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 March 31, 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: 1-12109

                           DELTA FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

            DELAWARE                                        11-3336165
            --------                                        ----------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)


             1000 WOODBURY ROAD, SUITE 200, WOODBURY, NEW YORK 11797
    (Address of registrant's principal executive offices including ZIP Code)

                                (516) 364 - 8500
                                ----------------
              (Registrant's telephone number, including area code)

                                    NO CHANGE
   (Former name, former address and former fiscal year, if changed since last
                                     report)


      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 and 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 March 31, 2001, 15,883,749 shares of the Registrant's common stock,
par value $.01 per share, were outstanding.


<PAGE>

                               INDEX TO FORM 10-Q

                                                                        Page No.

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited)

         Consolidated Balance Sheets as of March 31, 2001 and
         December 31, 2000...............................................   1

         Consolidated Statements of Operations for the three months
         ended March 31, 2001 and March 31, 2000.........................   2

         Consolidated Statements of Cash Flows for the three months
         ended March 31, 2001 and March 31, 2000.........................   3

         Notes to Consolidated Financial Statements......................   4

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations...........................................   8

Item 3.  Quantitative and Qualitative Disclosures About Market Risk......  21


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings...............................................  23

Item 2.  Changes in Securities and Use of Proceeds.......................  25

Item 3.  Defaults Upon Senior Securities.................................  25

Item 4.  Submission of Matters to a Vote of Security Holders.............  25

Item 5.  Other Information...............................................  26

Item 6.  Exhibits and Current Reports on Form 8-K........................  26

Signatures...............................................................  27


<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)


                  DELTA FINANCIAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                                                      MARCH 31,     DECEMBER 31,
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)           2001            2000
                                                     ----------     ------------
ASSETS
Cash and interest-bearing deposits                   $  79,373          62,270
Accounts receivable                                     15,781          21,954
Loans held for sale, net                               101,360          82,698
Accrued interest receivable                              4,790          10,388
Interest-only and residual certificates, net           196,070         216,907
Equipment, net                                          13,452          15,034
Prepaid and other assets                                20,948          37,846
Deferred tax asset, net                                  5,600           5,600
                                                     ----------      ----------
   Total assets                                      $ 437,374         452,697
                                                     ==========      ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Bank payable                                         $   2,696             927
Warehouse financing and other borrowings               106,815          88,632
Senior Notes                                           149,596         149,571
Accounts payable and accrued expenses                   29,044          33,414
Investor payable                                        73,068          69,489
Advance payment by borrowers for taxes and insurance    12,183          12,940
                                                     ----------      ----------
   Total liabilities                                   373,402         354,973
                                                     ----------      ----------

STOCKHOLDERS' EQUITY:
Common stock, $.01 par value. Authorized 49,000,000
   shares; 16,000,549 shares issued and
   15,883,749 shares outstanding at March 31, 2001
   and December 31, 2000                                   160             160
Additional paid-in capital                              99,472          99,472
Retained earnings                                      (34,342)           (590)
Treasury stock, at cost (116,800 shares)               ( 1,318)         (1,318)
                                                     ----------      ----------

   Total stockholders' equity                           63,972          97,724
                                                     ----------      ----------
     Total liabilities and stockholders' equity        437,374         452,697
                                                     ==========      ==========

          See accompanying notes to consolidated financial statements.

                                       1
<PAGE>
                  DELTA FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                        THREE MONTHS ENDED
                                                             MARCH 31,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)          2001           2000
                                                     --------       --------
REVENUES:
  Net gain on sale of mortgage loans                $  5,377         14,654
  Interest                                           (14,789)        10,537
  Servicing fees                                       2,213          4,066
  Origination fees                                     4,162          6,688
                                                     --------       --------
     Total revenues                                   (3,037)        35,945
                                                     --------       --------
EXPENSES:
  Payroll and related costs                           11,324         15,561
  Interest expense                                     5,829          7,803
  General and administrative                          11,831          9,456
  Disposition of branches                                786             -
  Restructuring charges                                  473             -
                                                     --------       --------
     Total expenses                                   30,243         32,820
                                                     --------       --------

Income (loss) before income taxes expense            (33,280)         3,125
Provision for income taxes expense                       472          1,299
                                                     --------       --------
Net income (loss)                                   $(33,752)         1,826
                                                     ========       ========

PER SHARE DATA:
   Net income (loss) per common
     share - basic and diluted                      $  (2.12)          0.11
                                                     ========       ========
   Weighted-average number
     of shares outstanding                        15,920,869     15,920,869
                                                  ===========    ===========


          See accompanying notes to consolidated financial statements.

                                       2
<PAGE>
<TABLE>
<CAPTION>
                  DELTA FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                                                                 THREE MONTHS ENDED
                                                                                      MARCH 31,
(DOLLARS IN THOUSANDS)                                                           2001           2000
                                                                               -------         -------
<S>                                                                          <C>            <C>
Cash flows from operating activities:
    Net income                                                               $ (33,752)         1,826
    Adjustments to reconcile net income to net cash used in
      operating activities:
       Provision for loan and recourse losses                                       87            542
       Depreciation and amortization                                             1,217          1,798
       Deferred tax benefit                                                          -           (731)
       Capitalized mortgage servicing rights, net of amortization                    -            783
       Deferred origination costs                                                 (646)            23
       Interest-only and residual certificates received in
          Securitization transactions, net                                      20,837         (8,452)
       Changes in operating assets and liabilities:
          Decrease (increase) in accounts receivable                             6,173         (2,468)
          Increase in loans held for sale, net                                 (18,016)        (3,417)
          Decrease in accrued interest receivable                                5,598         10,903
          Decrease (increase) in prepaid and other assets                       16,811         (6,700)
          Decrease in accounts payable and accrued expenses                     (4,370)        (4,266)
          Increase (decrease) in investor payable                                3,579         (8,379)
          (Decrease) increase in advance payments by borrowers
          for taxes and insurance                                                 (757)           346
                                                                              ----------    -----------
              Net cash used in operating activities                             (3,239)       (18,192)
                                                                              ----------    -----------
Cash flows from investing activities:
    Disposal (purchase) of equipment                                               390           (530)
                                                                              ----------    -----------
              Net cash provided by (used in) investing activities                  390           (530)
                                                                              ----------    -----------
Cash flows from financing activities:
    Proceeds from warehouse financing and other borrowings, net                 18,183         13,048
    Increase (decrease) in bank payable, net                                     1,769           (241)
                                                                              ----------    -----------
              Net cash provided by financing activities                         19,952         12,807
                                                                              ----------    -----------
              Net increase (decrease) in cash and interest-bearing deposits     17,103         (5,915)

Cash and interest-bearing deposits at beginning of period                       62,270         69,557
                                                                              ----------    -----------
Cash and interest-bearing deposits at end of period                          $  79,373     $   63,642
                                                                             ===========    ===========
Supplemental Information:
Cash paid during the period for:
    Interest                                                                 $   9,119         11,715
                                                                             ===========    ===========
    Income taxes                                                             $      20          2,039
                                                                             ===========    ===========
          See accompanying notes to consolidated financial statements.

                                       3
</TABLE>
<PAGE>

                  DELTA FINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)   BASIS OF PRESENTATION

     Delta  Financial  Corporation  (the  "Company"  or  "Delta")  is a Delaware
corporation, which was organized in August 1996.

     The accompanying  unaudited  consolidated  financial statements include the
accounts of the  Company  and its wholly  owned  subsidiaries.  All  significant
inter-company accounts and transactions have been eliminated in consolidation.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America for interim financial  information and the instructions
to Form 10-Q. Certain information and footnote  disclosures normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles have been condensed or omitted  pursuant to the rules and regulations
of  the  Securities  and  Exchange   Commission.   The  accompanying   unaudited
consolidated financial statements and the information included under the heading
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  should  be  read  in  conjunction  with  the  audited  consolidated
financial  statements  and  related  notes of the  Company  for the  year  ended
December 31, 2000.  The results of operations for the  three-month  period ended
March  31,  2001 is not  necessarily  indicative  of the  results  that  will be
expected for the entire year.

     All  adjustments  that  are,  in  the  opinion  of  management,  considered
necessary  for a fair  presentation  of the  financial  position  and results of
operations  for the interim  periods  presented  have been made.  Certain  prior
period amounts in the financial  statements  have been  reclassified  to conform
with the current year presentation.

(2) SUMMARY OF REGULATORY SETTLEMENTS

     In September  1999, the Company  settled  allegations by the New York State
Banking  Department  (the "NYSBD") and a lawsuit by the New York State Office of
the Attorney  General (the  "NYOAG")  alleging  that Delta had violated  various
state and federal  lending  laws.  The global  settlement  was evidenced by that
certain (a)  Remediation  Agreement by and between  Delta Funding and the NYSBD,
dated as of September 17, 1999 and (b) Stipulated  Order on Consent by and among
Delta Funding, Delta Financial and the NYOAG, dated as of September 17, 1999. As
part of the  Settlement,  Delta,  among other  things,  implemented  agreed upon
changes to its lending practices; is providing reduced loan payments aggregating
$7.25 million to certain  borrowers  identified by the NYSBD; and created a fund
financed by the grant of 525,000 shares of Delta Financial's  common stock to be
used,  for among other  things,  to pay  borrowers and for a variety of consumer
educational and counseling programs.

