728,000		1,~~172~~820,000
Amortizations and write offs	(3,649,000)		(2,398,000)
Amortization	(5,927,000)		(3,535,000)
Ending balance	$12 13,~~800~~729,000		$10 9,~~329~~840,000

3. NOTES PAYABLE

At ~~September~~December 3031, 2001, the Company had a syndicated warehousing line of credit agreement with ~~three~~five nonaffiliated banks, which provided for borrowings up to $~~110~~195,000,000 with annual interest payable monthly at 1.05% or LIBOR plus 1.05%, depending on the level of borrowings and the compensating balances maintained. At ~~September~~December 3031, 2001, borrowings under the credit agreement of $6294,~~975~~546,000 were collateralized by mortgage loans and mortgage-backed securities held for sale.

The warehousing line of credit agreement is subject to renewal on August 28, 2002, and contains certain requirements, including but not limited to, the maintenance of minimum net worth, debt to net worth ratio, current ratio, net income and servicing portfolio, and payment of dividends by the Company. The Company was in compliance with all debt covenants at ~~September~~December 3031, 2001. The Company believes its syndicated warehousing agreement will be renewed prior to its expiration.

In addition to the warehousing line of credit agreement, the Company makes use of ~~the~~a short-term reverse repurchase ~~agreements~~agreement provided by ~~investment~~a ~~banking~~nonaffiliated ~~firms~~bank in connection with its inventory of mortgage-backed securities. ~~These~~This ~~facilities~~facility ~~tend~~tends to carry lower interest rates and also allow the Company to better utilize its warehousing line. ~~There~~The ~~was no~~ balance outstanding under ~~these~~this ~~facilities~~facility at ~~September~~December 3031, 2001 was $3,739,000, and it was collateralized by mortgage-backed securities.

~~--------------------------------------------------------------------------------------------------------------------------------------------~~6.

_________________________________________

4. EARNINGS PER SHARE

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

	Three Months Ended September 30,		Six Months Ended September 30,
	Three Months Ended December 31,		Nine Months Ended December 31,
	2001	2000		2001	2000
Numerator:
Net income	$~~777~~1,856,000	$~~690~~287,000		$13,~~971~~827,000	$~~491~~778,000
Denominator:
Shares used in computing basic earnings per share	5,201,~~480~~002	5,~~217~~210,~~819~~502		5,~~203~~202,~~404~~600	5,~~234~~226,~~387~~396
Effect of stock options treated as equivalents under the treasury stock method	5,~~995~~916	-		713,~~730~~646	-
Denominator for diluted earnings per share	5,~~207~~206,~~475~~918	5,~~217~~210,~~819~~502		5,~~211~~216,~~134~~246	5,~~234~~226,~~387~~396
Basic earnings per share	$.1536	$.1306		$.3874	$.0915
Diluted earnings per share	$.1536	$.1306		$.3873	$.0915

5. RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended, generally requires the Company to recognize all freestanding and embedded derivative instruments as either assets or liabilities on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through earnings. Statement No. 133 allows for hedge accounting treatment for derivatives used to hedge various risks and sets the specific documentation requirements and qualifying criteria to be used to determine when hedge accounting can be applied. Depending on the nature of the hedging relationship, hedge accounting treatment provides for changes in the fair value of derivatives to be either offset against the change in fair value of assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings.

On April 1, 2001, the Company adopted the provisions of Statement No. 133 resulting in the recognition of a non-cash gain of $135,000 ($78,000, net after tax) in the Statements of Income ~~on April 1, 2001~~ to account for the cumulative effect of the accounting change relating to derivative, including best effort forward commitments to sell loans and loan origination commitments (interest rate locks). During the quarter ended ~~September~~December 3031, 2001, the Company recorded a ~~loss~~gain of $~~394~~242,000 on derivative instruments which is included in the gain on sale of mortgage loans.

