Form: 10-Q/A

Quarterly report pursuant to Section 13 or 15(d)

October 26, 2001

10-Q/A: Quarterly report pursuant to Section 13 or 15(d)

Published on October 26, 2001

FORM 10-Q/A

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended June 30, 2001 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: 1-13991

AMERICA FIRST MORTGAGE INVESTMENTS, INC.
(Exact name of registrant as specified in its charter)

Maryland 13-3974868
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)


399 Park Avenue, 36th Floor, New York, New York 10022
(Address of principal executive offices) (Zip Code)


(212) 935-8760
(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

The number of shares of the Registrant's common stock outstanding on August
10, 2001, was 19,034,850.
































-i-
Part I. Financial Information
Item 1. Financial Statements
AMERICA FIRST MORTGAGE INVESTMENTS, INC.
BALANCE SHEETS



June 30, 2001
(Unaudited) Dec. 31, 2000
--------------- ---------------

Assets
Investment in mortgage securities (Note 3) $ 781,966,309 $ 470,575,671
Investment in corporate debt securities (Note 4) 13,047,632 15,665,727
Investment in corporate equity securities (Note 5) 7,319,292 9,010,538
Cash and cash equivalents
Unrestricted 63,220,273 8,400,539
Restricted 9,576,290 498,875
Accrued interest and dividends receivable 4,742,597 3,433,256
Other investments (Note 6) 9,854,673 6,540,570
Goodwill, net 7,288,396 7,388,247
Other assets 867,350 976,889
--------------- ---------------
$ 897,882,812 $ 522,490,312
=============== ===============
Liabilities
Repurchase agreements (Note 7) $ 748,851,456 $ 448,583,432
Accrued interest payable 3,018,545 2,038,887
Accounts payable 803,939 550,209
Dividends payable 3,419,474 1,406,288
--------------- ---------------
756,093,414 452,578,816
--------------- ---------------

Stockholders' Equity
Common stock, $.01 par value; 375,000,000 shares authorized
19,034,850 and 8,692,825 issued and outstanding in 2001
and 2000, respectively (Note 8) 190,348 86,928
Additional paid-in capital 141,459,589 74,362,801
Retained earnings (accumulated deficit) 915,393 (440,084)
Accumulated other comprehensive income (775,932) (4,098,149)
--------------- ---------------
141,789,398 69,911,496
--------------- ---------------
$ 897,882,812 $ 522,490,312
=============== ===============

The accompanying notes are an integral part of the financial statements.





























- 1 -

AMERICA FIRST MORTGAGE INVESTMENTS, INC.
STATEMENTS OF INCOME
(UNAUDITED)





For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000
----------------- --------------- -------------- -------------

Mortgage securities income $ 8,155,306 $ 8,434,999 $ 16,175,928 $ 16,612,151
Corporate debt securities income 433,043 255,986 900,398 496,360
Dividend income 189,233 255,019 440,076 459,050
Interest income on cash and cash equivalents 177,593 140,174 336,169 293,008
--------------- --------------- -------------- -------------
Total interest and dividend income 8,955,175 9,086,178 17,852,571 17,860,569
Interest expense on borrowed funds 5,814,162 7,626,956 12,349,898 14,593,351
--------------- --------------- -------------- -------------
Net interest and dividend income 3,141,013 1,459,222 5,502,673 3,267,218
--------------- --------------- -------------- -------------
Income (loss) from other investments (9,061) 354,142 2,945,121 502,362
Net gain (loss) on investments (170,747) 119,619 (250,919) 119,619
--------------- --------------- -------------- -------------
(179,808) 473,761 2,694,202 621,981
--------------- --------------- -------------- -------------
General and administrative expenses 738,389 512,495 1,905,762 973,960
--------------- --------------- -------------- -------------
Net income $ 2,222,816 $ 1,420,488 $ 6,291,113 $ 2,915,239
=============== =============== ============== =============

Net income, basic, per share $ .24 $ .16 $ .71 $ .33
=============== =============== ============== =============

Net income, fully diluted, per share $ .24 $ .16 $ .70 $ .33
=============== =============== ============== =============



Weighted average number of shares outstanding,
basic 9,150,323 8,877,434 8,922,845 8,906,186
Weighted average number of shares outstanding,
fully diluted 9,248,396 8,892,407 9,005,596 8,917,468

The accompanying notes are an integral part of the financial statements.




























- 2 -

AMERICA FIRST MORTGAGE INVESTMENTS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)



Stockholders' Equity
------------------------------------------------------------------------------------
Accumulated
Other
Common Stock Paid-in Retained Comprehensive
# of Shares Amount Capital Earnings Income Total
------------ ------------ ------------ ------------ ----- ------- ------------


Balance at December 31, 2000 8,692,825 $ 86,928 $ 74,362,801 $ (440,084) $ (4,098,149) $ 69,911,496

Comprehensive income:
Net income - - - 6,291,113 - 6,291,113
Net unrealized holding gains
arising during the period - - - - 3,322,217 3,322,217
------------ ------------ ------------- ------------ ------------ ------------
Comprehensive income - - - 6,291,113 3,322,217 9,613,330
Dividends declared - - - (4,935,636) - (4,935,636)
Stock options
revaluation adjustment - - 18,937 - - 18,937
Issuance of common stock 6,811 68 49,935 - - 50,003
Issuance of common stock,
net of offering expenses 10,335,214 103,352 67,027,916 - - 67,131,268
------------ ------------ ------------- ------------ ------------ ------------
Balance at June 30, 2001 19,034,850 $ 190,348 $141,459,589 $ 915,393 $ (775,932) $141,789,398
============ ============ ============= ============ ============ ============

The accompanying notes are an integral part of the financial statements.








































- 3 -

AMERICA FIRST MORTGAGE INVESTMENTS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)






For the Six For the Six
Months Ended Months Ended
June 30, 2001 June 30, 2000
--------------- ---------------

Cash flows from operating activities
Net income $ 6,291,113 $ 2,915,239
Adjustments to reconcile net income to net cash
from operating activities:
Net (gain) loss on investments (2,506,605) (119,619)
Amortization of premium 1,069,743 749,282
Amortization of goodwill 99,851 99,851
Other amortization 395,980 43,496
Changes in assets and liabilities:
Increase in interest and dividends receivable (1,309,341) (610,905)
(Increase) decrease in other assets (215,800) 157,797
Increase (decrease) in accounts payable 253,730 (177,784)
Increase (decrease) in accrued interest payable 979,658 (1,367,847)
---------------- ---------------
Net cash provided by operating activities 5,058,329 1,689,510
---------------- ---------------
Cash flows from investing activities
Principal payments on mortgage securities 74,047,714 47,821,943
Proceeds from sale of mortgage securities 5,543,828 5,018,677
Proceeds from sale of corporate debt securities 1,960,875 372,500
Proceeds from sale of corporate equity securities 3,423,397 42,294
Purchases of mortgage securities (389,682,506) (67,095,668)
Purchases of corporate debt securities - (4,963,750)
Purchases of corporate equity securities (392,053) (6,480,808)
Increase in other investments (537,577) (41,136)
---------------- ---------------
Net cash used in investing activities (305,636,322) (25,325,948)
---------------- ---------------
Cash flows from financing activities
Net borrowings from repurchase agreements 300,268,024 20,314,026
Net proceeds from stock offering 67,131,268 -
(Increase) decrease in restricted cash (9,077,415) 2,781,882
Stock purchased for retirement - (558,452)
Dividends paid (2,924,150) (2,591,412)
---------------- ---------------
Net cash provided by financing activities 355,397,727 19,946,044
---------------- ---------------
Net increase (decrease) in unrestricted cash
and cash equivalents 54,819,734 (3,690,394)
Unrestricted cash and cash equivalents at
beginning of period 8,400,539 19,895,833
---------------- ---------------
Unrestricted cash and cash equivalents at
end of period $ 63,220,273 $ 16,205,439
================ ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 11,370,240 $ 15,961,198



