SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A

          [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
            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.......22


PART II - OTHER INFORMATION
   Item 1 - Legal Proceedings................................................23
   Item 2 - Changes in Securities and Use of Proceeds........................26
   Item 3 - Defaults Upon Senior Securities.  None...........................26
   Item 4 - Submission of Matters to a Vote of Security Holders..............26
   Item 5 - Other Information................................................26
   Item 6 - Exhibits and Current Reports on Form 8-K.........................26

Signatures...................................................................29

<PAGE>

PART I   - FINANCIAL INFORMATION

Item 1 -  Financial Statements (unaudited)

                  DELTA FINANCIAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                   March 31,         December 31,
                                                                                     2001                2000
                                                                                 ------------        -------------
(Dollars in thousands, except for share data)

Assets
<S>                                                                              <C>                    <C>
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
                                                                                  ===========        =========

</TABLE>


          See accompanying notes to consolidated financial statements.

<PAGE>

                  DELTA FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                               March 31,
(Dollars in thousands, except per share data)                         2001                2000
                                                                  ---------------  ----------------

Revenues:
<S>                                                            <C>                         <C>
     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
                                                               ==========              ==========

</TABLE>

          See accompanying notes to consolidated financial statements.

<PAGE>


                  DELTA FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                        Three Months Ended
                                                                                            March 31,
(Dollars in thousands)                                                               2001               2000
                                                                                 ---------------- --------------
Cash flows from operating activities:
<S>                                                                              <C>                     <C>
         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)
           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
                                                                                 ===========      ============

</TABLE>

          See accompanying notes to consolidated financial statements.

<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.

     We have made 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. We have reclassified
certain prior period amounts in the financial statements to conform to 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, has 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 has created a
fund financed by the grant of 525,000 shares of Delta Financial's common stock
with an agreed upon fixed value of $9.10 per share, which approximates the
stock's book value. Each month, on behalf of the affected borrowers, the Company
is making subsidy payments to fund the differential between the original and the
reduced loan payments to the related securitization trusts. As a result of our
payments to the securitization trusts, each month the amount of our current
liability will decrease from the original $7.25 million. The proceeds of the
funds will be used to pay borrowers and to finance a variety of consumer
educational and counseling programs. The Company does not manage the fund. The
number of shares of common stock deposited in the fund does not adjust to
account for fluctuations in the market price of the stock. Changes to the
Company's common stock market price do not have any impact on the Company's
financial statements. The Company did not make any additional financial
commitments between the settlement date and March 2000.

     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 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. The Company
terminated 128 employees as a result of exiting its servicing business. 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 Noteholders, the Company modified 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"). In consideration for the Senior
Noteholders' consent, the Company agreed, in an exchange offer (the "Exchange
Offer"), to offer current Senior Noteholders the option to exchange 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 more than $148 million of Senior Notes tendering in the
exchange.

     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 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 the Noteholders'
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 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
          prior to its conversion (which can occur only once five dividends have
          not been paid in cash).

     (b)  The Company 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 sale agreement to sell five of its residual certificates
for a cash purchase price of $15 million. As is customary with sales of similar
assets, the cash settlement does not occur until the pools of mortgages
underlying such residual certificates are transferred to an agreed upon servicer
who will service the pool of mortgage loans for the purchaser of such residuals.
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 five residuals have
provided bridge financing, in the form of residual financing, equal to
approximately 64% of the cash purchase price. The remainder of the purchase
price will be paid to the Company upon the transfer of servicing to Ocwen. The
Company will use the proceeds from the residual financing and subsequent sale
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.

(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:

<TABLE>
<CAPTION>
(Dollars in thousands, except EPS data)                  2000                        2001
--------------------------------------------- ---------------------------- --------------------------
<S>                                            <C>                                      <C>
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
Incremental shares-options                                --                               --
--------------------------------------------- ---------------------------- --------------------------
                                                     15,920,869                    15,920,869
Diluted EPS                                    $        (2.12)                           0.11
--------------------------------------------- ---------------------------- --------------------------
</TABLE>


(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." SFAS No.
140, which replaces SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," provides accounting and
reporting standards for securitizations and other transfers of assets. The
Standard is based on the application of a financial components approach that
focuses on control, and provides consistent standards for distinguishing
transfers of financial assets that are sales from transfers that are secured
borrowings. The Standard requires disclosure of information about securitized
assets, including principal outstanding of securitized and other managed assets,
accounting policies, key assumptions related to the determination of the fair
value of retained interests, delinquencies and credit losses. The accounting
requirements of the Standard are effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after March 31,
2001, and must be applied prospectively. The disclosures related to
securitization transactions are required for fiscal years ending after December
15, 2000, and comparative disclosures for prior periods are not required. The
implementation of SFAS No. 140 does not have an impact on our financial
statements.

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:

     o    continuing to provide top quality service to its network of brokers,
          and retail clients;

     o    maintaining its underwriting standards;

     o    further penetrating its established and recently-entered markets and
          expanding into new geographic markets;

     o    expanding its retail origination capabilities; and

     o    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."