In September 2000, the FASB issued Statement No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," that replaces, in its entirety, FASB Statement No. 125. Statement No. 140 revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures. Statement No. 140 is effective for transfers occurring after March 31, 2001, and the expanded disclosure requirements regarding securitizations and collateral were effective for fiscal years ended after December 15, 2000. The Company adopted Statement No. 140 on April 1, 2001, and the adoption had no material impact on net income for the quarter ended ~~September~~December 3031, 2001.

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6. CONTINGENCIES

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 financial position or results of operations of the Company.

~~--------------------------------------------------------------------------------------------------------------------------------------------~~7.

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF~~_________________________________________

~~FINANCIAL~~Item ~~CONDITION AND RESULTS OF OPERATIONS~~2
. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

Certain statements in this Form 10-Q are forward-looking statements, including those that discuss strategies, goals, outlook, projected revenues, income, return and other financial measures. These forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following factors: (i) the direction of interest rates; (ii) the demand for mortgage credits; (iii) the ability to obtain sufficient financial sources for liquidity and working capital; (iv) changes in laws or regulations governing mortgage banking operations; and (v) level of competition within the mortgage banking industry. In addition, the words "believe," "expect," "anticipate," "intend," "will" and similar words identify forward-looking statements in this Form 10-Q.

RESULTS OF OPERATIONS:

Three months ended ~~September~~December 3031, 2001 compared to three months ended ~~September~~December 3031, 2000.

GENERAL

First Mortgage reported a net ~~income~~profit of $~~777~~1,856,000 or $0.1536 per share for the quarter ended ~~September~~December 3031, 2001, compared to net ~~income~~profit of $~~690~~287,000 or $0.1306 per share for the comparable 2000 quarter. The ~~higher~~profit ~~net income~~ was ~~primarily~~ attributable to ~~the~~decreases ~~easing~~in ~~of mortgage~~ interest rates ~~during~~which substantially boosted new loan originations for the ~~course~~Company ofand the ~~period~~industry. In turn, ~~which~~this ~~enabled~~led to increases in loan origination and gain on sale of mortgages, two of the primary sources of revenue for the Company. toThe increase ~~loan~~in ~~production~~earnings ~~and~~was, ~~realize~~however, offset partially by higher ~~gains~~compensation; ongeneral ~~sale~~and administrative expenses and amortization of ~~mortgages~~capitalized servicing rights.

REVENUES

For the quarter ended ~~September~~December 3031, 2001, the volume of new mortgage loans closed increased by ~~290~~449.57% to $~~206~~327.28 million from $5259.86 million in the prior year quarter~~, and loan origination revenue increased by approximately 239% to $1~~.79 ~~million from $528,000 in the September 2000 quarter.~~ The increase is a direct reflection of lower ~~long-term~~ interest rates ~~as compared to the prior year quarter~~, which ~~significantly~~ increased ~~refinancing~~the volume of loans in the market place, ~~and~~coupled towith athe ~~lesser~~expansion ~~degree,~~of ~~loans for~~ the ~~purchase~~retail ofand ~~housing~~wholesale branches.

AsFor ~~of September 30, 2001,~~ the ~~Company~~three ~~serviced~~months ~~$1.525~~ended ~~billion~~December ~~in loans compared to $1.487 billion at September 30~~31, ~~2000~~2001, ~~an increase of 2.5%. Total~~ loan ~~servicing~~origination ~~income,~~revenue ~~including~~increased ~~late~~by ~~charges~~approximately ~~and~~248.4% ~~other miscellaneous fees fell slightly~~ to $12.~~711~~02 million infrom the ~~September~~December ~~2001~~2000 quarter, ~~from $1.814 million in the prior year quarter. The decrease was~~ due primarily to ~~low~~the ~~delinquencies~~increase in ~~our~~mortgage ~~loan servicing portfolio, reducing late charges and related fees~~production.

As of December 31, 2001, the Company serviced $1.571 billion in loans compared to $1.487 billion at December 31, 2000, an increase of 5.6% compared to the year-~~-------------------------------------------------------------------------------------------------------------------------------------------~~ago quarter. The increase in the Company's servicing portfolio was due to the higher loan production during most of calendar 2001, partially offset by amortization and run off due to heavy refinancing during the year. Total loan servicing income, including late charges and other miscellaneous fees, declined slightly to $1.799 million in the December 2001 quarter, from $1.804 million in the prior year quarter. The decline was the result of historically low delinquency rates in the portfolio, reducing late charge fees to the Company.