     In March 2000, the Company finalized an agreement with the U.S.  Department
of Justice, the Federal Trade Commission and the Department of Housing and Urban
Development, to complete the global settlement it had reached with the NYSBD and
NYOAG. The Federal  agreement  mandates some additional  compliance  efforts for
Delta, but it does not require any

                                       4


additional financial commitment by Delta.

(3) RESTRUCTURING CHARGES AND DEBT MODIFICATION

   RESTRUCTURING CHARGES

     In August 2000, Delta announced a corporate restructuring in its continuing
efforts to improve operating  efficiencies and to address its negative cash flow
from  operations.  During the third quarter of 2000, the Company recorded a $6.7
million  pre-tax  charge  related to this  restructuring,  which is  included in
restructuring  and other  special  charges  in the  consolidated  statements  of
operations.  This charge primarily relates to employee severance associated with
layoffs, a reduction to goodwill and office equipment write-offs.

     In January 2001, Delta announced that it had entered into an agreement with
Ocwen  Financial  Corporation  ("Ocwen") to transfer its servicing  portfolio to
Ocwen. In May 2001, the Company physically  transferred its servicing  portfolio
to Ocwen, and laid-off the majority of its servicing staff. The Company recorded
$0.5 million pre-tax charges related to this restructuring  which is included in
restructuring charges in the consolidated statements of operations.  This charge
relates to employee  severance  associated with closing the Company's  servicing
operations.

     The following  table sets forth the  components  of the  Company's  accrual
restructuring charges:

<TABLE>
<CAPTION>


                                        BALANCE AT                                 BALANCE AT
(DOLLARS IN THOUSANDS)              DECEMBER 31, 2000   INCREASES   DECREASES    MARCH 31, 2001
-----------------------------------------------------------------------------------------------
<S>                                 <C>                 <C>         <C>          <C>
Write down of lease obligations              1,163                      (111)            1,052
Employment termination payments                180           473        (134)              519

-----------------------------------------------------------------------------------------------
Total Accrual Restructuring Charges          1,343           473        (245)            1,571
-----------------------------------------------------------------------------------------------
</TABLE>

   DEBT MODIFICATION

     In August  2000,  the Company  announced  an agreement to modify its Senior
Notes (the "Debt Modification").  With the consent of greater than fifty percent
of its Senior Note  holders,  a negative  pledge  covenant  in the Senior  Notes
Indenture,  which  previously  prevented  the Company  from selling or otherwise
obtaining  financing against any of its  interest-only or residual  certificates
(the  "Residual  Assets"),   was  modified.  In  consideration  for  the  Senior
Noteholders'  consent,  the Company agreed,  in an exchange offer (the "Exchange
Offer"), to offer current Senior Noteholders the option of exchanging their then
existing  Senior Notes for (a) new senior  secured  notes (the  "Senior  Secured
Notes") and (b) ten-year  warrants to buy  approximately  1.6 million  shares of
Common Stock, at an initial exercise price of $9.10 per share, subject to upward
or downward adjustment in certain  circumstances.  The Senior Secured Notes have
the same coupon face amount and maturity  date as the Senior Notes and, up until
the Second Debt  Restructuring (see below) were secured by at least $165 million
of the Company's Residual Assets. The Exchange Offer was consummated in December
2000, with holders of greater than $148 million of Senior Notes tendering in the
exchange.

                                       5


     In  February  2001,  the Company  entered  into a Letter of Intent with the
beneficial  holders  of over  fifty  percent  of its  Senior  Secured  Notes  to
restructure,  and ultimately  extinguish,  the Senior Secured Notes (the "Second
Debt Restructuring").  In March 2001, the Company obtained the formal consent of
these  beneficial  holders  of  the  Senior  Secured  Notes  through  a  Consent
Solicitation  that  modified  certain  provisions  of the Senior  Secured  Notes
Indenture  to,  among  other  things,  allow  for the  release  of two  residual
certificates  currently  securing the Senior Secured Notes. In consideration for
their consent,  the Company has agreed to offer the Senior  Secured  Noteholders
the option to exchange their existing  Notes (the "Second  Exchange  Offer") for
new securities that will evidence a commensurate interest in a Liquidating Trust
to be formed in connection with the Second  Exchange Offer,  into which residual
certificates  then securing the Company's  obligations  under the Senior Secured
Notes  (totaling  approximately  $150 million) will be transferred as well as an
interest in preferred stock of Delta. The Second Debt Restructuring will provide
for, among other things, the following:

(a)      The Liquidating Trust will receive $15 million of  newly  issued  Delta
         preferred stock bearing  a 10% dividend payable semi-annually (with the
         first three dividends payable in kind). Delta  may redeem the preferred
         stock at its liquidation preference plus accrued dividends at any time.

(b)      Delta  will receive  all  cash  flows from  the  residual  certificates
         transferred into the Liquidating Trust through, and including, the June
         2001 distributions. Thereafter, the Company  will earn a management fee
         in return for its oversight and its  efforts to  maximize  the value of
         the Residual Assets in the Liquidating Trust, and for absorbing certain
         costs and fees on behalf of the Liquidating Trust.

(c)      The Company was able to monetize residual certificates  underlying five
         securitizations (including two that were released as part of the Second
         Debt Restructuring) to  provide  working capital, as  described in more
         detail below.

     Delta believes that,  upon  successful  consummation of the Second Exchange
Offer (which  requires at least  90-95% of the holders  agreeing to the exchange
offer),  Moody's and Fitch will withdraw their corporate  ratings on the Company
as the  underlying  debt will have been  largely  extinguished.  Delta  hopes to
complete the Second Debt Restructuring, subject to receipt of noteholder and SEC
approvals, some time in the third quarter of 2001.

     In March  2001,  in  connection  with the Second  Debt  Restructuring,  the
Company entered into a forward purchase agreement to sell residual  certificates
underlying five  securitizations  for a cash purchase price. As a result of this
agreement,  the Company  recorded a $25.4 million  non-cash  charge in the first
quarter of 2001. The purchasers of these  residuals  initially  provided  bridge
financing in the form of residual financing  (representing  approximately 64% of
the agreed  upon  purchase  price).  The bridge  financing  was repaid  from the
proceeds of the purchase price,  which was paid to the Company in May 2001, when
the Company physically transferred its servicing to Ocwen. The proceeds from the
residual  financing and subsequent  sale will be used by the Company for working
capital.


     Management  believes that its transfer of servicing to Ocwen and the Second
Debt  Restructuring are essential steps in its ongoing effort to restructure its
operations  and reduce its  negative  cash flow  associated  with its  servicing
operations and Senior Secured Notes.

                                       6


 (4) EARNINGS PER SHARE

     The  following  is  a  reconciliation  of  the  denominators  used  in  the
computations of basic and diluted Earnings Per Share ("EPS").  The numerator for
calculating both basic and diluted EPS is net income.

For the three months ended March 31:


(DOLLARS IN THOUSANDS, EXCEPT EPS DATA)          2001                  2000
------------------------------------------------------------------------------
Net income (loss)                          $  (33,752)                1,826
Weighted-average shares                    15,920,869            15,920,869
Basic EPS                                  $    (2.12)                 0.11

Weighted-average shares                    15,920,869            15,920,869
------------------------------------------------------------------------------
                                           15,920,869            15,920,869
Diluted EPS                                $    (2.12)                 0.11
------------------------------------------------------------------------------

 (5) IMPACT OF NEW ACCOUNTING STANDARDS

     In June 2000,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial  Accounting  Standards  (SFAS) No. 138,  "Accounting  for
Certain Derivative  Instruments and Certain Hedging Activities - an amendment of
FASB  Statement No. 133,  "Accounting  for  Derivative  Instruments  and Hedging
Activities." This statement supercedes and amends certain paragraphs of SFAS No.
133. The  effective  date for SFAS No. 138 is for fiscal years  beginning  after
June 15, 2000.  SFAS Nos. 138 and 133 apply to  quarterly  and annual  financial
statements.  There was no impact on the Company's financial condition or results
of operations upon adoption of SFAS Nos. 138 and 133.

     In September 2000, the FASB issued SFAS No. 140,  "Accounting for Transfers
and Servicing of Financial  Assets and  Extinguishments  of  Liabilities."  This
Statement  supercedes and replaces SFAS No. 125,  "Accounting  for Transfers and
Servicing of Financial Assets and  Extinguishments of Liabilities," and rescinds
SFAS No. 127,  "Deferral of the  Effective  Date of Certain  Provisions  of FASB
Statement No. 125.".  SFAS No. 140 provides  accounting and reporting  standards
for securitization  transactions  involving financial assets, sales of financial
assets such as receivables,  collateralized  borrowing arrangements,  securities
lending   transactions,   repurchase   agreements,   loan  participations,   and
extinguishments of liabilities.  Certain provisions of this Statement  including
relevant  disclosures  are effective for fiscal years ending after  December 31,
2000. The remaining  provision are effective for transfer  transactions  entered
into after March 31, 2001.  SFAS No. 140 does not require  restatement  of prior
periods.  The  implementation  of SFAS No.  140 does not have an  impact  on our
financial statements.

                                       7

<PAGE>
ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND
RESULTS OF OPERATIONS

THE  FOLLOWING  DISCUSSION SHOULD  BE READ IN CONJUNCTION  WITH THE CONSOLIDATED
FINANCIAL STATEMENTS OF THE  COMPANY  AND  ACCOMPANYING  NOTES  TO  CONSOLIDATED
FINANCIAL STATEMENTS SET FORTH THEREIN.

