DC-353673.10
                       IN THE UNITED STATES DISTRICT COURT
                      FOR THE EASTERN DISTRICT OF NEW YORK


UNITED STATES OF AMERICA,                 )
                                          )
                                          )
            Plaintiff,                    )
                                          )
                                          )
      v.                                  )     Civil No. CV 00 1872
                                          )
DELTA FUNDING CORPORATION, and            )
DELTA FINANCIAL CORPORATION               )
                                          )
            Defendants.                   )
                                          )
                                          )
------------------------------------------


                         SETTLEMENT AGREEMENT AND ORDER


      The United  States of America,  through the United  States  Department  of
Justice and on behalf of the Secretary of Housing and Urban  Development and the
Federal Trade Commission,  and Delta Funding  Corporation  ("Delta Funding") and
Delta Financial  Corporation  (except where otherwise noted, both defendants are
collectively  referred to as "Delta" or "the  lender") have agreed to enter into
this Settlement Agreement simultaneously with the filing of the United States of
America's Complaint (the "Complaint")  alleging that Delta has violated the Fair
Housing Act (42 U.S.C.  ss.ss.  3601-3619)("FHA"),  The Equal Credit Opportunity
Act (15 U.S.C. ss.ss.  1691-1691f) and its implementIng  Regulation B (12 C.F.R.
Part 202) (collectively,  "ECOA"),  the Home Ownership and Equity Protection Act
of 1994 (15 U.S.C. ss. 1639) and its implementinG Regulation Z (12 C.F.R. ss.ss.
226.31  -  226.32)  (collectively,  "HOEPA"),  and The  Real  Estate  Settlement
Procedures  Act of  1974  (12  U.S.C.  ss.  2601 - 2617)  anD  its  implementing
Regulation X (24 C.F.R. Part 3500) (collectively, "RESPA"), all as amended. This
Settlement Agreement resolves fully all claims in the United States' Complaint.

                                       1

I.    INTRODUCTION

      This case is  brought  by the  United  States to  vindicate  the rights of
persons whom the United States claims were injured by alleged  violations of the
fair lending, fair housing and consumer protection laws and regulations,  as set
forth  above.  The  Complaint  alleges  that Delta is engaged in the business of
making  subprime  home  mortgage  loans;  that a large part of its  business  is
concentrated in the minority residential areas of Kings and Queens Counties, New
York;  that the majority of its loans are  refinancing  loans for the purpose of
debt  consolidation;  that the majority of its  borrowers in these  counties are
presented to Delta by mortgage brokers;  that brokers  submitting loans to Delta
charge up to 10% of the loan amount as a "broker fee," unless state law provides
for a lower amount;  and that,  during the period January 1996 through  December
1998,  approximately 17.5 percent of Delta's loans in Kings and Queens Counties,
New York were high fee loans covered by HOEPA.

      The United  States  alleges that Delta  violated ECOA and FHA by approving
and funding loans with disparate  broker fees that resulted in African  American
female  borrowers  being charged more on average than white male  borrowers were
charged and that the higher prices charged to African  American females were not
based on differences in risk of repayment. The United States does not claim that
Delta discriminated in charging borrowers disparate fees that were set by Delta,
but rather in acceding to the discretionary prices that were charged by mortgage
brokers for the loans made by Delta.

      The United States  alleges that Delta  violated  RESPA because it contends
that in  certain  cases  the fees  received  by  mortgage  brokers  were not for
services actually  performed or were higher than an amount reasonably related to
the value of goods and facilities provided and services performed, and, as such,
constituted  illegal  payments  for the  referral of mortgage  loan  business or
unearned fees.

      The United  States  alleges that Delta Funding  violated  HOEPA because it
contends that Delta made certain loans based on borrowers' equity in their homes
rather  than the  borrowers'  ability  to repay  the  obligation,  and  included
prohibited  prepayment and increased interest rate default provisions in certain
HOEPA loan documents.

                                       2

      The  allegations of the Complaint  concern the period January 1996 through
December  1998,  during which Delta made more than 5,000 home mortgage  loans to
borrowers  in Kings and  Queens  Counties,  New York.  Delta  conducts  its home
mortgage lending business in more than 20 states other than New York, but almost
half of its lending is in that state.

      Delta denies all allegations in the United States'  Complaint and that any
of its actions have constituted violations of the ECOA, FHA, RESPA, HOEPA or any
other fair  housing,  fair lending or consumer  protection  law. In  particular,
Delta disputes the validity of the statistical analyses the United States relied
upon as the  principal  basis for its ECOA and FHA claims,  because  Delta's own
analyses did not reveal statistically significant differences in the prices paid
by borrowers in  protected  classes.  Delta  further  maintains  that the United
States' theories of liability  regarding loans brought to it by mortgage brokers
are  legally  insupportable,  because,  inter  alia,  they seek to hold a lender
responsible for the conduct of independent third parties.