_________________________________________

The following table sets forth certain information pertaining to the servicing portfolio of the Company for the period indicated.

	Three Months Ended September 30,
	Three Months Ended December 31
	2001	2000
	(Dollars in thousands except average loan balance)
Beginning loan service portfolio	$ 1,~~554~~523,~~608~~310	$ 1,~~491~~487,~~521~~214
Add: Loans originated	~~206~~327,~~198~~765	5259,~~808~~622
Purchased Loans	-	5,811
Less: Prepayment and amortization	280,613	80,381
Less: Prepayment and amortization	237,496	67,362
Ending loan servicing portfolio	1,570,462	1,466,455
Ending loan servicing portfolio	1,523,310	1,482,778
Sub-Servicing	234	8,637
Sub-Servicing	1,267	4,436
Total servicing portfolio	$ 1,570,696	$ 1,475,092
Total servicing portfolio	$1,524,577	$1,487,214
Average loan balance (end of period)	$ 98,730	$ 91,479
Average loan balance (end of period)	$95,268	$91,279
Number of Loans	16,003	16,293

Due to athe ~~rapid~~declining ~~decrease in~~ long-term mortgage interest rates ~~shortly~~during ~~after~~ the ~~end~~quarter ofand the ~~quarter,~~record ~~the~~increase ~~Company~~in ~~was~~new ~~able~~loan toproduction, ~~sell~~the ~~its~~gain ~~mortgage~~on ~~inventory~~sale atof amortgage ~~substantially~~loans ~~higher~~increased ~~premium~~dramatically byto ~~taking~~$6.66 ~~advantage~~million offor the ~~favorable~~three ~~interest~~months ~~environment.~~ended ~~The~~December ~~net~~31, ~~increase~~2001, inas ~~gains~~compared onto ~~mortgage~~$1.71 ~~sales~~million ~~was~~for ~~160%~~the ~~compared~~same to2000 ~~prior year quarter~~period.

Interest income, ~~which~~increased ~~reflects the interest received on mortgage loans and mortgage-backed securities held for sale, decreased slightly~~ to $1.1570 million for the three months ended ~~September~~December 3031, 2001 from $1.2411 million for the comparable prior year quarter. This ~~decrease~~increase was due primarily to the ~~smaller~~larger ~~mortgage-backed~~volume ~~securities~~of loan inventory carried in ~~the~~this ~~warehouse~~quarter ~~line~~as ~~by the Company~~ compared to the ~~September~~December 2000 quarter.

EXPENSES

The major components of the Company's total expenses are (i) compensations and benefits, (ii) general and administrative expenses, (iii) amortization of capitalized servicing rights, and (iv) interest expense. Total expenses for the three months ended ~~September~~December 3031, 2001 increased by $391.934% ~~million~~ to $89.2602 million from $4.3371 million for the ~~quarter~~three months ended ~~September~~December 3031, 2000. Compensations and benefits were $3.7198 million for the ~~September~~December 2001 quarter, an increase of ~~103~~129.94% over the year-ago quarter. ~~The increase in compensation and benefits were the result of the expansion of the retail origination branches and the near quadrupling of the new loan production.~~ General and administrative expense increased by $~~862~~1.04 million,~~000,~~ or 90108.74% over the prior ~~period~~year quarter. ~~The~~These higher ~~general and administrative~~ expenses were a direct result of ~~the~~expanded ~~expansion of~~ production operations in the quarter.

Amortization of capitalized servicing rights increased by $1100.058% ~~million~~over ~~compared~~prior ~~to the~~ year ~~earlier~~ quarter, due mainly to ~~the~~ higher volume of loan prepayments ~~from refinances~~ over the ~~comparable~~ prior ~~period~~fiscal year.