GENERAL

     Delta  Financial  Corporation  (the  "Company"  or  "Delta"),  through  its
wholly-owned   subsidiaries,   engages  in  the  consumer  finance  business  by
originating,  acquiring, selling and servicing non-conforming home equity loans.
Throughout its 19 years of operating history, the Company has focused on lending
to individuals  who generally have impaired or limited credit profiles or higher
debt-to-income ratios for such purposes as debt consolidation, home improvement,
mortgage refinancing or education.

     Through its  wholly-owned  subsidiary,  Delta Funding  Corporation  ("Delta
Funding"),  the Company originates home equity loans indirectly through licensed
mortgage   brokers  and  other  real  estate   professionals   who  submit  loan
applications  on behalf of the  borrower  ("Brokered  Loans")  and prior to July
2000,  also  purchases  loans  from  mortgage  bankers  and  smaller   financial
institutions  that  satisfy  Delta's  underwriting  guidelines   ("Correspondent
Loans"). The Company decided to discontinue its correspondent operations in July
2000 to focus on its less cash  intensive  broker  and  retail  channels.  Delta
Funding  currently  originates  and  purchases  the  majority of its loans in 20
states, through its network of approximately 1,500 brokers and correspondents.

     The Company develops retail loan leads ("Retail Loans")  primarily  through
its  telemarketing  system  and its  network  of 11 retail  offices  located  in
Illinois,  Indiana,  Missouri,  North  Carolina,  Ohio  (4),  Pennsylvania  (2),
Tennessee,  and a call center in New York. In January 2001,  the Company  closed
two under-performing retail offices in Florida.

     The  Company's  business  strategy  is to  increase  its loan  originations
platform  by  focusing  its  efforts  on  its  broker  and  retail  channels  of
originations  by (1) continuing to provide top quality service to its network of
brokers,  and retail clients,  (2) maintaining its underwriting  standards,  (3)
further penetrating its established and  recently-entered  markets and expanding
into new geographic markets, (4) expanding its retail origination  capabilities,
and (5) leveraging  and continuing its investment in information  and processing
technologies.

     In  May  2001,  the  New  York  Stock  Exchange   ("NYSE")  delisted  Delta
Financial's  Common Stock.  The Exchange stated that it took this action because
Delta was unable to meet the NYSE's continued listing standards of maintaining a
minimum of $15 million in market  capitalization and a minimum share price of $1
over a 30-day trading period.  When Delta's Common Stock was delisted in May, it
began trading on the Over The Counter  Bulletin Board ("OTCBB") under the ticker
symbol "DLTO."

                                       8


     For the three  months  ended March 31, 2001 the Company  originated  $170.7
million of loans, a decrease of 41% over the $287.0 million of loans  originated
and purchased in the comparable period in 2000. Of these amounts,  approximately
$105.1 million were originated  through its network of brokers and $65.6 million
were  originated  through its retail network during the three months ended March
31, 2001.  During the three  months ended March 31, 2000 the Company  originated
$173.2  million  through its network of brokers,  $71.5 million were  originated
through its retail  network and $42.3 million were purchased from its network of
correspondents.

     The following table sets forth information  relating to the delinquency and
loss experience of the mortgage loans serviced by the Company (primarily for the
securitization  trusts,  as  described  below) for the  periods  indicated.  The
Company is not the holder of the  securitization  loans,  but generally  retains
interest-only or residual  certificates issued by the securitization  trusts, as
well as the  servicing  rights,  the  value  of each of which  may be  adversely
affected by defaults.

                                                     THREE MONTHS ENDED
                                                 ------------------------------
(Dollars in thousands)                             MARCH 31,       DECEMBER 31,
                                                     2001              2000
                                                 ------------      ------------
Total Outstanding Principal Balance
  (at period end)............................    $ 3,055,982       $ 3,312,582
Average Outstanding(1).......................      3,160,196         3,406,684
DELINQUENCY (at period end)
30-59 Days:
  Principal Balance..........................    $   216,990       $   238,047
  Percent of Delinquency(2)..................          7.10%             7.19%
60-89 Days:
  Principal Balance..........................    $    95,054       $   110,730
  Percent of Delinquency(2)..................          3.11%             3.34%
90 Days or More:
  Principal Balance..........................    $    72,996       $    69,802
  Percent of Delinquency(2)..................          2.39%             2.11%
Total Delinquencies:
  Principal Balance..........................    $   385,040       $   418,579
  Percent of Delinquency(2)..................         12.60%            12.64%
FORECLOSURES
  Principal Balance..........................    $   203,959       $   206,281
  Percent of Foreclosures by Dollar(2).......          6.67%             6.23%
REO (at period end)..........................    $    64,912       $    57,981
   Percent of REO............................          2.12%             1.75%
Net Losses on Liquidated Loans...............    $    (9,905)      $   (10,159)
Percentage of Net Losses on Liquidated Loans
  (based on Average Outstanding Balance)(3)           (1.25%)           (1.19%)
---------------
(1)Calculated by summing the actual outstanding principal balances at the end
   of each month and dividing the total principal balance by the number of
   months in the applicable period.
(2)Percentages are expressed based upon the total outstanding principal balance
   at the end of the indicated period.
(3)Annualized.

     In May 2001, the Company  transferred its servicing portfolio to Ocwen and,
as such,  no

                                       9


longer  has a  portfolio  on which to report  delinquency  and loss experience.

CERTAIN ACCOUNTING CONSIDERATIONS

     As a  fundamental  part  of its  business  and  financing  strategy,  Delta
typically  sells  the  majority  of  its  loans  through   securitization  to  a
securitization  trust and derives a substantial portion of its income from these
sales. In a securitization,  the Company sells a pool of loans it has originated
or purchased to a REMIC trust for a cash  purchase  price.  The trust,  in turn,
finances  the  purchase  of the  pool  of  loans  it  has  acquired  by  selling
"pass-through  certificates,"  or bonds,  which  represent  undivided  ownership
interests in the trust. Holders of the pass-through certificates are entitled to
receive  monthly  distributions  of all  principal  received  on the  underlying
mortgages  and a specified  amount of  interest,  determined  at the time of the
offering.

     When  the  Company  sells a pool of  loans to a  securitization  trust,  it
receives  the  following  economic  interests in the trust:  (a) the  difference
between  the  interest  payments  due on the  loans  sold to the  trust  and the
interest rate paid to the pass-through certificateholders,  less the contractual
servicing  fee  and  other  costs  and  expenses  of  administering  the  trust,
represented  by  interest-only  and  residual  certificates,  and (b) (i) a cash
premium for  selling  the right to service the loans on behalf of the trust,  or
(ii) on those securitizations in which the company retains servicing rights, the
right to service the loans on behalf of the trust and earn a  servicing  fee, as
well as other  ancillary  servicing  related fees directly from the borrowers on
the underlying loans.

     Because the  Company  closed its  servicing  operations  in May 2000,  on a
go-forward  basis,  it expects  only to receive a cash  premium from selling the
right to service loans on behalf of new securitization trusts.

     The Company's  net  investment in the pool of loans sold at the date of the
securitization represents the amount originally paid to originate or acquire the
loans adjusted for (i) any direct loan origination  costs incurred (an increase)
and loan  origination  fees received (a decrease) in connection  with the loans,
which are treated as a component of the initial  investment  in loans,  and (ii)
the principal  payments  received,  and the amortization of the net loan fees or
costs,   during  the  period  the   Company   held  the  loans  prior  to  their
securitization.  The Company's investment in the loans also reflects adjustments
for any gains (a  decrease  in the  investment)  or losses (an  increase  in the
investment) the Company has incurred on treasury rate lock contracts (or similar
hedging  strategies)  which the Company has typically  used to hedge against the
effects of changes in interest  rates during the period it holds the loans prior
to their securitization. (See "- Hedging.")

     Upon the  securitization  of a pool of loans, the Company (i) recognizes in
income,  as origination  fees, the unamortized  origination fees included in the
investment in the loans sold, and (ii)  recognizes a gain on sale of loans equal
to (a) the difference between cash received from the trust and the investment in
the loans  remaining  after the  allocation  of portions of that  investment  to
record interest-only and residual certificates (and, where applicable,  mortgage
servicing  rights)  received  in the  securitization,  and (b) the cash  premium
received from selling the right to service the loans on behalf of the trust. The
majority of the net gain on sale of mortgage  loans  results from the fair value
of the  interest-only  and  residual  certificates  retained by the Company in a
securitization  for  each  period  and the  market  value  of the  interest-only
certificates sold in connection with each securitization.

                                       10


     The Company has sold the interest-only  certificates created in each of its
most recent  securitizations  for cash  proceeds and intends to continue to sell
the  interest-only  certificate as long as the sale  effectively  maximizes cash
flow and profitability.

     The  interest-only and residual  certificates  received by the Company upon
the  securitization of a pool of loans are accounted for as trading  securities.
The amount initially allocated to the interest-only and residual certificates at
the date of a  securitization  reflects the fair value of those  interests.  The
amount recorded for the certificates is reduced for distributions  thereon which
the Company receives from the trust,  and is adjusted for subsequent  changes in
the fair value of interest-only  and residual  certificates held by the Company,
which are reflected in the  statement of  operations.  The Company  assesses the
fair  value of  interest-only  and  residual  certificates  based  upon  updated
estimates of prepayment and default rates  relating to loan groups  comprised of
loans of similar  types,  terms,  credit  quality,  interest  rates,  geographic
location and value of loan  collateral,  which  represent the  predominant  risk
characteristics that would affect prepayments and default rates.