      Delta  disputes the United  States' RESPA claims,  and maintains  that the
broker  compensation  at issue in the  Complaint was  reasonably  related to the
value of the  goods,  facilities  and  services  provided  by brokers in similar
transactions in similar markets.

      Delta also disputes the United States' HOEPA claims,  and contends that it
underwrites  all of its loans,  including  loans covered by HOEPA,  based on the
borrower's  ability to repay,  and does not  contract  for or charge  prohibited
prepayment penalties or default interest on HOEPA loans.

      Although  Delta  disputes each of the United  States'  allegations,  it is
nevertheless  committed  to  furthering  the  spirit of fair  lending  and other
consumer  credit  laws by going  beyond what Delta  believes  is required  under
applicable law to remedy the violations alleged in the Complaint.

II.   RESOLUTION OF THE DISPUTE

      The parties  have agreed that in order to avoid  costly  litigation,  this
controversy  should  be  resolved  voluntarily,  and  that  the  terms  of  this
Settlement  Agreement shall govern Delta's  practices in all geographic areas in
which Delta makes  loans.  The parties  have also agreed that

                                       3

there should  be  no evidentiary  hearing,  trial  or  other adjudication on the
merits, and that  entry of  this Settlement  Agreement is not to be construed as
an admission by Delta of the validity of the claims asserted against it.

      Now therefore, on the basis of the foregoing representations of the United
States  and  Delta,  Delta,  its  officials,  and  employees,  as well as  their
successors, collectively referred to as "Delta", are hereby ORDERED as follows:

III.   GENERAL PROVISIONS

A. Delta is prohibited  from engaging in any act or practice that  discriminates
on the  basis of sex,  race,  or  color  in the  pricing  of  mortgage  loans as
prohibited  by FHA and ECOA,  including but not limited to approving and funding
loans for which  minorities and females pay more than similarly  situated whites
or males.

B. Delta is prohibited from violating  Section 8 of RESPA and Section 3500.14 of
its implementing  regulations,  and agrees to conduct its dealings with mortgage
loan  brokers in a manner  consistent  with  HUD's  Statement  of Policy  1999-1
Regarding Lender Payments to Mortgage Brokers (64 Fed. Reg.
10080, March 1, 1999).

C.    Delta  Funding is further  prohibited  from  violating  HOEPA (15 U.S.C.
ss. 1639),  and Sections  226.31 and 226.32 of Regulation Z, 12 C.F.R. ss.ss.
226.31 and 226.32, by:

1.   engaging in a pattern or practice of extending credit to borrowers based on
     the borrowers' collateral rather than considering the borrowers' current or
     expected  income,  debt or  employment  status  to  determine  whether  the
     borrowers are able to make the scheduled payments to repay the obligations,
     in violation of Section 129(h) of HOEPA, 15  U.S.C.ss.1639(h),  and Section
     226.32(e)(1) of Regulation Z, 12 C.F.R.ss.226.32(e)(1);

2.   including  in  a  HOEPA  mortgage  loan  a  prohibited  prepayment  penalty
     provision,  in violation of Section 129(c) of HOEPA, 15 U.S.C. ss. 1639(c),

                                       4

     and Section 226.32(d)(6) of Regulation Z, 12 C.F.R. ss.  226.32(d)(6);  and

3.   including  in a  HOEPA  loan a  default  provision  calling  for  increased
     interest rate after default,  in violation of Section  129(d) of HOEPA,  15
     U.S.C. ss. 1639(d), and Section 226.32(d)(4) of Regulation Z, 12 C.F.R. ss.
     226.32(d)(4).

IV.  REQUIRED POLICIES AND PRACTICES CONCERNING DELTA'S BUSINESS DEALINGS
     WITH MORTGAGE BROKERS

     A.    COMPLIANCE WITH THIS SETTLEMENT AGREEMENT

      To promote the objectives of ECOA, FHA, RESPA AND HOEPA in connection with
its wholesale lending operations, Delta shall conduct its business with mortgage
brokers as follows:

1. With respect to fair lending, Delta shall:

     a.    adhere  to the  FHA  and  ECOA  in all  aspects of the credit process
           including pricing of mortgage loans;

     b.    reject the broker's proposal or make a counteroffer when it  believes
           the broker's proposed compensation and costs  are not permitted under
           the fair lending laws; and

     c.    maintain loan underwriting  standards designed to ensure   that  loan
           applicants  will be  placed  at the  correct   credit risk level on a
           non-discriminatory basis.