Interest expense ~~increased~~decreased 2913.75% to $~~554~~764,000 for quarter ended ~~September~~December 31, 2001 from $~~427~~883,000 for the same period in year 2000. The ~~increase~~decrease was primarily due to ~~the~~substantial ~~higher~~lower ~~volume~~interest ofrates ~~loans~~charged ~~carried~~on in the mortgage warehouse ~~line towards the end of the quarter, as compared to the same period a year ago~~lines.

~~-------------------------------------------------------------------------------------------------------------------------------------------~~9.

_________________________________________

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS:

~~Six~~Nine months ended ~~September~~December 3031, 2001 compared to ~~six~~nine months ended ~~September~~December 3031, 2000.

GENERAL

In the ~~six~~nine months ended ~~September~~December 3031, 2001, the Company reported a net ~~income~~profit of $13.~~971~~83 million or $0.3874 per share, compared to a net ~~income~~profit of $~~491~~778,000 or $0.0915 per share for the same period inof year 2000. Total revenue increased by 110.6% to $31.39 million from $14.91 million in the comparable prior period. The increase in net income was ~~largely~~ due to ~~the~~decreases ~~easing~~in of interest rates during ~~this~~the ~~period~~course of the year, which increased new loan originations for the Company and the industry. In turn, this led to ~~much~~a ~~higher~~steep ~~new~~increase in loan ~~volume~~origination and ~~gains~~gain on ~~selling~~sale of mortgages, two of the primary sources of revenue for the Company.

REVENUES

For the ~~six~~nine months ended ~~September~~December 3031, 2001 ~~the volume of new mortgage loan originations increased 364% to $479.35 million from $103.32 million in the comparable period last year~~, ~~and~~ loan origination revenue increased ~~239~~242.36% to $35.4345 million from $1.0159 million for the ~~six~~nine months ended ~~September~~December 3031, 2000. The higher loan origination revenue was ~~largely~~primarily due to the ~~increase~~record high volume of new loans originated by the Company during the course of the fiscal year.

~~Loan~~The ~~servicing~~volume ~~income,~~of ~~representing~~new ~~the~~mortgage loan ~~servicing~~originations ~~fees,~~increased ~~late~~395.3% ~~charges and other fees earned by the Company for administering the loans in its servicing portfolio, fell slightly~~ to $3807.5112 million ~~for the six months ended September 30, 2001~~ from $3162.6694 million ~~for~~in the ~~same~~comparable period inlast ~~2000~~year. ~~The decrease in servicing income is primarily due to low delinquencies in the servicing portfolio, reducing late charges and related fees.~~

Loan servicing income, representing the loan servicing fees, late charges and other fees earned by the Company for administering the loans in its servicing portfolio, fell 2.8% to $5.31 million for the nine months ended December 31, 2001 from $5.46 million for the same period in 2000. The slight decrease in servicing income is primarily due to lower delinquency rates which reduced late charges and other fees.

The following table sets forth certain information pertaining to the servicing portfolio of the Company for the period indicated:

	Six Months Ended September 30,
	Nine Months Ended December 31,
	2001	2000
	(Dollars in thousands except average loan balance)
Beginning loan service portfolio	$ 1,514,807	$ 1,497,616
Add: Loans originated	~~479~~807,~~353~~118	~~103~~162,~~318~~940
Purchased Loans	-	5,811
Less: Prepayment and amortization	751,463	194,101
Less: Prepayment and amortization	470,850	123,967
Ending loan servicing portfolio	1,570,462	1,466,455
Ending loan servicing portfolio	1,523,310	1,482,778
Sub-Servicing	234	8,637
Sub-Servicing	1,267	4,436
Total servicing portfolio	$ 1,570,696	$ 1,475,092
Total servicing portfolio	$1,524,577	$1,487,214
Average loan balance (end of period)	$98,730	$91,479
Average loan balance (end of period)	$95,268	$91,279
Number of Loans	16,003	16,293

The sale of mortgages for the ~~six~~nine months ended ~~September~~December 3031, 2001 resulted in a gain of $916.5522 million compared to a gain of $24.5223 million for the 2000 period. The increase is primarily attributable to ~~falling~~the reduction in interest rates ~~during~~over ~~this~~the ~~period~~course of the year, enabling the Company to make a substantial gain on mortgages held for sale.