During the six months ended June 30, 2001 and 2000, the Company issued 6,811
and 7,804 shares of common stock, respectively, to its non-employee
directors in partial payment of the annual retainer paid by the Company to
such directors. The aggregate value of such common stock issued during the six
months ended June 30, 2001 and 2000 was $50,003 and $39,996, respectively.

The accompanying notes are an integral part of the financial statements.




- 4 -

AMERICA FIRST MORTGAGE INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)

1. Organization

America First Mortgage Investments, Inc. (the Company) was incorporated in
Maryland on July 24, 1997. The Company began operations on April 10, 1998
when it merged with three partnerships: America First Participating/Preferred
Equity Mortgage Fund Limited Partnership (Prep Fund 1), America First Prep
Fund 2 Limited Partnership (Prep Fund 2) and America First Prep Fund 2
Pension Series Limited Partnership (Pension Fund).

The Company has entered into an advisory agreement with America First Mortgage
Advisory Company (the Advisor) which provides advisory services in connection
with the conduct of the Company's business activities.

2. Summary of Significant Accounting Policies

A) Basis of Presentation
The accompanying interim unaudited financial statements have been prepared
according to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted according to such
rules and regulations, although management believes that the disclosures
are adequate to make the information presented not misleading. The
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2000. In the opinion of
management, all normal and recurring adjustments necessary to present
fairly the financial position at June 30, 2001 and results of
operations for all periods presented have been made. The results of
operations for the six-month period ended June 30, 2001 are not
necessarily indicative of the results to be expected for the full year.

As more fully discussed in Note 6, the Company has an investment in a
corporation and investments in five real estate limited partnerships, none
of which are controlled by the Company. These investments are accounted
for under the equity method.

The financial statements are prepared on the accrual basis of accounting
in accordance with generally accepted accounting principles.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

B) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and highly liquid
investments with original maturities of three months or less. The
carrying amount of cash equivalents approximates their fair value.

Restricted cash represents amounts held with certain lending
institutions with which the Company has repurchase agreements. Such
amounts may be used to make principal and interest payments on the related
repurchase agreements.

C) Mortgage Securities, Corporate Debt Securities and Corporate Equity
Securities
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" (SFAS 115), requires
the Company to classify its investments in mortgage securities,
corporate debt securities and corporate equity securities (collectively
referred to as investment securities) as either held-to-maturity,
available-for-sale or trading.

Although the Company generally intends to hold most of its mortgage
securities until maturity, it may, from time to time, sell any of its

- 5 -

mortgage securities as part of its overall management of its business.
In order to be prepared to respond to potential future opportunities in the
market, to sell mortgage securities in order to optimize the portfolio's
total return and to retain its ability to respond to economic conditions
that require the Company to sell assets in order to maintain an appropriate
level of liquidity, the Company has classified all its mortgage securities
as available-for-sale. Likewise, the Company has classified all its
corporate equity securities as available-for-sale. Mortgage securities and
corporate equity securities classified as available-for-sale are reported
at fair value, with unrealized gains and losses excluded from earnings and
reported in other comprehensive income. Corporate debt securities are
classified as held-to-maturity and are carried at amortized cost.

Unrealized losses on investment securities that are considered
other-than-temporary, as measured by the amount of decline in fair value
attributable to factors other than temporary, are recognized in income and
the cost basis of the investment security is adjusted.
Other-than-temporary unrealized losses are based on management's assessment
of various factors affecting the expected cash flow from the investment
securities, including an other-than-temporary deterioration of the credit
quality of the underlying mortgages and/or the credit protection
available to the related mortgage pool.

Gains or losses on the sale of investment securities are based on the
specific identification method.

Interest income is accrued based on the outstanding principal amount
of the investment securities and their contractual terms. Premiums
and discounts associated with the purchase of the investment securities
are amortized into interest income over the lives of the securities using
the effective yield method. Such calculations are adjusted for actual
prepayment activity.

Dividend income is recognized based on the ex-dividend date.

D) Credit Risk
The Company limits its exposure to credit losses on its investment
portfolio by requiring that at least 50% of its investment portfolio
consist of adjustable rate mortgage securities that are insured or
guaranteed as to principal and interest by an agency of the U.S.
government, such as the Government National Mortgage Association (GNMA),
the Federal National Mortgage Association (FNMA), or the Federal Home
Loan Mortgage Corporation (FHLMC). The remainder of the Company's assets
may be either: (i) investments in multifamily apartment properties; (ii)
investments in limited partnerships, real estate investment trusts or
closed-end funds owning a portfolio of mortgage assets; or (iii) other
fixed-income instruments (corporate debt or equity securities or mortgage
backed securities) that provide increased call protection relative to the
Company's mortgage assets. Corporate debt that is rated below
investment-grade will be limited to less than 5% of the Company's total
assets. As of June 30, 2001, and December 31, 2000, approximately 79% and
75%, respectively, of the Company's total assets consisted of adjustable
rate mortgage securities insured or guaranteed by the U.S. government or an
agency thereof. At June 30, 2001, management determined no allowance for
credit losses was necessary, except for the permanent impairment losses
described in Notes 4 and 5.

E) Other Investments
Other investments consist of certain non-consolidated investments accounted
for under the equity method, including: (i) non-voting preferred stock of a
corporation owning interests in real estate limited partnerships, and
(ii) investments in limited partnerships owning real estate.

F) Repurchase Agreements
Borrowings under repurchase agreements (see Note 7) are carried at their
unpaid principal balances, net of unamortized discount or premium. Any
discount or premium is recognized as an adjustment to interest expense
utilizing the interest method over the expected term of the related
borrowings.

G) Net Income per Share
Net income per share is based on the weighted average number of common
shares and common equivalent shares (e.g., stock options), if dilutive,
outstanding during the period. Basic net income per share is computed by

- 6 -

dividing net income available to shareholders by the weighted average
number of common shares outstanding during the period. Diluted net
income per share is computed by dividing the diluted net income available
to common shareholders by the weighted average number of common shares and
common equivalent shares outstanding during the period. The common
equivalent shares are calculated using the treasury stock method which
assumes that all dilutive common stock equivalents are exercised and the
funds generated by the exercise are used to buy back outstanding common
stock at the average market price during the reported period.
As more fully discussed in Note 8, options to purchase 520,000 and
300,000 shares of common stock were granted on April 6, 1998, and August
13, 1999, respectively. During the quarters ended June 30, 2001 and 2000,
the average price of the Company's stock was greater than the exercise
price of the options granted on August 13, 1999. As such, exercise of such
options under the treasury stock method is dilutive. Accordingly, these
dilutive securities were considered in fully diluted earnings per share.
With regard to the options granted on April 6, 1998, the exercise price is
greater than the average stock price during the quarters ended June 30,
2001, and June 30, 2000; therefore, exercise of such options under the
treasury stock method would be anti-dilutive. Accordingly, these
potentially dilutive securities were not considered in fully diluted
earnings per share.

