8-K

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

     PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (date of earliest event reported):                October 1, 1998

                      SOUTHERN PACIFIC FUNDING CORPORATION
             (Exact name of registrant as specified in its charter)

                                                                                 
         California                              1-11785                              33-0636924
(State or other jurisdiction             (Commission File No.)                   (I.R.S. Employer
         of incorporation)                                                       Identification No.)

4949 Meadows Road, Suite 600
Lake Oswego, OR                                                                          97035
(Address of principal executive offices)                                               (Zip code)



                                 (503) 303-5400
              (Registrant's telephone number, including area code)

                                 Not applicable
              (Former name, former address and former fiscal year,
                          if changed since last report)






Item 3.  Bankruptcy or Receivership.

         On October 1, 1998, Southern Pacific Funding Corporation,  a California
corporation  (the  "Registrant"),  filed a  petition  for  reorganization  under
Chapter 11 of the Bankruptcy Code in the United States  Bankruptcy Court for the
District of Oregon (Case No. 398-37613). The Registrant is managing its business
as  debtor-in-possession  subject to Court  approval for certain  actions of the
Registrant.  See the press release dated October 1, 1998,  filed as Exhibit 99.1
hereto and incorporated herein by this reference.

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

         (c)  Exhibits.

                 99.1 Registrant's press release dated October 1, 1998.

                                    SIGNATURE

         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.

                                      SOUTHERN PACIFIC FUNDING CORPORATION


Dated: October 1, 1998           By: /s/ E. James Hedemark
                                        Name:  E. James Hedemark
                                        Title:    Chief Executive Officer

EX-99.1

FOR MORE INFORMATION CONTACT:

David Kiser, CPA
Director of Corporate Communications
Southern Pacific Funding Corporation
(503) 303-2280

FOR IMMEDIATE RELEASE:

                      SOUTHERN PACIFIC FUNDING CORPORATION
                       FILES PETITION FOR REORGANIZATION,
                        ARRANGES POST-PETITION FINANCING

LAKE OSWEGO,  Ore.--(BUSINESS  WIRE)--Oct.  1, 1998 - Southern  Pacific  Funding
Corporation  announced today that the Company has  voluntarily  filed a petition
for  reorganization  under Chapter 11 in the United States  Bankruptcy Court for
the District of Oregon.

The petition does not involve Southern Pacific Funding's subsidiaries,  National
Capital Funding, Inc., Oceanmark Financial  Corporation,  Home America Financial
Services,  Inc.,  Hallmark  America  Corp.,  and its U.K.  subsidiary,  Southern
Pacific Mortgage Limited.  The Chapter 11 case is pending before U.S. Bankruptcy
Court Judge  Elizabeth L. Perris and the Company is  continuing in business as a
debtor in possession.

Attempts by the Company to negotiate with its warehouse  lenders with respect to
recent notices of default were  unsuccessful,  leaving  Southern Pacific Funding
unable to continue to fund mortgage loans in the normal course. Accordingly, the
Company  filed the  bankruptcy  petition  in order to obtain an  opportunity  to
reorganize  its affairs  under the  protection  of Chapter 11 and  implement its
previously-announced restructuring initiatives. Greenwich Capital Markets, Inc.,
has agreed to provide the Company with post-petition  financing  consisting of a
$100 million warehouse credit facility and a $12 million working capital line of
credit (of which not more than $7.5 million may be outstanding  prior to October
5, 1998). A hearing has been set for later today to obtain court approval of the
financing  arrangement  with Greenwich  Capital.  The financing  commitment will
expire not later than October 16, 1998, by which time Southern  Pacific  Funding
hopes to have permanent "debtor-in-possession" financing in place.

E. James Hedemark,  Chief Executive  Officer,  said, "The decision to file under
Chapter 11 was a  difficult  one. We were forced to take this action as a result
of difficult market conditions in the third quarter.  We have concluded that the
best way to protect the value of the Company and its business is to proceed with
the protection of the Court. Chapter 11 allows us to continue operating while we
consider all our strategic  alternatives,  including a sale of the Company,  and
develop a restructuring plan."

Southern Pacific Funding Corporation is a Lake Oswego,  Oregon,  based specialty
finance company that  originates,  purchases and sells home equity loans made to
borrowers  whose  needs  are  not  met by  traditional  financial  institutions.
Southern  Pacific Funding and its  subsidiaries  originate loans  throughout the
United  States  and  in  the  United  Kingdom  through  diversified

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origination  channels.  The  Company's  largest  shareholder,   Imperial  Credit
Industries,  Inc.  (NASDAQ:ICII),  currently  owns  47% of the  Common  Stock of
Southern Pacific Funding.

More  information may be found on Southern  Pacific  Funding  Corporation on the
Internet @ http://www.sp-funding.com

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