     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 it
originated and purchased in the comparable period in 2000. Of these amounts, the
Company originated approximately $105.1 million through its network of brokers
and $65.6 million 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 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.

<TABLE>
<CAPTION>

                                                                                     THREE MONTHS ENDED
                                                                              March 31,             December 31,
(Dollars in thousands)                                                           2001                   2000
                                                                            ----------------- --------------------
Total Outstanding Principal Balance
<S>                                                                         <C>                     <C>
    (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%)
</TABLE>


---------------

(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 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 2001, 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.

     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 that the Company receives 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

     Prepayments of loans and estimates of future prepayment rates, among other
factors, significantly affect the fair values of both interest-only and residual
certificates. 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 makes the following underlying assumptions in determining the
fair value of its interest-only and residual certificates:

     (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:

<TABLE>
<CAPTION>
                  ------------------------------- --------------------------------- ---------------------------------
                                                          Month One Speed                     Peak Speed *
                  ------------------------------- ---------- ---------- ----------- ---------- ---------- -----------
                  <S>                              <C>       <C>          <C>        <C>       <C>          <C>
                  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%
                  ------------------------------- ---------- ---------- ----------- ---------- ---------- -----------
</TABLE>

                    *    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

     (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 Company revised its prepayment rate assumption 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.

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 relating to a sale agreement it 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.

     With regard to this transaction, the Company entered into a sale agreement
dated March 15, 2001, to sell five of its residual certificates for a cash
purchase price of $15 million. As is customary with sales of similar assets, the
cash settlement does not occur until the pools of mortgages underlying such
residual certificates are transferred to an agreed upon servicer who will
service the pool of mortgage loans for the purchaser of such residuals. Under
SFAS No. 140, the fair value of an asset (I.E., the residual certificates, in
this instance) is defined as the amount at which it could be bought or sold, in
a current transaction between willing parties. If quoted market prices are not
available, the estimate of fair value should be based upon the best information
available. In the case of residual certificates, there generally are no quoted
market prices available. As such, the Company generally has valued its residual
certificates based upon the best information available - using a series of
assumptions, including estimates of prepayment speeds and defaults, utilizing a
discount rate. However, since the Company entered into the sale agreement on
March 15, 2001, the fair value of such residual certificates became the agreed
upon market price of $15 million. Therefore, the write-down of $25.4 million was
the charge to reflect the current fair value of such residuals being sold at
that time. At the time of the cash settlement, which occurred on May 2, 2001
(after the Company physically transferred servicing relating to the residual
certificates to Ocwen, the successor servicer), the Company recorded a $15
million cash receipt, with a corresponding credit of $15 million to the residual
certificates on the Company's books.

     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 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 fair value write down of its residual certificates
relating to a sale agreement the Company entered into in the first quarter of
2001, for a cash purchase price of $15 million.

     SERVICING FEES. Servicing fees represent all contractual and ancillary
servicing revenue that the Company receives 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 $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 that 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 $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 (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 $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 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 sale 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. With regard to this transaction, the Company entered
into a sale agreement dated March 15, 2001, to sell five of its residual
certificates for a cash purchase price of $15 million. As is customary with
sales of similar assets, the cash settlement does not occur until the pools of
mortgages underlying such residual certificates are transferred to an agreed
upon servicer who will service the pool of mortgage loans for the purchaser of
such residuals. Under SFAS No. 140, the fair value of an asset (I.E., the
residual certificates, in this instance) is defined as the amount at which it
could be bought or sold, in a current transaction between willing parties. If
quoted market prices are not available, the estimate of fair value should be
based upon the best information available. In the case of residual certificates,
there generally are no quoted market prices available. As such, the Company
generally has valued its residual certificates based upon the best information
available - using a series of assumptions, including estimates of prepayment
speeds and defaults, utilizing a discount rate. However, since the Company
entered into the sale agreement on March 15, 2001, the fair value of such
residual certificates became the agreed upon market price of $15 million.
Therefore, the write-down of $25.4 million was the charge to reflect the current
fair value of such residuals being sold at that time. At the time of the cash
settlement, which occurred on May 2, 2001 (after the Company physically
transferred servicing relating to the residual certificates to Ocwen, the
successor servicer), the Company recorded a $15 million cash receipt, with a
corresponding credit of $15 million to the residual certificates on the
Company's books.

     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 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 sale agreement to sell
five residual certificates 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
of $15 million. The Company used these proceeds to repay the residual financing
and will use the balance of the proceeds, together with the initial residual
financing, 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:

     o    its loan origination operations;

     o    loan originations pending their pooling and sale, net of warehouse
          financing;

     o    interest expense on warehouse and other financings;

     o    fees, expenses, and tax payments incurred in connection with our
          securitization program; and

     o    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. The Company
used a portion of the Senior Notes proceeds 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 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
affect adversely 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 the Company's 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 mitigate effectively interest
rate risk in the future.