The following table sets forth the reconciliation of the weighted average
shares outstanding for the calculation of basic earnings per share to the
weighted average shares outstanding for the calculation of fully diluted
earnings per share for each period presented:


For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------- -------------- ------------- -------------

Weighted average shares outstanding for
basic earnings per share 9,150,323 8,877,434 8,922,845 8,906,186
Add effect of assumed shares issued under
treasury stock method for stock options 98,073 14,973 82,751 11,282
Weighted average shares outstanding for -------------- --------------- ------------- --------------
diluted earnings per share 9,248,396 8,892,407 9,005,596 8,917,468
============== =============== ============= ==============


H) Comprehensive Income
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires the Company to display and report
comprehensive income, which includes all changes in Stockholders' Equity
with the exception of additional investments by or dividends to
shareholders. Comprehensive income for the Company includes net income and
the change in net unrealized holding gains (losses) on investments.
Comprehensive income for the three and six months ended June 30, 2001, and
June 30, 2000 was as follows:



For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
--------------- --------------- ------------- -------------

Net income $ 2,222,816 $ 1,420,488 $ 6,291,113 $ 2,915,239
Change in net unrealized holding gains (losses) 13,113 218,697 3,322,217 (2,296,891)
--------------- ---------------- -------------- --------------
Comprehensive income (loss) $ 2,235,929 $ 1,639,185 $ 9,613,330 $ 618,348
=============== ================ ============== ==============


I) Federal Income Taxes
The Company has elected to be taxed as a real estate investment trust
(REIT) under the provisions of the Internal Revenue Code and the
corresponding provisions of state law. As such, no provision for income
taxes has been made in the accompanying financial statements.

- 7 -

J) New Accounting Pronouncements
In June, 1998, the Financial Accounting Standards Board ("FASB") issued
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (FAS 133). Certain provisions of FAS
133 were amended by Financial Accounting Standards No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities" (FAS 138) in
June, 2000. These statements provide new accounting and reporting standards
for the use of derivative instruments. Although the Company has
not historically used such instruments, it is not precluded from doing so.
In the future, management anticipates using such derivative instruments only
as hedges to manage interest rate risk. Management does not anticipate
entering into derivatives for speculative or trading purposes. As of January
1, 2001, the Company had no outstanding derivative hedging instruments nor
any imbedded derivatives requiring bifurcation and separate accounting under
FAS 133, as amended. Accordingly, there was no cumulative effect upon
adoption of FAS 133, as amended, on January 1, 2001.

In September, 2000, the FASB issued Financial Accounting Standards No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" (FAS 140). This statement is applicable for
transfers of assets and extinguishments of liabilities occurring after March
31, 2001. The Company adopted the provisions of this statement as required
for all transactions entered into on or after April 1, 2001. The adoption
of FAS 140 did not have a significant impact on the Company.

In July, 2001, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 141, "Business Combinations" and FAS No. 142,
"Goodwill and Other Intangible Assets" which provide guidance on how
entities are to account for business combinations and for the goodwill and
other intangible assets that arise from those combinations or are acquired
otherwise. These standards are effective for the Company on January 1,
2002.

FAS 142 will require that goodwill no longer by amortized, but instead be
tested for impairment at least annually. As of the date of adoption, the
Company expects to have unamortized goodwill in the amount of approximately
$7,189,000. Amortization expense related to such goodwill was approximately
$100,000 for the six month period ended June 30, 2001 and is expected to be
approximately $200,000 for the year ended December 31, 2001. Management
expects to adopt such statement effective January 1, 2002, as required but
has not yet completed its evaluation as to the potential implications to the
financial statements.

K) Reclassifications
Certain prior period amounts have been reclassified to conform with the
current period presentation.

3. Mortgage Securities

The following table presents the Company's mortgage securities as of June 30,
2001 and December 31, 2000.



June 30, 2001
(Unaudited) December 31, 2000
----------------- -----------------

FNMA Certificates $ 611,984,228 $ 377,668,990
GNMA Certificates 15,077,050 24,529,046
FHLMC Certificates 92,787,049 8,981,226
Commercial mortgage-backed securities 11,714,604 17,135,031
Non-agency AAA assets 50,403,378 42,261,378
----------------- -----------------
$ 781,966,309 $ 470,575,671
================= =================


At June 30, 2001, and December 31, 2000, mortgage securities consisted of
pools of adjustable-rate mortgage securities with carrying values of
$769,355,081 and $450,992,165, respectively, and fixed-rate mortgage
securities with carrying values of $12,611,228 and $19,583,506,
respectively.


- 8 -

The Federal National Mortgage Association (FNMA) Certificates are backed by
first mortgage loans on pools of single-family properties. The FNMA
Certificates are debt securities issued by FNMA and are guaranteed by FNMA as
to the full and timely payment of principal and interest on the underlying
loans.

The Government National Mortgage Association (GNMA) Certificates are backed by
first mortgage loans on multifamily residential properties and pools of
single-family properties. The GNMA Certificates are debt securities issued
by a private mortgage lender and are guaranteed by GNMA as to the full and
timely payment of principal and interest on the underlying loans.

The Federal Home Loan Mortgage Corporation (FHLMC) Certificates are backed by
first mortgage loans on pools of single-family properties. The FHLMC
Certificates are debt securities issued by FHLMC and are guaranteed by FHLMC
as to the full and timely payment of principal and interest on the underlying
loans.

The commercial mortgage-backed securities are rated AA or A by Standard and
Poor's.

The non-agency assets are generally rated AAA by Standard and Poor's.

At June 30, 2001, and December 31, 2000, all mortgage securities were
classified as available-for-sale and as such are carried at their fair value.
The following table presents the amortized cost, gross unrealized gains, gross
unrealized losses and fair value of mortgage securities at June 30, 2001, and
December 31, 2000, respectively:



As of
June 30, 2001 As of
(Unaudited) Dec. 31, 2000
------------------ ------------------

Amortized cost $ 783,546,747 $ 474,638,436
Gross unrealized gains 1,528,217 351,662
Gross unrealized losses (3,108,655) (4,414,427)
------------------ ------------------
Fair value $ 781,966,309 $ 470,575,671
================== ==================


4. Corporate Debt Securities

Corporate debt securities are classified as held-to-maturity. The following
table presents the amortized cost, gross unrealized gains, gross unrealized
losses and fair value of the corporate debt securities as of June 30, 2001,
and December 31, 2000:




As of
June 30, 2001 As of
(Unaudited) December 31, 2000
------------------ ------------------

Amortized cost $ 13,047,632 $ 15,665,727
Gross unrealized gains - 24,900
Gross unrealized losses (6,842,507) (3,795,002)
------------------ ------------------
Fair value $ 6,205,125 $ 11,895,625
================== ==================


The Company recognized a permanent impairment loss of $273,890 during the
three and six months ended June 30, 2001, on one of its investments in
corporate debt securities. The amortized cost basis of such security was
adjusted accordingly.