2.   With  respect  to  real  estate  settlement  procedures,   and   consistent
     with HUD's Statement of Policy 1999-1 Delta shall:

     a.    only  fund  loans  where  it  reasonably   believes  the compensation
           to the mortgage broker is made  in  exchange  for  services  actually
           performed and goods and facilities  actually  furnished by the broker
           and the broker's total compensation  is  reasonably  related  to  the
           services  performed  and  the  goods  and  facilities provided by the
           broker;

     b.    operate on the understanding that (i)  payments  to mortgage  brokers
           by Delta for  referral  of  business are  not  permissible

                                       5

           and  (ii)  referral fees  are  not payments  for goods, facilities or
           services;

     c.    where necessary to arrive at an overall mortgage broker  compensation
           that  is  reasonably  related  to the services performed or the goods
           and  facilities provided by the mortgage broker,  reduce or eliminate
           its yield spread premiums or other back-end fees, propose a reduction
           in the  mortgage  broker's  front-end  charges  or take other action.
           Delta shall  decline to fund the loan if the overall mortgage  broker
           compensation is not reasonably related to the  services  performed or
           the goods and facilities provided by the mortgage broker;

     d.    refrain from providing,  in exchange for the  referral  of  business,
           those   settlement   services  for   which  the  mortgage brokers are
           receiving compensation; and

     e.    modify all its  existing  agreements with mortgage brokers  within 60
           days of the  date  of  this  Settlement  Agreement  to  contain,  and
           ensure that all future  agreements with mortgage brokers  contain,  a
           provision   that  the   mortgage    brokers   will    make     timely
           disclosures   to   borrowers    concerning   the   broker's  services
           and  compensation, to the extent required by state law,  and,  within
           60 days of the date of this Settlement Agreement, Delta shall provide
           further  disclosure,  in the  form  of   ATTACHMENT  A   hereto  (the
           "Broker Information  Disclosure")  to each borrower from  whom  Delta
           receives   a  loan  application.  Delta  shall   provide  the  Broker
           Information  Disclosure  no later  than  three  business  days  after
           the loan application is received by Delta.

3.   With respect to loans covered by HOEPA proposed by brokers, Delta shall:

     a.    reject the broker's proposal when it believes the broker's  proffered
           documentation of the borrower's  income is  insufficient  to  support
           the  amount of income claimed;

     b.    maintain loan  underwriting  standards  designed   to   ensure   that
           extensions  of credit are based on the  borrower's  repayment ability
           including the borrower's  current   and   expected  income,   current
           obligations,  and employment; and

     c.    maintain loan underwriting procedures designed  to ensure   that  any
           borrower's   income  will  be  verified  and documented  to establish
           a  reasonable  basis to believe such income exists.

                                       6

B.    NOTICE TO MORTGAGE BROKERS  CONCERNING  COMPLIANCE WITH THIS SETTLEMENT
      AGREEMENT

1.   Within 60 days of  the  date of this  Settlement   Agreement,  Delta  shall
     notify  each  mortgage broker with which it does business of the compliance
     requirements  set forth in paragraph  IV.A,  and shall revise the materials
     it provides to all brokers to include the following statements:

     a.    "The Fair Housing Act and the Equal  Credit  Opportunity Act apply to
           all aspects of the credit process including  the  pricing of mortgage
           loans;"

     b.    "It  is  unlawful  to  make   differing   initial  price   quotations
           on the basis of the loan  applicant's  race, national origin, sex, or
           age;"

     c.    "The Real Estate Settlement  Procedures Act prohibits compensation to
           a mortgage broker unless the compensation is in exchange for services
           actually  performed  and goods and facilities  actually  furnished by
           the broker,   and  the   mortgage   broker's   total  compensation is
           reasonably  related to the value of the  services  performed  and the
           goods  and facilities furnished by the broker;" and

     d.    The Home  Ownership  and Equity  Protection  Act  of  1994  prohibits
           the  making  of  non-purchase  money  mortgage loans that have  total
           points  and fees  that exceed eight  percent of the total loan amount
           without regard  to  the  borrower's  ability  to  repay. Accordingly,
           all  loans  subject   to   HOEPA  must  be  supported   by   credible
           documentation  that the borrower is able to repay the loan.

2.   In  addition,  Delta    shall  offer  all  wholesale  brokers  with whom it
     does mortgage  loan   business  the   opportunity   to  undergo    training
     similar to the training described in Section VII.

V.    MONETARY COMPENSATION

      On  September  17,  1999,  the  Superintendent  of Banks of New York State
("NYSBD")  and Delta  entered into a  Remediation  Agreement  resolving  NYSBD's
allegations  that  its  examination  of  Delta's  lending   practices   revealed
violations of the FHA,  ECOA,  RESPA and HOEPA

                                       7

and Section  296-a of the New York  Executive  Law.  The  settlement  includes a
$7,250,000.00  "Remediation Fund" by Delta and an "Amelioration Fund" consisting
of 525,000  unregistered  shares of common stock  ("Stock")  of Delta  Financial
Corporation.  The "Remediation Fund" and the proceeds from the sale of the Stock
in the "Amelioration Fund" shall be used to compensate  borrowers  identified by
the NYSBD and the federal agencies.

