Exhibit 8.1


                                January 21, 1998



         Re:      First Alliance Mortgage Company
                  Mortgage Loan Asset-Backed Securities
                  Registration Statement on Form S-3

Ladies and Gentlemen:

         We have acted as counsel to First Alliance Mortgage Company in
connection with the preparation and filing of the registration statement on Form
S-3 (such registration statement, the "Registration Statement") being filed
today with the Securities and Exchange Commission pursuant to the Securities Act
of 1933, as amended (the "Act"), in respect of Mortgage Loan Asset Backed
Certificates (the "Certificates") and Notes (the "Notes") which you plan to
offer in series. Our opinions formed the basis for the description of federal
income tax consequences appearing under the heading "Certain Federal Income Tax
Consequences" of the applicable prospectus supplement contained in the
Registration Statement. Assuming issuance of Certificates of a series and
assuming the federal income tax characterization of those Certificates as REMIC
interests, standard interests, stripped interests or partnership interests at
that time, we confirm that the description under "Certain Federal Income Tax
Consequences" in the prospectus of the federal income tax consequences with
respect to a series of Certificates presents our opinion of the material tax
issues relating to an investment in those Certificates. Assuming issuance of
Notes as indebtedness at that time, we confirm that the description under
"Certain Federal Income Tax Consequences" in the prospectus of the federal
income tax consequences with respect to a series of Notes presents our opinion
of the material tax issues relating to an investment in those Notes.

         We hereby consent to the filing of this letter as Exhibit 8.1 to the
Registration Statement and to the reference to this firm in the Registration
Statement and related prospectus supplement under the heading "Certain Federal
Income Tax Consequences."

                                         Very truly yours,


                                         /S/ Arter & Hadden LLP
                                         --------------------------
                                         Arter & Hadden LLP