     Periods of unexpected or rapid changes in interest rates, and/or other
volatility or uncertainty regarding interest rates, also can affect adversely
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 in connection
with a 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 also may
affect net interest income as certain of the Company's asset-backed securities
are priced based on 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 two or three years of the
mortgage loan, and adjusting 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 loan sales and securitizations. Between the time the
Company originates the mortgage and sells the mortgage loans in the secondary
market, the Company may hedge the risk of fluctuations in interest. The risk to
the Company begins after the Company originates and purchases mortgage loans and
prior to selling or securitizing such mortgage loans. Since the Company has
closed and funded a mortgage loan at a specified interest rate and recorded an
expected gain at the time of sale of that mortgage loan, the Company is exposed
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 Company's cost of funds generally has two components, the Treasury rate
with a similar duration and average life and the spread to Treasuries or profit
margin required by the investors. Management determines at its discretion
whether or not to hedge the fair value of its mortgage loans in inventory that
are pending sale. Historically, it has been the Company's objective to hedge the
fair value of its mortgage loans during periods of uncertainty or volatility.
Prior to the fourth quarter of 2000, Delta previously had 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 to Delta
that was not offset by a higher gain on sale. In response, beginning in the
fourth quarter 2000, management made the determination that a more appropriate
strategy to use as a hedging vehicle, when the Company employed its hedging
strategy, was to short sell 15-year FNMA mortgage securities ("FNMA
Securities"), in lieu of the previous treasury rate lock contracts. It did so
based on its belief that changes in the fair market value of FNMA Securities
will be more similarly correlated to changes in the fair market value of 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 Company determines the
nature and quantity of hedging transactions 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 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, 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 Company originates and purchases mortgage loans and then sells the
mortgage loans through a combination of whole loan sales and securitizations. As
a result, the primary market risk to which the Company is subject to is interest
rate risk. In turn, interest rates are highly sensitive to many factors,
including governmental monetary and tax policies, domestic and international
economic and political considerations and other factors beyond the Company's
control. Changes in the general interest rate levels between the time the
Company originates or purchases mortgage loans and the time when the Company
sells such mortgage loans in securitization transactions 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 rates rise between the time the Company originates or purchases the
loans and the time the Company sells the loans in a securitization transaction,
the excess spread generally narrows, resulting in a loss in value of the loans
and a lower net gain on sale for 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 also could 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").

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 is 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 Lawss.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 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 Lawss.296-a, and
          (e) New York Executive Lawss. 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, has 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 has created a fund financed by the grant
          of 525,000 shares of Delta Financial's common stock; the proceeds of
          which will be 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

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 that it consummated 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; and that holders of
approximately $148,037,000.00 in principal amount of the Old Notes exchanged
their Old Notes for approximately $148, 037,000.00 in principal amount of
Secured Notes and Warrants to purchase approximately 1,569,193 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 to provide
for (a) (i) the release of certain residual receivables presently owned by two
Delaware business trusts (the "DBTs") established by the Company to secure the
Senior Secured Notes, (ii) the exchange of certain other residual receivables
presently owned by the Company or its affiliates outside of the DBTs for
residual receivables presently owned by the DBTs, and (iii) the elimination of
certain covenants in the Indenture (and related documents) that require the
maintenance of residual receivable coverage ratios and flow of residual
receivables; and (b) the Company launching an exchange offer pursuant to which
the holders of the Secured Senior Notes will be offered the opportunity to
exchange their notes for (i) newly issued securities that will evidence a
commensurate interest in a liquidating trust to be formed by the Company into
which all of the residual receivables owned by the DBTs at the time of the
consummation of the exchange offer will be transferred and (ii) their pro rata
share of $15 million of the company's newly issued preferred stock.

     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 (a) amend the Indenture governing the Secured Senior Notes
(and certain other related documents as necessary) to provide for (i) the
release of certain residual receivables presently owned by the two DBTs, subject
to the Trusts temporarily retaining a junior lien in such residual receivables,
(ii) the exchange of certain other residual receivables presently owned by the
company or its affiliates outside of the DBTs for residual receivables presently
owned by the DBTs, and (iii) the elimination of certain covenants in the
Indenture (and related documents) that require the maintenance of residual
receivable coverage ratios and flow of residual receivables, and (b) the Company
launching an exchange offer pursuant to which the holders of the Secured Senior
Notes will be offered the opportunity to exchange their notes for (i) newly
issued securities that will evidence a commensurate interest in a liquidating
trust to be formed by the Company into which all of the residual receivables
owned by the DBTs at the time of the consummation of the exchange offer will be
transferred and (ii) their pro rata share of $15 million of the Company's newly
issued preferred stock.

<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:  July 2, 2001
                                     By: /s/ HUGH MILLER
                                         ----------------------
                                             Hugh Miller
                                             President & Chief
                                             Executive Officer


                                     By: /s/ RICHARD BLASS
                                         -----------------------
                                              Richard Blass
                                              Executive Vice President and
                                              Chief Financial Officer