     The  Company did not  complete a  securitization  of mortgage  loans in the
first  quarter of 2001,  opting  instead to sell whole loans for a cash premium.
The Company  intends to return to its prior  practice of selling loans through a
combination of securitization and, to a lesser extent,  whole loan sales, in the
second quarter of 2001.

FAIR VALUE ADJUSTMENTS

     The  fair  values  of both  interest-only  and  residual  certificates  are
significantly  affected  by,  among  other  factors,  prepayments  of loans  and
estimates  of future  prepayment  rates.  The  Company  continually  reviews its
prepayment  assumptions  in light of company and industry  experience  and makes
adjustments to those assumptions when such experience indicates.

     The Company's underlying  assumptions used in determining the fair value of
its interest-only and residual certificates are as follows:

(a)   Prepayment rate assumptions are based upon the Company's on-going analysis
      of industry and Company pool trends,  the most recent adjustments to these
      assumptions were made in the third  quarter of 2000 and the fourth quarter
      of  1999.   The following  table  shows  the  changes  to  the  prepayment
      assumptions  at  each of these dates and the assumptions used prior to the
      1999 fourth quarter change:

-------------------------------------------------------------------------------
                             Month One Speed             Peak Speed *
-------------------------------------------------------------------------------
Loan Type               9/30/00  12/31/99   Prior   9/30/00 12/31/99   Prior
-------------------------------------------------------------------------------
Fixed Rate Loans           4.0%      4.0%    4.8%       23%      31%     31%
-------------------------------------------------------------------------------
Six-Mo. LIBOR ARMS        10.0%     10.0%   10.0%       50%      50%     50%
-------------------------------------------------------------------------------
Hybrid ARMS                4.0%      4.0%    6.0%       50%      50%     50%
-------------------------------------------------------------------------------
* Since the second quarter of 1998, the Company has utilized a "vector" curve,
  instead of a "ramp" curve, which the Company believes will be more
  representative of future loan prepayment experience.

(b)   A default reserve for both fixed- and adjustable-rate  loans  sold  to the
      securitization  trusts  of  3.50% of the amount initially  securitized  at
      December 31, 2000  compared  to  3.10%  at  December 31, 1999 and 2.00% at
      December 31, 1998; and

                                       11


(c)   Under the "cash-out" method, an annual discount rate of 13.0% was  used in
      determining the present value of  cash flows  from  residual certificates,
      which represent the predominant form  of  retained interest, at  March 31,
      2001 and December 31, 2000, up from 12% prior thereto. An annual  discount
      rate of 18% is used during the duration of the Net Interest Margin ("NIM")
      transaction on a portion of the Company's residual certificates.


     In the third  quarter of 2000,  the Company  lowered its  prepayment  speed
assumptions  mainly by reducing the peak speed on its fixed rate product,  which
comprises  the  majority of the  Company's  servicing  portfolio.  In the fourth
quarter of 1999, the Company lowered its prepayment speed assumption along parts
of the prepayment rate vector curve while leaving the peak speeds intact.

     The  prepayment  rate  assumption  was  revised  primarily  to reflect  the
Company's actual loan performance experience over the past several quarters. The
loan loss reserve assumption was revised to reflect management's belief that (i)
slower  prepayment  speeds,  (ii) anticipated flat to slightly  moderate rise in
home  values as  compared  to the past few years  and  (iii)  the  inability  of
borrowers to refinance  their  mortgages  to avoid  default  because of industry
consolidation may have an adverse effect on the Company's non-performing loans.

     In the third and fourth  quarters of 2000, the Company changed the discount
rate it uses in  determining  the  present  value of cash  flows  from  residual
certificates, as follows:

       a. In the third quarter of 2000, the Company  increased the discount rate
its uses on those residual  certificates  included in the NIM Transaction to 18%
(from 12%) and recorded an $8.8 million  valuation  adjustment.  This adjustment
reflects a reduction in the present value of those residual certificates sold in
connection with the Company's NIM transaction completed in the fourth quarter of
2000. The Company  increased the discount rate on these  residual  certificates,
during the period that the senior NIM securities will be outstanding, to account
for the  potentially  higher risk  associated  with the residual  cash flows the
Company  will retain  from a  certificated  interest in the NIM trust,  which is
subordinated to the senior security sold in the NIM transaction.

       b. In the fourth quarter of 2000,  the Company raised the annual discount
rate it uses in  determining  the  present  value of cash  flows  from  "senior"
residual  certificates  (I.E.,  those  residuals  that are not  subject to a NIM
Transaction) to 13% from 12%, and recorded a $7.1 million valuation  adjustment.
This adjustment  reflects what management  believes is an increase in volatility
concerning the other underlying  assumptions used in estimating  expected future
cash flows due to greater  uncertainty  surrounding  current  and future  market
conditions,  including without limitation,  inflation,  recession,  home prices,
interest rates and equity markets.

                                       12

<PAGE>

RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2000

GENERAL

     The  Company's net loss for the three months ended March 31, 2001 was $33.8
million,  or $2.12 per share,  compared to $1.8 million, or $0.11 per share, for
the three months ended March 31, 2000.  Comments regarding the components of net
loss are detailed in the following paragraphs.

REVENUES

     Total revenues decreased $38.9 million,  or 108%, to $(3.0) million for the
three months ended March 31, 2001, from $35.9 million for the comparable  period
in 2000.  The decrease in revenue was  primarily  attributable  to the Company's
write down of  residual  certificates  sold under a forward  purchase  agreement
entered into in the first quarter of 2001 (that closed in May 2001),  for a cash
purchase price which reflected a significant  discount to the Company's carrying
value of such residual  certificates.  To a lesser extent, the decrease was also
attributable to a lower net gain on sale due to (a) the Company selling loans on
a servicing-released basis, and not through securitization,  during the quarter,
and (b) a  decrease  in the  amount of loans sold or  securitized  reflecting  a
decrease in the Company's total loan  production.  Lastly,  the Company also had
lower  origination  fees,  due to the  aforementioned  decrease  in  total  loan
production,  and  lower  servicing  fees,  due to  the  sale  of  its  servicing
operations to Ocwen.

     The Company  originated and purchased  $170.7 million of mortgage loans for
the three months ended March 31, 2001,  representing  a 41% decrease from $287.0
million of mortgage loans originated and purchased for the comparable  period in
2000.  The Company sold $144.3  million of loans on a  servicing-released  basis
during  the three  months  ended  March 31,  2001,  compared  to $290.0  million
securitized and sold during the same period in 2000.

     NET GAIN ON SALE OF  MORTGAGE  LOANS.  Net gain on sale of  mortgage  loans
represents (1) the sum of (a) the fair value of the  interest-only  and residual
certificates retained by the Company in a securitization for each period and the
market value of the  interest-only  certificates  sold in  connection  with each
securitization,  (b) the fair value of  capitalized  mortgage  servicing  rights
associated  with loans  securitized  in each period and/or the premium  received
from selling mortgage  servicing rights in connection with each  securitization,
and (c)  premiums  earned  on the  sale of whole  loans on a  servicing-released
basis,  (2) less the (x) premiums paid to originate or acquire  mortgage  loans,
(y)  costs  associated  with  securitizations  and (z)  any  hedge  loss  (gain)
associated with a particular securitization.

     Net gain on sale of mortgage loans decreased $9.3 million,  or 63%, to $5.4
million for the three months ended March 31,  2001,  from $14.7  million for the
comparable  period in 2000. This decrease was primarily due (i) to a decrease in
the amount of loans  securitized and sold compared to the first quarter of 2000,
primarily  reflecting  lower loan  production and (ii) to the Company's  selling
whole loan sales, instead of securitizing - securitization  typically results in
a higher  net gain on sale  percentage  than whole loan sales - during the first
quarter  of 2001.  The  Company  sold  $144.3  million  of  mortgage  loans on a
servicing-released  basis in the  first  quarter  of 2001,  compared  to  $290.0
million of mortgage loans  securitized  and sold during the same

                                       13


period in 2000. The Company  had $170.7 million of loan  production in the first
quarter of 2001, compared to $287 million during the same period in 2000.

     INTEREST INCOME.  Interest income  primarily  represents the sum of (1) the
difference  between the  distributions the Company receives on its interest-only
and residual certificates and the adjustments recorded to reflect changes in the
fair  value  of the  interest-only  and  residual  certificates,  (2) the  gross
interest  earned on loans  held for sale  (other  than for  loans  sold into the
conduit in which case, it is the net interest spread), (3) with respect to loans
sold into the conduit, the net interest margin earned (excess servicing) between
the  weighted  average rate on the mortgage  loans less the  conduit's  variable
funding  rate  plus  administrative  fees,  and  (4)  interest  earned  on  cash
collection balances.

     Interest income  decreased  $25.3 million,  or 241%, to $(14.8) million for
the three  months ended March 31, 2001,  from $10.5  million for the  comparable
period in 2000.  The  decrease  in  interest  income  was  primarily  due to the
Company's $25.4 million write down of residual certificates sold under a forward
purchase  agreement the Company entered into in the first quarter of 2001, for a
cash  purchase  price  below  the  Company's  carrying  value  of such  residual
certificates.