~~Interest income, which reflects the interest earned on mortgage loans and mortgage-backed securities held for sale, was $2~~10.70 million for the six months ended September 30, 2001 as compared to $2.50 million over the comparable 2000 period. The increase was as a result of the higher volume of mortgage-backed securities carried in the warehouse line compared to the current period.

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Interest income increased to $4.39 million compared to $3.61 million in the year earlier period. This was due primarily to the large volume of loan inventory carried by the Company as a result of record origination levels.

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 expenses. Total expenses for the ~~six~~nine months ended ~~September~~December 3031, 2001 increased by $784.~~117 million or 80.4~~2% from the ~~six~~nine months ended ~~September~~December 3031, 2000. Compensation and benefits increased ~~103~~112.84% to $711.0302 million compared to $35.4519 million in the first ~~six~~nine months of fiscal year 2000. General and administrative expenses increased by 106.8% to $35.87 million from $12.8984 million in the comparable period in 2000. The increases in these expenses were ~~largely~~ a direct result of ~~the~~record ~~higher~~ loan originations ~~and associated compensation and general and administrative expenses in the first half of fiscal year 2002~~.

The 67.7% increase in amortization of capitalized servicing rights ~~increased~~ to $35.6593 million ~~compared to $2.39 million in the year earlier period. This~~ was mainly due to ~~the~~higher ~~large~~volume ~~increase~~of inloan ~~portfolio~~prepayments ~~loans~~over ~~being~~the ~~refinanced~~course ~~due~~of tothe ~~lower interest rates~~year.

Interest expense increased 8.7% to $12.4218 million as compared to $12.1301 million in the year- earlier ~~six~~nine months, due primarily to the larger ~~volume~~mortgage ofinventory ~~loans~~and mortgage-backed securities carried inby the ~~warehouse~~Company ~~line~~ during the period, partially offset by lower interest rates charged on the mortgage warehousing lines.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal liquidity requirement is the funding of its new mortgage loans and loan origination expenses. To meet these funding needs, the Company relies on warehouse lines of credit, ~~with~~reverse ~~banks~~repurchase agreements, its own capital, and also cash flows from operations.

At ~~September~~December 3031, 2001, maximum permitted borrowings under the syndicated warehouse line of credit agreement with ~~three~~five nonaffiliated banks totaled $~~110~~195 million and the amount outstanding was $6294.9855 million. Borrowings under ~~these~~this ~~facilities~~facility ~~are~~is secured by mortgage loans ~~and mortgage-backed securities~~. The ~~agreements~~agreement ~~contain~~contains various covenants, including the maintaining of minimum net worth, current ratio, net income, servicing portfolio balances, debt to net worth ratio, and ~~paying~~prior ofapproval ~~dividends~~to make dividend payments. The Company was in compliance with all debt covenants at ~~September~~December 3031, 2001. ~~The~~However, if there is any material negative event affecting the economy or substantial increase in the interest rates, the Company's operating results could be adversely impacted, which could lead to the non-compliance of the debt covenants. Absent the preceding scenario, the Company believes that the syndicated warehouse agreement will be renewed when the current term expires.

In addition to the syndicated ~~warehouse~~warehousing ~~line of credit~~agreement, the Company regularly makes use of the ~~short-term~~ reverse repurchase agreements ~~provided~~offered by ~~investment~~a ~~banking~~nonaffiliated ~~firms~~bank in connection with its ~~inventory of~~ mortgage-backed securities. ~~These~~The ~~facilities~~balance ~~tend~~outstanding tounder ~~carry~~this ~~lower~~facility ~~interest~~was ~~rates and also allow the Company more flexibility in utilizing its warehousing line~~$3.74 ~~There~~million ~~was~~at noDecember ~~balance outstanding on September 30~~31, 2001.