- 9 -

5. Corporate Equity Securities

Corporate equity securities are classified as available-for-sale. The
following table presents the cost, gross unrealized gains, gross unrealized
losses and fair value of the corporate equity securities as of June 30, 2001,
and December 31, 2000:



As of
June 30, 2001 As of
(Unaudited) December 31, 2000
------------------ ------------------

Cost $ 6,514,786 $ 9,045,923
Gross unrealized gains 1,077,343 613,843
Gross unrealized losses (272,837) (649,228)
------------------ -------------------
Fair value $ 7,319,292 $ 9,010,538
================== ===================


The Company recognized a permanent impairment loss of $124,000 during the six
months ended June 30, 2001, on one of its investments in corporate equity
securities. The cost basis of such security was adjusted accordingly.

6. Other Investments
Other investments consisted of the following as of June 30, 2001 and December
31, 2000:



As of
June 30, 2001 As of
(Unaudited) Dec. 31, 2000
-------------- -------------

Investment in Retirement Centers Corporation $ 5,446,197 $ 2,540,180
Investment in and advances to real estate limited partnerships 4,408,476 4,000,390
------------- -------------
Total $ 9,854,673 $ 6,540,570
============= =============


The Company's investment in Retirement Centers Corporation (RCC) represents a
95% ownership interest in such corporation. The Company owns 100% of the
non-voting preferred stock of RCC and a third party owns 100% of the common
stock. The Company accounts for its investment in RCC on the equity method.
As of June 30, 2001, RCC owned (i) a 128-unit apartment property located in
Omaha, Nebraska, which was acquired on January 12, 2000 and (ii) an 88.3%
undivided interest in a 192-unit apartment property located in Lawrenceville,
Georgia, which was acquired on January 18, 2001.

At December 31, 2000, RCC owned (i) the 128-unit apartment property referenced
above and (ii) a limited partnership interest in a real estate limited
partnership which operates an assisted living center located in Salt Lake
City, Utah. On January 2, 2001, the limited partnership which owned the
assisted living center was liquidated with RCC receiving an undivided interest
in the net assets of such partnership. RCC then sold its undivided interest
in the net assets of the assisted living center. Such sale contributed
approximately $2,100,000 ($2,600,000 less an incentive fee of approximately
$511,000) (see Note 9) to the Company's net income for the six months ended
June 30, 2001. The proceeds of such sale were utilized to acquire the
192-unit apartment property on January 18, 2001 as discussed above.

Investments in and advances to unconsolidated real estate limited partnerships
consist of investments in or advances made to limited partnerships which own
properties. These investments are not insured or guaranteed by any government
agency or third party. The value of these investments is a function of the
underlying value of the real estate owned by such limited partnerships. They
are accounted for under the equity method of accounting. Certain of the
investments have a zero carrying value and, as such, earnings are recorded
only to the extent distributions are received. Such investments have not been
reduced below zero through recognition of allocated investment losses since

- 10 -

the Company has no legal obligation to provide additional cash support to the
underlying property partnerships as it is not the general partner, nor has it
indicated any commitment to provide this support. As of June 30, 2001, and
December 31, 2000, the Company had investments in five (including the
acquisition described below) such limited partnerships. On January 18, 2001,
the Company and one of its real estate limited partnerships acquired the
remaining 11.7% undivided interest in the 192-unit apartment property
discussed above.

7. Repurchase Agreements

The Company finances the acquisition of its mortgage-backed securities at
short-term borrowing rates through the use of repurchase agreements. Under a
repurchase agreement, the Company sells securities to a lender and agrees to
repurchase those securities in the future for a price that is higher than the
original sales price. The difference between the sale price the Company
receives and the repurchase price the Company pays represents interest paid to
the lender. Although structured as a sale and repurchase obligation, a
repurchase agreement operates as a financing under which the Company
effectively pledges its securities as collateral to secure a short-term loan
which is equal in value to a specified percentage of the market value of the
pledged collateral. The Company retains beneficial ownership of the pledged
collateral, including the right to distributions. At the maturity of a
repurchase agreement, the Company is required to repay the loan and
concurrently receives back its pledged collateral from the lender or, with the
consent of the lender, the Company renews such agreement at the then
prevailing financing rate. The repurchase agreements may require the Company
to pledge additional assets to the lender in the event the market value of the
existing pledged collateral declines. Through June 30, 2001, the Company has
not had margin calls on its repurchase agreements that it was not able to
satisfy with either cash or additional pledged collateral.

The Company's repurchase agreements generally range from one month to one year
in duration. Should the providers of the repurchase agreements decide not to
renew them at maturity, the Company must either refinance these obligations or
be in a position to satisfy the obligations. If, during the term of a
repurchase agreement, a lender should file for bankruptcy, the Company might
experience difficulty recovering its pledged assets and may have an unsecured
claim against the lender's assets. To reduce its exposure, the Company enters
into repurchase agreements only with financially sound institutions whose
holding or parent company's long-term debt rating is "A" or better as
determined by both Standard and Poor's Corporation and Moody's Investors
Services, where applicable. If this minimum criterion is not met, then the
Company will not enter into repurchase agreements with that lender without the
specific approval of its board of directors. In the event an existing lender
is downgraded below "A," the Company will seek board approval before entering
into additional repurchase agreements with that lender. The Company generally
seeks to diversify its exposure by entering into repurchase agreements with at
least four lenders with a maximum exposure to any lender of no more than three
times the Company's stockholders' equity. As of June 30, 2001, the
Company had repurchase agreements with ten lenders with a maximum exposure to
any one lender of not more than 1.5 times our stockholders' equity.

As of June 30, 2001, the Company had outstanding balances of $748,851,456
under 72 repurchase agreements with a weighted average borrowing rate of 4.2%
and a weighted average remaining maturity of 3.9 months. As of June 30, 2001,
all of the Company's borrowings were fixed-rate term repurchase agreements
with original maturities that range from one to twelve months. As of December
31, 2000, the Company had outstanding balances of $448,583,432 under 55
repurchase agreements with a weighted average borrowing rate of 6.60%.

At June 30, 2001, the repurchase agreements had the following remaining
maturities:




Within 30 days $ 276,397,709
30 to 90 days 208,369,587
90 days to one year 264,084,160
-------------
$ 748,851,456
=============


- 11 -

The repurchase agreements are collateralized by the Company's mortgage
securities and corporate debt securities with an aggregate current face value
of approximately $786.5 million and corporate equity securities with a current
market value of approximately $7.3 million. The repurchase agreements bear
interest at rates that are LIBOR based.