     SERVICING  FEES.  Servicing  fees represent all  contractual  and ancillary
servicing  revenue received by the Company less (1) the offsetting  amortization
of the capitalized  mortgage servicing rights,  and any adjustments  recorded to
reflect valuation allowances for the impairment in mortgage servicing rights and
(2) prepaid interest shortfalls.

     Servicing  fees  decreased  $1.9  million,  or 46%, to $2.2 million for the
three months ended March 31, 2001,  from $4.1 million for the comparable  period
in 2000. This decrease was the result of the Company's agreement to transfer its
servicing   portfolio  to  Ocwen  in  January  2001,  pursuant  to  which  Ocwen
immediately  began  receiving all servicing  related fees and, in turn,  paid to
Delta an interim servicing fee.

     ORIGINATION  FEES.  Origination  fees represent fees earned on brokered and
retail  originated  loans.  Origination fees decreased $2.5 million,  or 37%, to
$4.2 million for the three  months  ended March 31, 2001,  from $6.7 million for
the  comparable  period in 2000.  The decrease was primarily the result of (1) a
37%  decrease  in  broker  originated  loans  and (2) a 15%  decrease  in retail
originated loans.

EXPENSES

     Total expenses  decreased by $2.6 million,  or 8%, to $30.2 million for the
three months ended March 31, 2001, from $32.8 million for the comparable  period
in 2000. The decrease was primarily the result of a decrease in personnel  costs
and  interest  expense  which was  partially  offset by increases in general and
administrative costs, disposition of branches and restructuring charges.

     PAYROLL AND RELATED  COSTS.  Payroll and related  costs  include  salaries,
benefits  and  payroll  taxes  for all  employees.  Payroll  and  related  costs
decreased by $4.3  million,  or 28%, to $11.3 million for the three months ended
March 31,  2001,  from $15.6  million  for the  comparable  period in 2000.  The
decrease was primarily the result of (i) a lower number of employees  during the
first quarter of 2001 compared to 2000 relating to the Company's  restructuring,
and

                                       14


(ii) a lower  amount of  commissions paid as loan originations decreased in 2001
compared to 2000. As of  March 31, 2001,  the Company  employed  735  full-  and
part-time employees, compared to 1,049 full- and part-time employees as of March
31, 2000.

     INTEREST EXPENSE.  Interest expense includes the borrowing costs to finance
loan  originations  and  purchases  under the $150 million  aggregate  principal
amount of 9.5% Senior  Notes due 2004 issued in July 1997 (the  "Senior  Notes")
and the Company's credit facilities.

     Interest expense decreased by $2.0 million, or 26%, to $5.8 million for the
three months ended March 31, 2001 from $7.8 million for the comparable period in
2000. The decrease was primarily due to lower loan production, which resulted in
lower warehouse financing.

     GENERAL AND ADMINISTRATIVE  EXPENSES.  General and administrative  expenses
consist primarily of capital charges  associated with the Company's interest and
servicing   advance   securitizations,   office  rent,   insurance,   telephone,
depreciation,  goodwill  amortization,  legal  reserves and fees,  license fees,
accounting fees, travel and entertainment expenses,  advertising and promotional
expenses and the  provision  for loan losses on the  inventory of loans held for
sale and recourse loans.

     General and  administrative  expenses  increased  $2.3 million,  or 24%, to
$11.8  million for the three months ended March 31, 2001,  from $9.5 million for
the  comparable  period in 2000.  The increase was  primarily due to the capital
charges   associated   with  the  Company's   interest  and  servicing   advance
securitizations  (which the  Company  no longer  will incur as of May 2001 since
Ocwen, and not Delta,  will be responsible for making all interest and servicing
related  advances  within the  securitization  trusts).  Included in the capital
charges are the following  expenses:  (1) interest  expense,  (2) bond insurance
premium, and (3) trustee expenses.

     INCOME TAXES.  Deferred tax assets and  liabilities  are  recognized on the
income  reported in the financial  statements  regardless of when such taxes are
paid. These deferred taxes are measured by applying current enacted tax rates.

     The Company  recorded a tax  provision of $0.5 million and $1.3 million for
the three months ended March 31, 2001 and 2000, respectively.


FINANCIAL CONDITION

MARCH 31, 2001 COMPARED TO DECEMBER 31, 2000

     Cash and  interest-bearing  deposits  increased  $17.1 million,  or 27%, to
$79.4 million at March 31, 2001,  from $62.3 million at December 31, 2000.  This
increase was primarily the result of higher prepayments which caused an increase
in monies  held in  securitization  trust  accounts  by the  Company,  acting as
servicer for its ongoing securitization program.

     Accounts  receivable  decreased  $6.2 million,  or 28%, to $15.8 million at
March 31,  2001,  from $22.0  million at December 31,  2000.  This  decrease was
primarily  due to the  sale  of  some of the  Company's  reimbursable  servicing
advance receivables.

     Loans held for sale, net increased $18.7 million, or 23%, to $101.4 million
at March 31, 2001,  from $82.7  million at December 31, 2000.  This increase was
primarily due to the net

                                       15


difference between loan originations  and  whole  loan  sales  during  the three
months ended March 31, 2001.

     Accrued interest  decreased $5.6 million,  or 54%, to $4.8 million at March
31, 2001,  from $10.4 million at December 31, 2000.  This decrease was primarily
due to the sale of interest receivable assets (monthly delinquency advances).

     Interest-only and residual certificates decreased $20.8 million, or 10%, to
$196.1 million at March 31, 2001, from $216.9 million at December 31, 2000. This
decrease primarily reflects a $25.4 million write down of the Company's residual
certificates  sold under a forward purchase  agreement entered into in the first
quarter  of 2001 (and  closed in May  2001),  for a cash  purchase  price  which
represented  a  significant  discount to the  Company's  carrying  value of such
residual  certificates.  This was  partially  offset by the net accretion of the
Company's  residual  certificates  as  part  of its  mark-to-market  fair  value
adjustment in accordance with SFAS 115.

     Prepaid and other assets decreased $16.9 million,  or 45%, to $20.9 million
at March 31, 2001,  from $37.8  million at December 31, 2000.  This decrease was
primarily  attributable to (1) the extinguishment of the Company's  wholly-owned
special  purpose  entity  (and the  equity  (capital)  in such  special  purpose
entity),  used as the issuer for a servicing  advance  securitization,  upon the
Company's repurchase of such securitization, using the proceeds it received from
selling the  underlying  servicing  advance  receivables  to Ocwen,  and (2) the
Company's payment of its Senior Note interest coupon in February 2001, which was
held in escrow,  and  therefore  reflected as a prepaid  asset,  at December 31,
2000.

     Warehouse  financing and other borrowings  increased $18.2 million, or 21%,
to $106.8  million at March 31,  2001,  from $88.6 at December  31,  2000.  This
increase was primarily  attributable to (1) the residual  financing  received by
the  Company as part of the  initial  bridge  financing  on the  purchase of its
residuals, and (2) the funding of the Company's loans held for sale, net.

     The aggregate  principal balance of the Senior Notes totaled $149.6 million
at March 31, 2001 and December 31, 2000, net of unamortized  bond discount.  The
Senior Notes accrue interest at a rate of 9.5% per annum, payable  semi-annually
on February 1 and August 1.

     Investor payable  increased $3.6 million,  or 5%, to $73.1 million at March
31, 2001,  from $69.5  million at December 31, 2000.  The increase was primarily
the result of higher prepayments, which caused an increase in the amount payable
to  investors.  Investor  payable is  comprised  of all  principal  collected on
mortgage  loans and accrued  interest.  Variability in this account is primarily
due to the principal payments collected within a given collection period.

LIQUIDITY AND CAPITAL RESOURCES

     The Company  has  primarily  operated on a negative  cash flow basis in the
past. The Company  anticipates that it will continue to have negative  operating
cash flow for the foreseeable  future due primarily to (1) the costs  associated
with the  Company's  servicing  operations  until the  transfer of  servicing to
Ocwen, and (2) the costs associated with its loan originations operations, which
currently exceed the cash proceeds  generated from (a) up front origination fees
earned  on  closed  loans  and  (b)  the   Company's   selling   loans   through
securitization   or  on  a  whole  loan  basis.  If  the  Company  can  increase
originations  to a  sufficient

                                       16


level  so  as  to  bring  down its overall cost to originate  loans,  management
believes   the  Company  can  begin   generating   positive   cash  flow  within
approximately  12 months.  To do so, the Company must generate  sufficient  cash
from (1)  securitizing  and selling whole loans,  (2) origination  fees on newly
closed loans, and (3) cash flows from residual assets the Company retains.

     As  part  of  its  Second  Debt   Restructuring,   the   Company   obtained
approximately  $2.5  million  of  residual  financing  secured by certain of its
residual  certificates  at the time of the  signing  of the  Letter of Intent in
February  2001.  In March 2001,  the  Company  entered  into a forward  purchase
agreement to sell residual  certificates  underlying five  securitizations for a
cash  purchase  price  of $15  million.  At  that  time,  the  Company  received
approximately an additional $7.1 million of "bridge" residual  financing secured
primarily by the  residual  certificates  to be  purchased  (for a total of $9.6
million of "bridge" residual  financing).  The agreement specified that the cash
purchase  price  of $15  million  would  be paid  when  the  Company  physically
transferred  its servicing to Ocwen,  which occurred in May 2001, at which point
the Company  received the agreed upon purchase price. The proceeds of which were
used to repay the residual  financing and the balance of the proceeds,  together
with the  initial  residual  financing,  will be used by the Company for working
capital.  Because these residual  certificates  were being sold at a significant
discount to the Company's book value for such certificates, the Company recorded
$25.4 million pre-tax non-cash charge in the first quarter of 2001.