In the first ~~six~~nine months in fiscal year 2002, the Company repurchased in open market transactions and retired 7,500 shares of its common stock at an aggregate cost of $23,000.

The Company had stockholders' equity of $3133.2713 million at ~~September~~December 3031, 2001. Management believes that its current financing arrangements are adequate to meet its projected operational needs.

~~DISCLOSURE ABOUT MARKET RISK~~11.

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DISCLOSURE ABOUT INTEREST RATE RISK

The Company manages many risks in its normal course of business, however, the 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.

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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 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, and also based on the interest environment as of ~~September~~December 3031, 2001, 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 $3.5 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.

DISCLOSURE OF DERIVATIVES

The Company does not participate in any speculative derivative trading, however, it does hold derivative financial instruments, including best effort forward commitments to sell loans, loan origination commitments and mortgage-backed securities, to minimize interest rate exposure of its mortgage pipeline and inventory. Hedge accounting results when the Company designs and documents the hedging relationships involving these instruments. If the hedges are not highly effective, the changes in the fair value of the derivatives used as hedges would be reflected in earnings, as discussed in Note 5 of the financial statements. The Company does not believe that it is exposed to more than a nominal amount of credit risk in its derivative financial instruments.

PROSPECTIVE TRENDS

~~For~~During most of ~~the~~calendar ~~first~~year ~~six~~2001 ~~months of fiscal 2002,~~ interest rates offell ~~the~~to ~~standard~~historic ~~30-year~~lows ~~fixed~~from ~~rate~~the ~~mortgages~~higher ~~fluctuated~~levels ~~between~~of ~~6.875%~~recent ~~and 7.25%~~years, ~~creating a strong refinance wave throughout the mortgage industry,~~ and ~~boosting our~~ new loan ~~originations~~applications ~~dramatically.~~increased ~~Going~~in ~~into~~record ~~the~~amounts. ~~third~~The ~~quarter,~~decrease ~~mortgage~~in interest rates ~~have continued to fall~~, ~~now~~coupled towith ~~approximately 6.50%, growing~~ the ~~earlier~~continuing ~~strong~~expansion ~~refinance wave into a virtually tidal wave~~ of ~~new~~both ~~refinance~~our ~~mortgage~~retail ~~originations.~~division ~~Should~~and ~~mortgage~~wholesale ~~interest rates remain at these levels~~divisions, orenabled ~~lower,~~us weto ~~anticipate~~increase ~~continued~~our ~~record~~business ~~originations~~from ~~and~~all ~~strong~~channels ~~operating~~while ~~results~~refinance ~~throughout~~loan ~~the~~activity ~~remainder~~was ofboosted in our ~~fiscal~~Direct ~~year~~Marketing Division.

AsThe ~~discussed~~Federal ~~above~~Reserve ~~however,~~Board ~~refinance~~had ~~waves~~reversed ~~can~~itself ~~also~~and ~~have~~was areducing ~~downside~~interest inrates ~~that the prepayment rate on existing loans~~ in ~~our~~order ~~loan servicing portfolio may also increase proportionately. Our strategy~~ to ~~mitigate~~soften ~~this~~any ~~risk~~recessionary iseffects ~~to proactively solicit our existing borrowers~~ for ~~new~~the ~~refinance~~economy. ~~loans~~For ~~before~~our ~~someone~~industry, ~~else~~which ~~does,~~is ~~and~~counter-cyclical to ~~aggressively~~others, ~~solicit refinance loans from borrowers with loans held by other lenders. To~~ this ~~end,~~is weusually ~~have~~good ~~two offices exclusively dedicated to these Direct Marketing solicitations~~news. ~~Thus~~We ~~far~~engaged ~~we've been able to stay ahead of the early prepayments, and~~ in ~~fact~~a ~~have~~record ~~grown~~volume ~~the~~refinance ~~servicing portfolio by 2~~surge.~~5% over the past year.~~