8. Stockholders' Equity

Common Stock Offering
------------------------
The Company filed a registration statement with respect to a public offering
and sale of 9,000,000 shares of its common stock that became effective June
21, 2001. In addition, the Company granted the underwriters an option to
purchase up to 1,335,214 additional shares to cover over-allotments which the
underwriters exercised in full. The public offering closed on June 27, 2001.
The shares were priced at $7 per share with the Company receiving net proceeds
of approximately $67.1 million after deducting total offering costs of
approximately $5.2 million, including underwriting discounts.

1997 Stock Option Plan
---------------------
The Company has a 1997 Stock Option Plan (the Plan) which authorizes the
granting of options to purchase an aggregate of up to 1,400,000 shares of the
Company's common stock, but not more than 10% of the total outstanding shares
of the Company's common stock. The Plan authorizes the board of directors, or
a committee of the board of directors, to grant Incentive Stock Options (ISOs)
as defined under section 422 of the Internal Revenue Code, Non-Qualified Stock
Options (NQSOs) and Dividend Equivalent Rights (DERs) to eligible persons,
other than non-employee directors. Non-employee directors are eligible to
receive grants of NQSOs with DERs pursuant to the provisions of the Plan. The
exercise price for any options granted to eligible persons under the Plan
shall not be less than the fair market value of the common stock on the day of
the grant. The options expire if not exercised ten years after the date
granted.

On April 6, 1998, 500,000 ISOs were granted to buy common shares at an
exercise price of $9.375 per share (the 1998 Grant). In addition, 20,000
NQSOs were issued at an exercise price of $9.375 per share. On August 13,
1999, 300,000 ISOs were granted to buy common shares at an exercise price of
$4.875 per share (the 1999 Grant). Prior to the 1998 Grant, no other options
were outstanding. As of June 30, 2001 and December 31, 2000, 525,000 ISOs
were vested and exercisable. As of June 30, 2001 and December 31, 2000,
20,000 NQSOs were vested and exercisable. As of June 30, 2001, no options had
been exercised.

In addition to the options granted on April 6, 1998, 500,000 and 5,000 DERs
were also granted on the ISOs and NQSOs, respectively, based on the provisions
of the Plan. No DERs were granted on the ISOs granted on August 13, 1999.
DERs on ISOs vest on the same basis as the options. DERs on NQSOs became
fully vested in April, 1999. Payments are made on vested DERs only. Vested
DERs are paid only to the extent of ordinary income and not on returns of
capital. Dividends paid on ISOs are charged to stockholders' equity when
declared and dividends paid on NQSOs are charged to earnings when declared.
For the three and six months ended June 30, 2001, the Company recorded charges
of $87,500 and $170,000, respectively, to stockholders' equity (included in
dividends paid or accrued) associated with the DERs on ISOs and charges of
$875 and $1,700, respectively, to earnings associated with DERs on NQSOs.
For the three and six months ended June 30, 2000, the Company recorded charges
of $70,000 and $105,00, respectively, to stockholders' equity (included in
dividends paid or accrued) associated with DERs on ISOs and charges of $700
and $2,100, respectively, to earnings associated with DERs on NQSOs.

The options and related DERs issued were accounted for under the provisions of
SFAS 123, "Accounting for Stock Based Compensation". Because the ISOs were
not issued to officers who are direct employees of the Company, ISOs granted
were accounted for under the option value method as variable grants and a
periodic charge is recognized based on the vesting schedule. The charge
for options which vested immediately with the 1998 Grant was included as
capitalized transaction costs in connection with the Merger. Until fixed and
determinable, management estimates the value of the ISOs granted as of each
balance sheet date using a Black-Scholes valuation model, as adjusted for the
discounted value of dividends not to be received under the unvested DERs. In
the absence of comparable historical market information for the Company,
management originally utilized assumptions consistent with activity of a

- 12 -

comparable peer group of companies including an estimated option life, a
volatility rate, a risk-free rate and a current dividend yield (or 0% if the
related DERs are issued). For the three and six months ended June 30, 2001,
as part of operations, the Company reflected earnings charges of $10,500 and
$136,143, respectively, representing the value of ISOs/DERs granted over their
vesting period. For the three and six months ended June 30, 2000, as part of
operations, the Company reflected earnings charges of $55,821 and $152,675,
respectively, representing the value of the ISOs/DERs granted over their
vesting period. NQSOs granted were accounted for using the intrinsic method
and, accordingly, no earnings charge was reflected since the exercise price
was equal to the fair market value of the common stock at the date of the
grant.

The Company pays its non-employee directors a portion of their annual retainer
in common stock of the Company. During the six months ended June 30, 2001,
and 2000, the Company issued 6,811 and 7,804 shares of its common stock with
an aggregate value of $50,003 and $39,996, respectively, to such directors
(5,472 and 7,804 shares with an aggregate value of $40,000 and $39,996 during
the three months ended June 30, 2001 and 2000, respectively).

Dividends
---------
The Company declared the following dividends during 2001 and 2000:




Amount per
Declaration Date Record Date Payment Date Share
---------------- ------------ ------------ -----------

During 2001:

February 12, 2001 April 16, 2001 April 30, 2001 $ .165
April 9, 2001 June 30, 2001 July 16, 2001 $ .175

During 2000:

March 17, 2000 April 14, 2000 May 17, 2000 $ .140
June 14, 2000 June 30, 2000 August 17, 2000 $ .140
September 8, 2000 October 16, 2000 November 17, 2000 $ .155
December 14, 2000 January 15, 2001 January 30, 2001 $ .155




Stock Repurchase Plan
---------------------
During the fourth quarter of 1999, the Company implemented a 600,000 share
repurchase program. Pursuant to this program, through June 30, 2001, the
Company has purchased and retired 378,221 shares at an aggregate cost of
$1,923,821 (none during the quarter or six months ended June 20, 2001).

9. Related Party Transactions

The Advisor manages the operations and investments of the Company and performs
administrative services for the Company. In turn, the Advisor receives a
management fee payable monthly in arrears in an amount equal to 1.10% per
annum of the first $300 million of Stockholders' Equity of the Company, plus
.80% per annum of the portion of Stockholders' Equity of the Company above
$300 million. The Company also pays the Advisor, on a quarterly basis, an
incentive compensation fee of 20% of the amount by which its Return on Equity
for each quarter exceeds a return based on the Ten-Year U.S. Treasury Rate
plus 1%. For the three and six months ended June 30, 2001, the Advisor earned
a base management fee of $271,046 and $480,050, respectively, and incentive
compensation of $257,134 and $1,009,923, respectively. For the three and six
months ended June 30, 2000, the Advisor earned a base management fee of
$179,422 and $362,347, respectively, and incentive compensation of $53,969 and
$125,229, respectively. America First Properties Management Company L.L.C.,
(the Manager), provides property management services for multifamily
properties in which the Company has an interest. The Manager receives a
management fee equal to a stated percentage of the gross revenues generated by
the properties under management, ranging from 3.5% to 4% of gross revenues.
Such fees paid by the entities which own the multifamily properties in which

- 13 -

the Company has an interest for the three and six months ended June 30, 2001,
amounted to $111,141 and $219,576, respectively, and such fees paid for the
three and six months ended June 30, 2000, amounted to $97,017 and $191,566,
respectively.