     Currently,  the Company's primary cash requirements  include the funding of
(1) its loan origination operations, (2) loan originations pending their pooling
and sale,  net of warehouse  financing,  (3) interest  expense on warehouse  and
other financings,  (4) fees,  expenses,  and tax payments incurred in connection
with our  securitization  program,  and (5)  ongoing  administrative  and  other
operating expenses.

     The  Company  must be able to sell its loans  and  obtain  adequate  credit
facilities  and other  sources of funding in order to continue to originate  and
service  loans.  Historically,   the  Company  has  utilized  various  financing
facilities and an equity  financing to offset negative  operating cash flows and
support its loan originations,  securitizations  and general operating expenses.
In July 1997,  the Company  completed an offering of the Senior Notes. A portion
of the Senior Notes proceeds were used to pay down various financing  facilities
with the remainder used to fund the Company's loan  originations and its ongoing
securitization  program.  The Company's primary sources of liquidity continue to
be  warehouse,  residual  and other  financing  facilities,  securitizations  of
mortgage loans and residual assets and, subject to market  conditions,  sales of
whole loans,  mortgage  servicing rights,  residual assets,  and debt and equity
securities.

     To  accumulate  loans for  securitization,  the Company  borrows money on a
short-term basis through warehouse lines of credit.  The Company has relied upon
a few lenders to provide the primary credit facilities for its loan originations
and purchases.  The Company had one warehouse  facility as of March 31, 2001 for
this purpose.  The warehouse facility is a $200 million credit facility that has
a variable  rate of interest and expires in May 2001.  There can be no assurance
that the Company will be able to renew this  warehouse  facility at its maturity
at terms  satisfactory to the Company or at all. The Company is currently in the
process of seeking  additional  warehouse  lines of credit,  but there can be no
assurances  that the  Company  will be

                                       17


successful  in its  attempt to secure an additional warehouse line of credit.

     The  Company is required to comply with  various  operating  and  financial
covenants as provided in the agreements  described above which are customary for
agreements of their type.  The continued  availability  of funds provided to the
Company  under these  agreements  is subject to,  among  other  conditions,  the
Company's continued compliance with these covenants.

INTEREST RATE RISK

     The  Company's   primary  market  risk  exposure  is  interest  rate  risk.
Profitability  may be  directly  affected by the level of, and  fluctuation  in,
interest  rates,  which affect the  Company's  ability to earn a spread  between
interest  received on its loans and the costs of its borrowings,  which are tied
to various United States  Treasury  maturities,  commercial  paper rates and the
London  Inter-Bank  Offered Rate ("LIBOR").  The profitability of the Company is
likely to be adversely affected during any period of unexpected or rapid changes
in interest rates. A substantial and sustained  increase in interest rates could
adversely  affect the  Company's  ability to purchase  and  originate  loans.  A
significant  decline  in  interest  rates  could  increase  the  level  of  loan
prepayments  thereby  decreasing  the  size  of  the  Company's  loan  servicing
portfolio. To the extent servicing rights and interest-only and residual classes
of certificates  have been capitalized on the books of the Company,  higher than
anticipated  rates of loan  prepayments  or losses could  require the Company to
write down the value of such  servicing  rights and  interest-only  and residual
certificates,  adversely impacting earnings. In an effort to mitigate the effect
of interest rate risk,  the Company  periodically  reviews its various  mortgage
products and identifies and modifies  those that have proven  historically  more
susceptible  to  prepayments.  However,  there  can be no  assurance  that  such
modifications to its product line will effectively  mitigate  interest rate risk
in the future.

     Periods of  unexpected  or rapid  changes in interest  rates,  and/or other
volatility or uncertainty  regarding  interest rates,  can also adversely affect
the Company by increasing the likelihood that asset-backed investors will demand
higher spreads than normal to offset the volatility  and/or  uncertainty,  which
decreases  the value of the  residual  assets  received by the  Company  through
securitization.

     Fluctuating  interest rates also may affect the net interest  income earned
by the Company resulting from the difference between the yield to the Company on
loans held pending sales and the interest paid by the Company for funds borrowed
under the Company's  warehouse  facilities,  although the Company  undertakes to
hedge its exposure to this risk by using  treasury  rate lock  contracts  and/or
FNMA mortgage securities. (See "--Hedging"). Fluctuating interest rates may also
affect net interest income as certain of the Company's  asset-backed  securities
are priced off of one-month LIBOR, but the collateral underlying such securities
are  comprised of mortgage  loans with either fixed  interest  rates or "hybrid"
interest rates - fixed for the initial 2 or 3 years, and then adjusts thereafter
every six months - which creates basis risk (See "--Fair Value Adjustments").

HEDGING

     The  Company  originates  mortgage  loans  and then  sells  them  through a
combination  of whole

                                       18


loan  sales  and  securitizations.  Between the  time the Company originates the
mortgage and sells it in the secondary market, the Company may hedge the risk of
fluctuations  in  interest.  The  risk  to  the  Company  begins  subsequent  to
originating  mortgage loans and prior to selling or  securitizing  such mortgage
loans.  Since the Company has a closed (and funded) mortgage loan at a specified
interest rate with an expected gain at time of sale,  the Company's  exposure is
to a  higher  interest  rate  environment  due to  market  conditions.  A higher
interest  rate  market  implies  a higher  cost of funds  to the  Company  which
decreases  the net spread the Company  would earn between the mortgage  interest
rate on each mortgage  loan less the cost of funds.  As a result the Company may
experience a lower gain on sale.

     The cost of funds is  generally  composed of two  components,  the Treasury
rate with a similar  duration and average life and the spread to  Treasuries  or
profit margin  required by the investors.  Delta had previously used a "Treasury
Rate Lock" to hedge its cost of funds exposure. However, in the third quarter of
1998 and again in the second quarter of 1999,  asset-backed  investors  demanded
substantially  wider spreads over treasuries than  historically  experienced for
newly issued  asset-backed  securities,  which resulted in a hedge loss that was
not offset by a higher gain on sale,  as the Company had  historically  seen. In
response,  beginning in the fourth  quarter 2000,  management  implemented a new
hedging strategy that involves selling 15-year FNMA mortgage  securities  ("FNMA
Securities"),  in lieu of treasury rate lock  contracts.  It did so based on its
belief that FNMA Securities are more similarly  correlated to its mortgage loans
because both are considered  "spread product" - the FNMA Securities  incorporate
both an underlying treasury rate with similar duration to the Company's mortgage
loans plus a general spread meant to take into account  additional risks such as
early repayment or extension  risk,  etc. - that  management  believes make them
more likely to respond  similarly to a change in interest  rates than AAA United
States Treasury  securities  ("U.S.  Treasuries"),  which do not have a "spread"
component.  While neither of the above are perfect hedges,  FNMA securities have
demonstrated  a closer  correlation to the Company's cost of funds over the past
few years, especially during periods of high interest rate volatility and market
uncertainty.  The nature and quantity of hedging  transactions are determined by
the Company based upon various factors  including,  without  limitation,  market
conditions and the expected volume of mortgage  originations and purchases.  The
Company will enter into these  hedging  strategies  through one of its warehouse
lenders and/or one of the  investment  bankers,  which  underwrite the Company's
securitizations.  These  strategies  are  designated  as hedges in the Company's
books and records and are closed out when the associated loans are sold.

     If the value of the hedges decrease, offsetting an increase in the value of
the loans, the Company,  upon settlement with its hedge  counterparty,  will pay
the hedge loss in cash and then realize the corresponding  increase in the value
of the loans as part of its net gain on sale of mortgage  loans  through  either
its  corresponding   interest-only  and  residual  certificates  or  whole  loan
premiums. Conversely, if the value of the hedges increase, offsetting a decrease
in the  value  of the  loans,  the  Company,  upon  settlement  with  its  hedge
counterparty,  will receive the hedge gain in cash and realize the corresponding
decrease in the value of the loans  through a  reduction  in either the value of
the  corresponding   interest-only  and  residual  certificates  or  whole  loan
premiums.

     The Company will  continue to review its hedging  strategy in order to best
mitigate risk

                                       19


pending securitization or loan sales.

     The Company did not hedge during the first quarter of 2001 or 2000.

INFLATION

     Inflation  affects  the  Company  most  significantly  in the  area of loan
originations and can have a substantial effect on interest rates. Interest rates
normally  increase  during periods of high inflation and decrease during periods
of low inflation. (See "--Interest Rate Risk.")

IMPACT OF NEW ACCOUNTING STANDARDS

     For discussion regarding the impact of new accounting  standards,  refer to
Note 5 of Notes to the Consolidated Financial Statements.