We The ~~have~~competitive ~~continued~~pressures towe ~~expand~~have ~~our~~talked ~~retail~~about ~~origination~~so ~~division,~~often ~~most~~are ~~recently~~still ~~opening new offices in Reno~~there, ~~Nevada;~~but ~~Denver,~~their ~~Colorado;~~effect ~~and~~is ~~Portland,~~greatly ~~Oregon.~~reduced ~~This~~when ~~division~~we ~~has~~are ~~grown~~in tothis ~~fifteen~~boom ~~offices,~~part ~~and is dedicated primarily to loans for the purchase~~ of ~~housing, although there is also spillover business from~~ the ~~refinance~~mortgage ~~wave~~cycle. ~~Having a strong retail operation doing purchase loan business with Realtors and others enables us to continue originating new loans when refinance loan volume contracts.~~

~~For~~ We ~~the~~continue ~~first~~to ~~six~~pursue ~~months~~opportunities ofto ~~this~~expand ~~fiscal year,~~ our retail ~~channel produced 25% of new origination volume~~division, ~~the~~which ~~Direct~~is ~~Marketing~~now ~~channel~~at ~~produced~~fifteen ~~25%~~offices, and ~~the~~we ~~wholesale~~are ~~channel~~aggressively ~~produced~~recruiting ~~the~~for ~~remaining 50%~~more. We ~~believe~~have ~~that~~added ~~this~~personnel ~~diversification~~to isour ~~the~~Direct ~~appropriate~~Marketing ~~balance~~Division ~~for~~so ~~today's~~as ~~mortgage~~to ~~market.~~

~~Even our modest website (www~~12.FirstMortgage.Com) is producing a steady stream of new loan applicants. Our strategy for these inquiries is to immediately turn them over to our nearest retail office, wherein a full-time mortgage professional works with these applicants to satisfy their mortgage needs. This has been a pleasant surprise, as we did not try to build a major consumer website business model. If such a model is to be successful however, we believe that there must also be a local branch office presence such as ours to work with these applicants.

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~~Finally,~~take ~~the~~advantage war on terrorism puts us into new and uncharted waters for our business. There are simply too many variables and "what-ifs" to wed ourselves to one strategy or another. With mortgage banking, as always, the level of ~~long term mortgage interest rates is~~ the ~~single~~refinance ~~most~~loan ~~important~~market, ~~ingredient~~and to our ~~business.~~Santa ~~Although our business is in boom times right now~~Ana, ~~the~~San ~~outlook~~Jose ~~for interest rates going forward is not clear. We believe our best strategy is to stay nimble~~ and ~~concentrate~~Phoenix ~~our~~wholesale ~~focus~~offices onare ~~whichever~~producing ~~direction~~large ~~the~~volumes ~~market~~of ~~and~~new ~~trends take us~~originations.

~~--------------------------------------------------------------------------------------------------------------------------------------------~~ Our consumer website (www.firstmortgage.com) is also contributing. Although we have no illusions about becoming a big "dot com" lender, mortgage consumer websites can be a good supplemental source for refinance loans when we are in a low interest rate environment, such as now. The Company has a big advantage over many others in that we also have retail offices, enabling us to offer both "clicks and bricks," to potential borrowers.

We were positioned with the necessary channels and tools to take advantage of the opportunities which are opened up as a result of the recent reduction in interest rates. If rates stay at this level, or fall even lower, and remain that way for calendar year 2002, the Company has the potential to experience another good year in fiscal 2003.

13.

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PART II. OTHER INFORMATION.

Item 6. Exhibits and Reports of Form 8-K.

(a) No exhibits are filed with this report.

(b) The Company did not file any reports on Form 8-K during the quarter ended ~~September~~December 3031, 2001.

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SIGNATURES

Pursuant to the requirements 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.

FIRST MORTGAGE CORPORATION

Date: ~~November~~February 12, ~~2001~~2002 By S/Clement Ziroli Clement Ziroli Chairman of the Board of Directors, Chief Executive Officer

Date: ~~November~~February 12, ~~2001~~2002 By S/Pac W. Dong Pac W. Dong Executive Vice President, Chief Financial Officer

15.

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Filing Compare · FIRST MORTGAGE CORP /CA/