10. Subsequent Events

Through August 10, 2001, the Company acquired ten FNMA whole-pool
mortgage-backed certificates with an aggregate remaining principal balance of
$235.7 million (FNMA Certificates). The FNMA Certificates bear interest at
rates ranging from 5.78% to 7.66% per annum. The total purchase price paid
for the FNMA Certificates, including accrued interest, was approximately
$241.3 million. The Company also acquired two FHLMC whole-pool
mortgage-backed certificates with an aggregate remaining principal balance of
$36.0 million (FHLMC Certificates). The FHLMC Certificates bear interest at
rates of 6.12% and 6.75% per annum. The total purchase price paid for the
FHLMC Certificates, including accrued interest, was approximately $36.9
million. In addition, the Company acquired two non-agency AAA assets with an
aggregate remaining principal balance of $97.5 million. The non-agency AAA
assets bear interest at rates of 5.93% and 6.00% per annum. The total
purchase price paid for the non-agency AAA assets, including accrued interest,
was approximately $97.9 million. The acquisitions were financed with the
proceeds of various LIBOR-based repurchase agreements aggregating $333.8
million and cash of $42.3 million.



















































- 14 -

Item 2.
AMERICA FIRST MORTGAGE INVESTMENTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion should be read in conjunction with all of the
financial statements and notes included in Item 1 of this report as well as
the Company's Annual Report on Form 10-K for the year ended December 31, 2000.

General

The Company was incorporated in Maryland on July 24, 1997. The Company began
operations on April 10, 1998 when it merged with three partnerships: America
First Participating/Preferred Equity Mortgage Fund Limited Partnership ("Prep
Fund 1"), America First Prep Fund 2 Limited Partnership ("Prep Fund 2") and
America First Prep Fund 2 Pension Series Limited Partnership ("Pension Fund").

America First Mortgage Advisory Corporation (the "Advisor") provides advisory
services to the Company in connection with the conduct of the Company's
business activities. The Company's principal investment strategy includes
leveraged investing in adjustable rate mortgage securities. The Company's
investment strategy also provides for the acquisition of multifamily housing
properties, REIT securities and high-yield corporate securities. Since
commencing operations and through June 30, 2001, the Company purchased
mortgage securities with a face value at the time of purchase of approximately
$1.053 billion (mortgage securities with a face value of approximately $384.0
million were purchased during the six months ended June 30, 2001).

The Company has elected to become subject to tax as a real estate investment
trust ("REIT") for federal income tax purposes beginning with its 1998 taxable
year and, as such, anticipates distributing annually at least 90% (95% prior
to January 1, 2001) of its taxable income, subject to certain adjustments.
Generally, cash for such distributions is expected to be largely generated
from the Company's operations, although the Company may borrow funds to make
distributions. The Company declared the following dividends during 2001 and
2000:




Amount per
Declaration Date Record Date Payment Date Share
---------------- ------------ ------------ -----------

During 2001:

February 12, 2001 April 16, 2001 April 30, 2001 $ .165
April 9, 2001 June 30, 2001 July 16, 2001 $ .175

During 2000:

March 17, 2000 April 14, 2000 May 17, 2000 $ .140
June 14, 2000 June 30, 2000 August 17, 2000 $ .140
September 8, 2000 October 16, 2000 November 17, 2000 $ .155
December 14, 2000 January 15, 2001 January 30, 2001 $ .155





The Company's operations for any period may be affected by a number of factors
including the investment assets held, general economic conditions affecting
underlying borrowers and, most significantly, factors which affect the
interest rate market. Interest rates are highly sensitive to many factors,
including governmental monetary and tax policies, domestic and international
economic and political considerations, and other factors beyond the control of
the Company.

Liquidity and Capital Resources

The Company's principal sources of capital consist of borrowings under
repurchase agreements, principal payments received on its portfolio of
mortgage securities, cash provided by operations and public equity offerings.
Principal uses of cash include the acquisition of investment securities, the

- 15 -

payment of operating expenses and the payment of dividends to shareholders.

On June 27, 2001, the Company closed a public offering of 10,335,214 shares of
its common stock. The offering included the full exercise of the
underwriters' option to purchase up to 1,335,214 additional shares to cover
over-allotments. The shares were priced at $7 per share with the Company
receiving net proceeds of approximately $67.1 million net of offering
expenses of $5.2 million, including underwriting discounts. Proceeds of the
offering are primarily being utilized to acquire additional adjustable-rate
mortgage securities.

During the six months ended June 30, 2001, the Company acquired $390.1 million
of mortgage securities and corporate equity securities. Financing for these
acquisitions was provided primarily through the utilization of repurchase
agreements, supplemented by cash flow from operations and a portion of the
proceeds of the aforementioned equity offering. Net borrowings under
repurchase agreements totaled $300.3 million during the six months ended June
30, 2001. The Company also received principal payments of $74.0 million on its
mortgage securities and proceeds of $10.9 million from the sale of mortgage
securities, corporate debt securities and corporate equity securities during
the six months ended June 30, 2001. Other uses of funds during the six months
ended June 30, 2001, included $3.3 million primarily for the acquisition of an
interest in a multifamily housing property and $2.9 million for dividend
payments.

The Company's borrowings under repurchase agreements totaled $748.9 million at
June 30, 2001, and had a weighted average borrowing rate of 4.2% as of such
date. At June 30, 2001, the repurchase agreements had balances of between $.2
million and $65.0 million. These arrangements have original terms to maturity
ranging from one month to twelve months and annual interest rates based on
LIBOR. To date, the Company has not had margin calls on its repurchase
agreements that it was not able to satisfy with either cash or additional
pledged collateral.

The Company believes it has adequate financial resources to meet its
obligations as they come due and fund committed dividends as well as to
actively pursue its investment policy.

Results of Operations

Three Month Period Ended June 30, 2001 Compared to 2000

During the three months ended June 30, 2001, total interest and dividend income
decreased approximately $131,000 (1.4%) compared to the same period in the
prior year. Such decrease was the result of reductions in income from
mortgage securities and dividend income which were partially offset by
increases in income from corporate debt securities and income recognized on
short-term investments in cash and cash equivalents. The decrease in income
from mortgage securities was the result of a reduction in outstanding
fixed-rate investments due to sales of such investments and increased
repayments by the underlying borrowers as well as to a reduction in the
annualized yield on adjustable-rate mortgage investments. Such decreases
were partially offset by an increase in the average investment in
adjustable-rate mortgage securities during the period.

The decrease in dividend income is primarily attributable to a reduction in
the average amount invested in such securities as a result of sales of the
underlying investments.

The increase in income from corporate debt securities and income on short-term
investments in cash and cash equivalents was primarily the result of an
increase in the average balances of such investments during the period.

The Company's interest expense decreased $1.8 million (23.8%) for the three
months ended June 30, 2001, compared to the comparable period in 2000. Such
decrease is due primarily to a decrease in the Company's average interest cost
from 6.38% to 4.66% for the three months ended June 30, 2000 and 2001,
respectively. The decrease in average interest cost was partially offset by
an increase in the Company's average outstanding borrowings for the three
months ended June 30, 2001 which increased approximately $22.9 million as
compared to the same period in 2000.