RISK FACTORS

     Except  for  historical   information  contained  herein,  certain  matters
discussed in this Form 10-Q are  "forward-looking  statements" as defined in the
Private  Securities  Litigation Reform Act ("PSLRA") of 1995, which involve risk
and  uncertainties   that  exist  in  the  Company's   operations  and  business
environment, and are subject to change on various important factors. The Company
wishes  to take  advantage  of the  "safe  harbor"  provisions  of the  PSLRA by
cautioning  readers that  numerous  important  factors  discussed  below,  among
others,  in some cases have caused,  and in the future could cause the Company's
actual results to differ materially from those expressed in any  forward-looking
statements  made by, or on behalf of, the Company.  The following  include some,
but not all, of the factors or uncertainties  that could cause actual results to
differ from projections:

o  The Company's ability or inability  to  consummate  all  facets of the Second
   Debt Restructuring, including  without limitation, the Second Exchange Offer.

o  The Company's ability  or  inability  to  increase  its  loan originations to
   specified levels (and subsequent sale  or  securitization  of  such loans) to
   offset the Company's current cost structure.

o  The Company's ability or inability  to  continue to access lines of credit at
   favorable terms and conditions, including  without  limitation, warehouse and
   other credit facilities used to finance newly originated  mortgage loans held
   for sale.

o  The Company's ability or inability to continue its practice of securitization
   of mortgage loans held for sale, as well as its  ability  to  utilize optimal
   securitization structures at favorable terms to the Company.

o  The  Company's  ability  or  inability  to  continue  monetizing its residual
   assets, including  without  limitation, selling,  financing  or  securitizing
   (through NIM transactions) such assets.

o  Costs  associated  with  litigation, compliance  with  the  NYSBD Remediation
   Agreement and NYOAG Stipulated Order on  Consent,  and  rapid  or  unforeseen
   escalation of the cost of regulatory compliance, generally including  but not
   limited to, adoption of new, or  changes in state or federal lending laws and
   regulations  and  the  application  of  such  laws and regulations,

                                       20


   licenses, environmental compliance, adoption of new, or changes in accounting
   policies and practices and the application  of  such polices  and  practices.
   Failure to comply   with  various  federal,  state  and  local   regulations,
   accounting policies,  environmental  compliance,  and   compliance  with  the
   Remediation Agreement and Stipulated Order  on  Consent  can  lead to loss of
   approved status, certain rights  of  rescission  for  mortgage  loans,  class
   action lawsuits and administrative enforcement action against the Company.

o  The Company's ability or inability to complete all facets of  the transfer of
   servicing to Ocwen within the necessary time frames and as  cost efficient as
   possible.

o  A general economic slowdown. Periods of economic slowdown or recession may be
   accompanied by decreased demand for consumer credit and declining real estate
   values. Because  of  the  Company's  focus on  credit-impaired borrowers, the
   actual rate of delinquencies,  foreclosures and losses  on  loans affected by
   the borrowers reduced ability to use home equity to support borrowings  could
   be higher than those generally  experienced in the mortgage lending industry.
   Any sustained  period  of  increased  delinquencies,  foreclosure,  losses or
   increased costs could adversely affect the Company's ability to securitize or
   sell loans in the secondary market.

o  The effects of  interest  rate  fluctuations  and  the  Company's  ability or
   inability to hedge effectively against such fluctuations in  interest  rates;
   the effect of changes in monetary and fiscal policies, laws and  regulations,
   other activities of governments, agencies, and  similar organizations, social
   and economic  conditions,  unforeseen  inflationary  pressures  and  monetary
   fluctuation.

o  Increased competition  within  the Company's markets has taken on many forms,
   such  as  convenience  in  obtaining a  loan, customer service, marketing and
   distribution channels, loan origination fees and interest rates. The  Company
   is currently competing with large finance companies and  conforming  mortgage
   originators many of whom have greater financial,  technological and marketing
   resources.

o  Unpredictable delays  or difficulties in development of new product programs.

o  The unanticipated expenses of assimilating newly-acquired businesses into the
   Company's structure; as well as  the  impact of unusual expenses from ongoing
   evaluations of business strategies, asset valuations, acquisitions,
   divestitures and organizational structures.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The primary  market  risk to which the Company is exposed is interest  rate
risk, which is 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.  Changes in
the general level of interest rates between the time when the Company originates
or purchases  mortgage  loans and the time when the Company  sells such mortgage
loans at  securitization  can affect the value of the Company's  mortgage  loans
held for sale and,  consequently,  the  Company's  net gain on sale  revenue  by
affecting the "excess  spread"  between the interest rate on the mortgage  loans
and the interest rate paid to asset-backed  investors who purchase  pass-through
certificates issued by the securitization trusts. If interest

                                       21


rates  rise  between  the  time  the Company  originates  or purchases the loans
and the time the loans are sold at  securitization,  the excess spread generally
narrows,  resulting in a loss in value of the loans and a lower net gain on sale
reported by the Company.

     A  hypothetical   10  basis  point  increase  in  interest   rates,   which
historically  has  resulted in  approximately  a 10 basis point  decrease in the
excess  spread,  would be expected to reduce the  Company's  net gain on sale by
approximately 25 basis points. Many factors, however, can affect the sensitivity
analysis described above including, without limitation, the structure and credit
enhancement used in a particular securitization,  the Company's prepayment, loss
and  discount  rate  assumptions,  and the spread  over  treasuries  demanded by
asset-backed investors who purchase the Companies asset-backed securities.

     To reduce its financial  exposure to changes in interest rates, the Company
generally hedges its mortgage loans held for sale by entering into treasury rate
lock contracts (see "-Hedging"). The Company's hedging strategy has largely been
an effective  tool to manage the Company's  interest rate risk on loans prior to
securitization,  by providing  the Company with a cash gain (or loss) to largely
offset the reduced (increase) excess spread (and resultant lower (or higher) net
gain on sale) from an increase  (decrease) in interest  rates.  A hedge may not,
however, perform its intended purpose of offsetting changes in net gain on sale.

     Changes in interest rates could also adversely affect the Company's ability
to  purchase  and  originate  loans  and/or  could  affect  the  level  of  loan
prepayments thereby impacting the size of the Company's loan servicing portfolio
and the value of the  Company's  interest  only and  residual  certificates  and
capitalized mortgage servicing rights. (See "-Interest Rate Risk").

                                       22
<PAGE>

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     Because the nature of Delta's business  involves the collection of numerous
accounts,  the validity of liens and  compliance  with various state and federal
lending laws,  Delta is subject,  in the normal course of business,  to numerous
claims and legal proceedings. Delta's lending practices have been the subject of
several  lawsuits  styled as class  actions  and of  investigations  by  various
regulatory  agencies  including  the New  York  State  Banking  Department  (the
"NYSBD"),  the  Office  of the  Attorney  General  of the State of New York (the
"NYOAG") and the United States  Department  of Justice (the "DOJ").  The current
status of these actions are summarized below.

o  In or about November 1998, Delta received notice that it had been  named in a
   lawsuit filed in the United States District Court for the Eastern District of
   New York. In  December  1998,  plaintiffs filed an amended complaint alleging
   that  Delta   had  violated  the  Home  Equity  and  Ownership Protection Act
   ("HOEPA"),  the  Truth in Lending Act ("TILA")  and  New  York State  General
   Business Law ss. 349. The complaint seeks (a)  certification  of  a  class of
   plaintiffs,  (b) declaratory  judgment permitting rescission, (c) unspecified
   actual, statutory, treble  and  punitive damages (including attorneys' fees),
   (d) certain  injunctive  relief, and (e) declaratory  judgment  declaring the
   loan  transactions as void and unconscionable. On December 7, 1998, plaintiff
   filed  a  motion  seeking  a  temporary  restraining  order   and preliminary
   injunction,  enjoining   Delta  from   conducting  foreclosure  sales  on  11
   properties. The District Court  Judge ruled that  in order to consider such a
   motion, plaintiff must move  to intervene on behalf of  these  11  borrowers.
   Thereafter, plaintiff moved to intervene on behalf of 3 of these 11 borrowers
   and sought the injunctive relief  on their behalf. Delta opposed the motions.
   On  December  14,  1998, the  District  Court  Judge  granted  the  motion to
   intervene  and  on  December  23,  1998,  the  District  Court Judge issued a
   preliminary injunction enjoining Delta from proceeding with  the  foreclosure
   sales of  the  three  intervenors'  properties. Delta has filed  a motion for
   reconsideration of the December 23, 1998 order. In January 1999, Delta  filed
   an  answer  to  plaintiffs' first amended complaint. In July 1999, plaintiffs
   were granted leave, on consent, to file a second amended complaint. In August
   1999,  plaintiffs  filed a second amended complaint that, among other things,
   added additional parties  but contained the same causes of action  alleged in
   the  first  amended  complaint. In  September  1999, Delta  filed a motion to
   dismiss the complaint, which was opposed by plaintiffs and, in June 2000, was
   denied  in  part  and granted in part by the Court. In or about October 1999,
   plaintiffs filed a motion seeking  an order  preventing Delta, its  attorneys
   and/or the NYSBD from issuing  notices  to  certain of Delta's  borrowers, in
   accordance with a settlement agreement entered into by and  between Delta and
   the NYSBD. In  or  about October 1999  and November 1999, respectively, Delta
   and the NYSBD submitted opposition to plaintiffs' motion. In  March 2000, the
   Court issued an order that permits  Delta to  issue an  approved form of  the
   notice. In September 1999, plaintiffs filed a motion for class certification,
   which was opposed by Delta in February 2000, and ultimately withdrawn without
   prejudice  by  plaintiffs  in  January  2001.  Delta  believes  that  it  has
   meritorious

