SECURITIES AND EXCHANGE COMMISSSION
                              WASHINGTON, DC 20549


                                   FORM 12B-25



                          Commission File Number 1-9819

                              NOTICE OF LATE FILING

                                  (Check One):

    [ X ] Form 10-K [ ] Form 11-K [ ] Form 20-F [ ] Form 10-Q [ ] Form N-SAR

     For the Period Ended:  December 31, 1998

[   ]  Transition Report on Form 10-K     [   ] Transition Report on Form 10-Q
[   ]  Transition Report on Form 20-F     [   ] Transition Report on Form N-SAR
[   ]  Transition Report on Form 11-K

     For the Transition Period Ended:

                                                                               

Nothing  in this  form  shall be  construed  to imply  that the  Commission  has
verified any information contained herein.

If the notification  relates to a portion of the filing checked above,  identify
the item(s) to which the notification  relates: Item 8. Financial Statements and
Supplemental Data and Exhibits 23.1 and 23.2

_______________________________________________________________________________

                         PART I - REGISTRANT INFORMATION

                               DYNEX CAPITAL, INC.
                            (Full name of registrant)


                          10900 Nuckols Road, 3rd Floor
                           Glen Allen, Virginia 23060
                     (Address of principal executive office)

________________________________________________________________________________

                        PART II - RULE 12b-25 (b) AND (c)

If subject  report could not be filed without  reasonable  effort or expense and
the registrant seeks relief pursuant to Rule 12b-25(b),  the following should be
completed. (Check box if appropriate.)

         (a)   The reasons described in reasonable detail in Part III of this 
               form could not be eliminated without  unreasonable effort
               or expense.                                 [ X ]Yes     [   ] No

         (b)   The subject annual report, semi-annual report, transition report
               on Form 10-K,  20-F, 11-K or Form N-SAR, or portion thereof will
               be filed on or before the 15th calendar day following the 
               prescribed due date; or subject  quarterly  report or  transition
               report on Form 10-Q, or portion  thereof will be filed on or 
               before the fifth  calendar day following the prescribed due
               dat                                          [ X ] Yes   [   ] No

         (c)   The accountant's statement or other exhibit required by Rule 
               12b-25 (c) has been attached if applicable.  [   ] Yes   [ X ] No
                                                                                

                              PART III - NARRATIVE

State below in reasonable  detail the reasons why Form 10-K,  11-K,  20-F, 10-Q,
N-SAR or the  transition  report  portion  thereof could not be filed within the
prescribed time period.

     Dynex  Capital,  Inc.  ("Company")  is unable to file timely its  financial
statements and  supplemental  data under Item 8. of Form 10-K for the year ended
December 31, 1998, without  unreasonable effort or expense. On October 30, 1998,
the Company  received a comment  letter from the SEC staff on the Company's 1997
Form 10-K,  March 31, 1998 and June 30, 1998 Form 10-Q's.  After  responding  to
such comments, the SEC notified the Company on February 1, 1999 that the Company
could no longer consolidate  certain affiliate companies for financial reporting
purposes as the Company  does not have  voting  control and that future  filings
should reflect such change.  The Company is completing the process  necessary to
file restated financial statements for the indicated periods.


                           PART IV - OTHER INFORMATION

   (1)   Name and telephone number of person to contact in regard to this 
         notification

         Lynn K. Geurin                  804                217-5820
             (Name)                  (Area Code)       (Telephone Number)

   (2)   Have all other periodic reports required under Section 13 or 15(d) of 
         the Securities  Exchange Act of 1934 or section 30 of the Investment  
         Company Act of 1940 during the preceding 12 months or for such shorter
         period that the registrant was required to file such report(s) been
         filed?  If the answer is no, identify report(s).

              [ X ]  Yes            [   ]  No

   (3)   Is it anticipated that any significant change in results of operation 
         from the corresponding  period for the last fiscal year will be 
         reflected by the earnings statements to be included in the subject 
         report or portion thereof?

              [ X ]  Yes            [   ]  No

         If so, attach an explanation of the anticipated change,  both 
         narratively and  quantitatively,  and, if appropriate state
         the reasons why a reasonable estimate of the results cannot be made.

         In a press release  issued  yesterday,  March 31, 1999, the Company  
         reported a net loss of $16.9  million,  or $0.44 per common  share for
         the fourth  quarter  1998  compared to net income of $17.8  million,  
         or $0.32 per common share for the fourth  quarter of 1997. For the 
         full year 1998,  the Company  reported net income of $19.6 million, or 
         $0.14 per common share  compared to net income of $74.0  million,  or 
         $1.38 per common share for the full year 1997.  The primary  reasons
         for the  decrease in  earnings  for both the fourth  quarter of 1998 
         as well as the entire year of 1998 include a $17.6 million impairment 
         charge taken in the fourth quarter on certain assets  related to the 
         Company's  funding  arrangement with AutoBond  Acceptance Corporation;
         a decrease in net interest margin; a decrease in the gain on sale of 
         investments and trading  activities and an increase in net 
         administrative  fees and expenses to Dynex Holding,  Inc (an affiliate
         of the Company).  These results were discussed in Item 7.  Management's
         Discussion and Analysis of Financial Condition and Results of 
         Operations  of the  Company's Form 10-K which was filed yesterday as
         well as in the press  release  issued yesterday.

Dynex Capital,  Inc. has caused this  notification to be signed on its behalf by
the undersigned thereunto duly authorized.

                                    DYNEX CAPITAL, INC.

 

                                                                      
Date:    April 1, 1999              By:      Thomas H. Potts
                                             President