As a result of the widening of the Company's interest rate margin, net


- 16 -

interest and dividend income increased $1.6 million (115.3%) from $1.5 million
to $3.1 million for the three months ended June 30, 2000 and 2001,
respectively.

Income from other investments decreased $0.4 million for the three months
ended June 30, 2001, compared to the same period in 2000 as a result of a
reduction in income generated by the Company's investments in unconsolidated
real estate limited partnerships.

The Company recognized a net loss of approximately $171,000 on its investments
during the three months ended June 30, 2001. Such net loss resulted from a
permanent impairment loss recognized on one of its investments in corporate
debt securities of approximately $274,000 (See Note 4) and losses on sales of
certain corporate debt and equity securities of approximately $601,000. Such
losses were partially offset by gains on sales of certain corporate debt and
equity securities of approximately $704,000. This compares to a net gain of
approximately $120,000 recognized during the three months ended June 30, 2000,
resulting from the sale of corporate debt and equity securities for a gain of
$199,000 which was partially offset by a loss of $79,000 on the sale of
numerous small pools of fixed-rate mortgage securities.

General and administrative expenses for the Company for the three months ended
June 30, 2001, increased $0.2 million as compared to the three months ended
June 30, 2000. Such increase is primarily attributable to a higher incentive
compensation fee earned by the Advisor due to an increase in income generated
by the Company.

Six Month Period Ended June 30, 2001 Compared to 2000

During the six months ended June 30, 2001, total interest and dividend income
approximated that of the same period in the prior year. This was the result
of reductions in income from mortgage securities and dividend income which
were substantially offset by increases in income from corporate debt
securities and income recognized on short-term investments in cash and cash
equivalents. The decrease in income from mortgage securities was the result
of a reduction in outstanding fixed-rate investments due to sales of
such investments and increased repayments by the underlying borrowers as
well as a reduction in the annualized yield on adjustable-rate mortgage
investments. Such decreases were partially offset by an increase in the
average investment in adjustable-rate mortgage securities during the period.

The decrease in dividend income is primarily attributable to a reduction in
the average amount invested in such securities as a result of sales of the
underlying investments.

The increase in income from corporate debt securities and income on short-term
investments in cash and cash equivalents was primarily the result of an
increase in the average balances of such investments during the period.

The Company's interest expense decreased $2.2 million (15.4%) for the six
months ended June 30, 2001, compared to the comparable period in 2000. Such
decrease is due primarily to a decrease in the Company's average interest cost
from 6.31% to 5.14% for the six months ended June 30, 2000 and 2001,
respectively. The decrease in average interest cost was partially offset by
an increase in the Company's average outstanding borrowings for the six months
ended June 30, 2001 which increased approximately $18.4 million as compared to
the same period in 2000.

As a result of the widening of the Company's interest rate margin, net
interest and dividend income increased $2.2 million (68%) from $3.3 million to
$5.5 million for the six months ended June 30, 2000 and 2001, respectively.

Income from other investments increased $2.4 million for the six months ended
June 30, 2001, compared to the same period in 2000. Included in such income
for the six months ended June 30, 2001, is a gain of approximately $2.6
million which resulted from the sale by a non-consolidated subsidiary of its
undivided interest in the net assets of an assisted living center. Excluding
such gain, income from other investments decreased $0.2 million as a result of
a reduction in income generated by the Company's investments in unconsolidated
real estate limited partnerships.

The Company recognized a net loss of approximately $251,000 on its investments
during the six months ended June 30, 2001. Such net loss resulted from


- 17 -

permanent impairment losses recognized on one of each of its investments in
corporate debt and equity securities totaling approximately $398,000. (See
Notes 4 and 5). In addition, the Company recognized losses of approximately
$601,000 on sales of certain corporate debt and equity securities. Such
losses were partially offset by a gains on sales of commercial mortgage-backed
securities and corporate debt and equity securities totaling approximately
$748,000. This compares to a net gain of approximately $120,000 recognized
during the six months ended June 30, 2000, resulting from the sale of certain
corporate debt and equity securities for a gain of $199,000 which was
partially offset by a loss of $79,000 on the sale of numerous small pools of
fixed-rate mortgage securities.

General and administrative expenses for the Company for the six months ended
June 30, 2001, increased $0.9 million as compared to the six months ended
June 30, 2000. Such increase is primarily attributable to a higher incentive
compensation fee earned by the Advisor of which $0.5 million resulted from the
sale described in Note 6 and $0.4 million resulted from an increase in income
generated by the Company.

New Accounting Pronouncements

In September, 2000, the FASB issued Financial Accounting Standards No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" (FAS 140). This statement is applicable for
transfers of assets and extinguishments of liabilities occurring after March
31, 2001. The Company adopted the provisions of this statement as required for
all transactions entered into on or after April 1, 2001. The adoption of FAS
140 did not have a significant impact on the Company.

In July, 2001, the Financial Accounting Standards Board issued Financial
Accounting Standards (FAS) No. 141, "Business Combinations" and FAS No. 142,
"Goodwill and Other Intangible Assets" which provide guidance on how entities
are to account for business combinations and for the goodwill and other
intangible assets that arise from those combinations or are acquired
otherwise. These standards are effective for the Company on January 1, 2002.

FAS 142 will require that goodwill no longer by amortized, but instead be
tested for impairment at least annually. As of the date of adoption, the
Company expects to have unamortized goodwill in the amount of approximately
$7,189,000. Amortization expense related to such goodwill was approximately
$100,000 for the six month period ended June 30, 2001 and is expected to be
approximately $200,000 for the year ended December 31, 2001. Management
expects to adopt such statement effective January 1, 2002, as required but has
not yet completed its evaluation as to the potential implications to the
financial statements.

Other Matters

The Company at all times intends to conduct its business so as to not become
regulated as an investment company under the Investment Company Act of 1940.
If the Company were to become regulated as an investment company, then, among
other things, the Company's ability to use leverage would be substantially
reduced. The Investment Company Act exempts entities that are "primarily
engaged in the business of purchasing or otherwise acquiring mortgages and
other liens on and interests in real estate" (i.e. "Qualifying Interests").
Under the current interpretation of the staff of the SEC, in order to qualify
for this exemption, the Company must maintain at least 55% of its assets
directly in Qualifying Interests. In addition, unless certain mortgage
securities represent an undivided interest in the entire pool backing such
mortgage securities (i.e. "whole pool" mortgage securities), such mortgage
securities may be treated as securities separate from the underlying mortgage
loan, thus, may not be considered Qualifying Interests for purposes of the 55%
exemption requirement. Accordingly, the Company monitors its compliance with
this requirement in order to maintain its exempt status. As of June 30,
2001, the Company determined that it is in and has maintained compliance with
this requirement.









- 18 -

Forward Looking Statements

When used in this Form 10-Q, in future SEC filings or in press releases or
other written or oral communications, the words or phrases "will likely
result", "are expected to", "will continue", "is anticipated", "estimate",
"project" or similar expressions are intended to identify "forward looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. The Company cautions that such forward looking statements
speak only as of the date made and that various factors including regional
and national economic conditions, changes in levels of market interest
rates, credit and other risks of lending and investment activities, and
competitive and regulatory factors could affect the Company's financial
performance and could cause actual results for future periods to differ
materially from those anticipated or projected.