                                       23


   defenses  and   intends  to  defend  this suit, but cannot estimate with  any
   certainty  its ultimate legal or financial liability, if any, with respect to
   the alleged claims.

o  In or about March 1999, Delta  received  notice  that  it had been named in a
   lawsuit filed in the Supreme Court of the State of New York, New York County,
   alleging that Delta had improperly charged certain borrowers processing fees.
   The  complaint  seeks (a) certification  of  a  class  of  plaintiffs, (b) an
   accounting, and (c) unspecified compensatory and punitive damages  (including
   attorneys' fees), based  upon  alleged (i) unjust enrichment, (ii) fraud, and
   (iii) deceptive  trade practices. In April 1999, Delta filed an answer to the
   complaint. In September 1999, Delta  filed a motion to dismiss the complaint,
   which was opposed by plaintiffs,  and  in February 2000, the Court denied the
   motion to dismiss. In  April 1999, Delta filed  a  motion to change venue and
   plaintiffs  opposed  the motion. In July 1999, the Court denied the motion to
   change venue. Delta appealed and in  March  2000, the Appellate Court granted
   Delta's  appeal  to change  venue  from  New York County to Nassau County. In
   August 1999, plaintiffs filed a motion for  class  certification, which Delta
   opposed  in  July 2000.   In  or  about  September  2000, the  Court  granted
   plaintiffs' motion  for  class certification, from which Delta filed a Notice
   of Appeal. Delta  believes that  it  has meritorious  defenses and intends to
   defend  this suit, but  cannot estimate with any certainty its ultimate legal
   or financial liability, if any, with respect to the alleged claims.

o  In or about July 1999, Delta  received  notice that it  had  been  named in a
   lawsuit filed in the United States District Court for the Western District of
   New York,  alleging  that  amounts  collected and maintained by it in certain
   borrowers'  tax and insurance  escrow  accounts  exceeded  certain  statutory
   (RESPA) and/or  contractual (the  respective  borrowers' mortgage agreements)
   ceilings. The complaint seeks (a) certification of a class of plaintiffs, (b)
   declaratory relief finding that Delta's practices violate applicable statutes
   and/or the  mortgage agreements, (c) injunctive  relief,  and (d) unspecified
   compensatory  and  punitive  damages (including attorneys'  fees). In October
   1999, Delta  filed  a  motion to  dismiss the complaint. In or about November
   1999, the case was transferred to the  United States  District  Court for the
   Northern  District  of  Illinois. In  February  2000,  the  plaintiff opposed
   Delta's motion to dismiss. In March 2000, the Court granted Delta's motion to
   dismiss   in  part,  and  denied  it  in  part. Delta  believes  that  it has
   meritorious  defenses  and intends  to defend  this suit, but cannot estimate
   with any certainty  its ultimate  legal or  financial liability, if any, with
   respect to the alleged claims.

o  In or  about August 1999, the NYOAG filed a lawsuit  against  Delta  alleging
   violations  of (a) RESPA (by paying  yield  spread  premiums),  (b) HOEPA and
   TILA,  (c) ECOA,  (d) New  York  Executive  Law ss.  296-a,  and (e) New York
   Executive Law ss. 63(12). In September 1999, Delta  and the NYOAG settled the
   lawsuit,  as part of a global  settlement by  and among Delta,  the NYOAG and
   the NYSBD,  evidenced  by that  certain  (a)  Remediation  Agreement  by  and
   between  Delta  and the  NYSBD,  dated   as of  September  17,  1999  and (b)
   Stipulated  Order on Consent by  and among  Delta,  Delta  Financial  and the
   NYOAG,  dated as of  September  17, 1999. As part of the  Settlement,  Delta,
   among   other  things,   implemented  agreed  upon  changes  to  its  lending
   practices;  is providing reduced  loan payments  aggregating $7.25 million to
   certain  borrowers  identified by  the NYSBD;  and created a fund financed by
   the grant of 525,000 shares of Delta Financial's  common stock; the  proceeds
   of which will be

                                       24


   used, for among other things, to pay borrowers and for a  variety of consumer
   educational and counseling  programs. As a result, the NYOAG lawsuit has been
   dismissed as against Delta. The Remediation Agreement and Stipulated Order on
   Consent  supersede  Delta's  previously  announced settlements with the NYSBD
   and the NYOAG. In March 2000, Delta finalized a settlement agreement with the
   United  States  Department  of Justice, the Federal Trade Commission and  the
   Department of Housing and Urban Renewal, to complete the global settlement it
   had reached with  the NYSBD and NYOAG. The  Federal  agreement  mandates some
   additional  compliance  efforts  for  Delta,  but  it  does  not  require any
   additional financial commitment.

o  In November 1999, Delta received notice that it had been  named  in a lawsuit
   filed in the United  States  District  Court for the Eastern  District of New
   York, seeking  certification as a class action and alleging violations of the
   federal  securities  laws in  connection  with the Company's  initial  public
   offering in 1996 and its reports  subsequently  filed with the Securities and
   Exchange  Commission.  The complaint alleges that the scope of the violations
   alleged recently in the consumer  lawsuits and regulatory  actions indicate a
   pervasive  pattern of action and risk that should  have been more  thoroughly
   disclosed to investors in the Company's  common stock. In May 2000, the Court
   consolidated  this case and several other lawsuits that  purportedly  contain
   the same or similar  allegations  against Delta and in August 2000 plaintiffs
   filed their Consolidated  Amended  Complaint.  In October 2000, Delta filed a
   motion to  dismiss  the  Complaint  in its  entirety,  which was  opposed  by
   plaintiffs in November 2000,  and is now pending.  Delta believes that it has
   meritorious  defenses  and intends to defend this suit,  but cannot  estimate
   with any certainty its ultimate  legal or financial  liability,  if any, with
   respect to the alleged claims.

o  In or about April 2000,  Delta received  notice  that  it had been named in a
   lawsuit filed in the Supreme Court of the State of New York,  Nassau  County,
   alleging  that Delta has  improperly  charged and  collected  from  borrowers
   certain  fees when  they  paid off  their  mortgage  loans  with  Delta.  The
   complaint seeks (a)  certification of a class of plaintiffs,  (b) declaratory
   relief finding that the payoff statements used include  unauthorized  charges
   and are deceptive and unfair,  (c)  injunctive  relief,  and (d)  unspecified
   compensatory,  statutory and punitive damages  (including legal fees),  based
   upon alleged  violations  of Real  Property Law 274-a,  unfair and  deceptive
   practices,  money had and received  and unjust  enrichment,  and  conversion.
   Delta  answered  the  complaint  in June 2000.  In March 2001,  Delta filed a
   motion for summary  judgment,  which was opposed by plaintiffs in March 2001,
   and Delta filed reply papers in April 2001.  The motion is now  submitted and
   pending.  Delta  believes  that it has  meritorious  defenses  and intends to
   defend this suit,  but cannot  estimate with any certainty its ultimate legal
   or financial liability, if any, with respect to the alleged claims.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS. None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.  None

ITEM 4.  SUBMISSION TO A VOTE OF SECURITY HOLDERS.  None

                                       25


ITEM 5.  OTHER INFORMATION.

         In May  2001,  the New  York Stock  Exchange  ("NYSE")  delisted  Delta
Financial's  Common Stock.  The Exchange stated that it took this action because
Delta was unable to meet the NYSE's continued listing standards of maintaining a
minimum of $15 million in market  capitalization and a minimum share price of $1
over a 30-day trading period.  When Delta's Common Stock was delisted in May, it
began trading on the Over The Counter  Bulletin Board ("OTCBB") under the ticker
symbol "DLTO."

ITEM 6.    EXHIBITS AND CURRENT REPORTS ON FORM 8-K.

 (a) Exhibits:

     None.

 (b) Reports on Form 8-K:

     On January 10,  2001,  the Company  filed a Current  Report on Form 8-K, in
which it reported  consummation of the exchange offer of its 9 1/2% Senior Notes
due 2004 for its newly issued 9 1/2% Senior  Secured Notes due 2004 and warrants
to purchase shares of the Company's common stock.

     On March 2, 2001,  the Company filed a Current Report on Form 8-K, in which
it reported  that it had entered  into a  non-binding  letter of intent with the
beneficial  holders of a majority in  principal  amount of the  Company's 9 1/2%
Senior Secured Notes due 2004 to restructure the Secured Senior Notes.

     On March 22, 2001, the Company filed a Current Report on Form 8-K, in which
it  reported  that the Company  received  the formal  consent of the  beneficial
holders of a majority in principal amount of the Company's 9 1/2% Senior Secured
Notes  due 2004 to amend certain covenants contained in the Indenture  governing
the Secured  Senior Notes and certain other related  documents.

                                       26
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, the Registrant has duly caused this Report on Form 10-Q to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                       DELTA FINANCIAL CORPORATION
                                              (Registrant)

Date:  May 15, 2001
                                       By: /s/ HUGH MILLER
                                           ---------------------------------
                                           Hugh Miller
                                           PRESIDENT & CHIEF EXECUTIVE OFFICER


                                       By: /s/ RICHARD BLASS
                                           ---------------------------------
                                           Richard Blass
                                           SENIOR VICE PRESIDENT AND
                                           CHIEF FINANCIAL OFFICER



                                       27