The Company does not undertake and specifically disclaims any obligation to
update any forward-looking statements to reflect events or circumstances after
the date of such statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in the Company's market risk since
December 31, 2000.




















































- 19 -

PART II. OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds.

On March 30, 2001 and May 31, 2001, the Company issued 1,339 and 5,472
shares of its common stock, respectively, to its non-employee directors
in partial payment of the annual retainer paid by the Company to such
directors. Each such director was entitled to payment of a number of
shares determined by dividing $10,000 by the closing sale price of the
common stock on the dates of issuance which were $7.47 on March 30, 2001
and $7.31 on May 31, 2001. The issuance of these shares is exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act") under Section 4(2) thereof in that the transaction did not involve
a public offering.

The Company filed a registration statement (Commission File No. 333-59800)
with respect to a public offering and sale of 9,000,000 shares of its
common stock that became effective June 21, 2001. In addition, the
Company granted Friedman, Billings, Ramsey & Co., Inc. and Tucker Anthony
Sutro Capital Markets, the managing underwriters, an option to purchase up
to 1,335,214 additional shares to cover over-allotments which they
exercised in full. The public offering closed on June 27, 2001. The
shares were priced at $7 per share. Gross proceeds from the offering were
approximately $72.3 million. Net proceeds were approximately $67.1
million after deducting underwriting discounts and expenses of
approximately $4.7 million and other offering costs of approximately $.5
million. Allotments paid from offering proceeds were paid to persons
unaffiliated with the Company. As of June 30, 2001 approximately $16
million of proceeds from the offering were utilized to acquire additional
adjustable-rate mortgage securities. The remaining $51.1 million of
proceeds was invested in interest-bearing cash accounts and will be
utilized primarily to acquire additional adjustable-rate mortgage
securities.

Item 4. Submission of Matters to Vote of Securities Holders.

The Company held its Annual Meeting of Stockholders on May 24, 2001 for
the purpose of: (i) electing three directors (ii) ratifying the
appointment of its auditors (iii) voting on a proposal to amend the
Company's 1997 Amended and Restated Stock Option Plan (the "Stock Option
Plan") to increase the number of shares and (iv) to approve the issuance
of up to 20,000,000 additional shares of the Company's common stock or
securities convertible into or exercisable for such number of shares of
common stock in one or more private placements. The following sets forth
the results of the election of officers:

NAME OF NOMINEE FOR WITHHELD
---------------- --------------- -----------

Stewart Zimmerman 7,674,876 (99%) 67,894 (1%)
Alan Gosule 7,666,177 (99%) 76,593 (1%)
W. David Scott 7,679,556 (99%) 63,214 (1%)

There was no solicitation in opposition to the nominees by the
Stockholders.

The ratification of the appointment of PricewaterhouseCoopers LLP as
independent auditors for the Company for the fiscal year ending December
31, 2001 was approved by the Stockholders with 7,607,130 votes FOR (98%),
46,796 votes AGAINST (1%), and 88,844 votes ABSTAINED OR BROKER
NON-VOTES (1%).

The proposal to amend the Company's Stock Option Plan was approved by the
Stockholders with 6,985,974 votes FOR (90%), 526,325 votes AGAINST
(7%), and 230,471 votes ABSTAINED OR BROKER NON-VOTES (3%).

Further information regarding these matters is contained in the Company's
Proxy Statement dated April 13, 2001.







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Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

2.1 Agreement and Plan of Merger by and among the Registrant,
America First Participating/Preferred Equity Mortgage Fund
Limited Partnership, America First Prep Fund 2 Limited
Partnership, America First Prep Fund 2 Pension Series
Limited Partnership and certain other parties, dated as of
July 29, 1997 (incorporated herein by reference to Exhibit
2.1 of the Registration Statement on Form S-4 dated
February 12, 1998, filed by the Registrant pursuant to the
Securities Act of 1933 (Commission File No. 333-46179)).

3.1 Amended and Restated Articles of Incorporation of the
Registrant (incorporated herein by reference to Form 8-K
dated April 10, 1998, filed by the Registrant pursuant to
the Securities Exchange Act of 1934 (Commission File No.
1-13991)).

3.2 Amended and Restated Bylaws of the Registrant (incorporated
herein by reference to Form 8-K dated April 10, 1998,
filed by the Registrant pursuant to the Securities Exchange
Act of 1934 (Commission File No. 1-13991)).

4.1 Specimen of Common Stock Certificate of the Company.
(incorporated herein by reference to Exhibit 4.1 of the
Registration Statement on Form S-4 dated February 12, 1998,
filed by the Registrant pursuant to the Securities Act of
1933 (Commission File No. 333-46179)).

10.1 Advisory Agreement, dated April 9, 1998, by and between
the Company and the Advisor (incorporated herein by
reference to Form 8-K dated April 10, 1998 filed by
the Company pursuant to the Securities Exchange Act of
1934 (Commission File No. 1-13991)).

10.2 Employment Agreement of Stewart Zimmerman (incorporated
herein by reference to Exhibit 10.2 of the Registration
Statement on Form S-4 dated February 12, 1998, filed by
the Company pursuant to the Securities Act of 1933
(Commission File No. 333-46179)).

10.3 Employment Agreement of William S. Gorin (incorporated
herein by reference to Exhibit 10.3 of the Registration
Statement on Form S-4 dated February 12, 1998, filed by
the Company pursuant to the Securities Act of 1933
(Commission File No. 333-46179)).

10.4 Employment Agreement of Ronald A. Freydberg (incorporated
herein by reference to Exhibit 10.4 of the Registration
Statement on Form S-4 dated February 12, 1998, filed by
the Company pursuant to the Securities Act of 1933
(Commission File No. 333-46179)).

10.5 Addendum to Employment Agreement of Stewart Zimmerman
(incorporated herein by reference to Form 10-Q dated
March 31, 2000, filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934
(Commission File No. 1-13991)).

10.6 Addendum to Employment Agreement of William S. Gorin
(incorporated herein by reference to Form 10-Q dated
March 31, 2000, filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934
(Commission File No. 1-13991)).

10.7 Addendum to Employment Agreement of Ronald A. Freydberg
(incorporated herein by reference to Form 10-Q dated
March 31, 2000, filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934
(Commission File No. 1-13991)).



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10.8 Second Amended and Restated 1997 Stock Option Plan of the
Company (incorporated herein by reference to Form 10-Q
dated June 30, 2001, filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934
(Commission File No. 1-13991)).

(b) Reports on Form 8-K

The Registrant did not file any reports on Form 8-K during
the quarter for which this report is filed.

































































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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.

Dated: October 26, 2001 AMERICA FIRST MORTGAGE INVESTMENTS, INC.

By /s/ Stewart Zimmerman
Stewart Zimmerman
President and Chief Executive Officer

By /s/ William S. Gorin
William S. Gorin
Authorized Officer and Chief Financial Officer



























































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