      One of the  purposes of the  Remediation  Fund is to  compensate  New York
State  borrowers,  including  residents of minority  areas and African  American
females identified by the Department of Justice and the NYSBD, who obtained home
mortgage loans from Delta between October 1, 1995 and September 17, 1999 and who
allegedly paid more for their loans than the average borrower who was a resident
of non-minority areas or the average non-minority  borrower,  and New York State
borrowers  with respect to whom the NYSBD alleges Delta violated HOEPA or RESPA.
Compensation will be in the form of reductions to monthly mortgage payments on a
going forward basis as set forth in the September 17, 1999 Remediation Agreement
executed by the NYSBD and Delta.

      The  "Amelioration  Fund" will be used to provide monetary  restitution to
borrowers who were  allegedly  harmed by Delta's  alleged fair  lending,  RESPA,
and/or HOEPA  violations,  as  identified  by the  Department of Justice and the
NYSBD.  Restitution must be paid to all eligible New York State borrowers before
restitution  is made to borrowers  outside New York State.  Any borrower to whom
compensation is awarded from the Remediation Fund or Amelioration  Fund shall be
required, prior to receiving any such compensation, to sign a general release.

VI.   MONITORING AND COMPLIANCE SYSTEM

     A. Within forty-five days of the date of this Settlement Agreement,  Delta
shall submit to the federal  agencies  for review and  approval a new monitoring
and  compliance   system   designed   to    ensure   uniform    application   of
underwriting  criteria   and  appropriate   payment  of  mortgage  broker  fees.
If the  federal agencies do not  otherwise   notify  Delta  in  writing   within
forty-five days after their receipt of the new monitoring and compliance system,
it shall be deemed approved.

B. The monitoring and compliance system shall include:


                                       8

          1.      Development  and  implementation  of policies  and  guidelines
                  designed to ensure that the  underwriting of mortgage loans is
                  made  in  compliance  with  law.  Such  guidelines   shall  be
                  incorporated into Delta's lending policy;

          2.      Development  and  implementation  of a  system    designed  t
                  accurately record  data  related  to the  charging  of  broker
                  fees on  mortgage  loans  underwritten,  closed  and funded by
                  Delta,  including   the  dollar and  percentage  amount of the
                  broker fee charged, the amount and type of loan, documentation
                  of   any pricing  exceptions,  information  about the borrower
                  as required by the Home Mortgage  Disclosure Act ("HMDA"), the
                  name  of the  loan  officer,  and the  name  of  the  mortgage
                  broker;

          3.      Development  and  implementation  of  a  comprehensive  system
                  designed to permit  detailed  periodic  monitoring of mortgage
                  origination  pricing practices to ensure that flexible pricing
                  does not result in  discrimination  and that  mortgage  broker
                  compensation  is in exchange for and is reasonably  related to
                  the services, goods, and facilities provided by the broker.

          4.      The  development  and  implementation  of a system designed to
                  identify  all  borrowers   whose  loans  are  subject  to  the
                  requirements   of  HOEPA  and  permit   detailed  and  ongoing
                  monitoring of file  documentation that such borrowers are able
                  to repay their loans.

          5.      The designation of managers,  including senior-level managers,
                  to serve as compliance officers and to monitor compliance with
                  the foregoing compliance system; and

          6.      The development and  implementation  of a disciplinary  policy
                  for employees who violate the required  policies and practices
                  described in this Settlement Agreement.

                                       9

VII.  EDUCATION OF DELTA EMPLOYEES

     A.  Within  forty-five  days from  the  effective  date of  this Settlement
Agreement,  Delta shall amend its  existing  Fair  Lending  Training  Program to
include  the  elements  set  forth   below,  and   shall   submit   the  amended
training program ("Amended Training Program") to the federal agencies for review
and approval. If the  federal  agencies do not otherwise notify Delta in writing
within  forty-five days after their  receipt  of  the Amended  Training Program,
it shall be deemed approved. Such Amended Training Program shall include:

     1.    A detailed  discussion  of the  purpose  of, and  the    prohibitions
           contained in HOEPA, ECOA, FHA, and RESPA;

     2.    A detailed  discussion of liability  for  violations of HOEPA,  ECOA,
           FHA, and RESPA;

     3.    A  certification  form to be  completed  by each officer and employee
           attending the training program; and

     4.    A  schedule   pursuant to which the training program and supplemental
           training programs will be offered.

     B.  Within sixty days  following  the  approval of  the  Amended   Training
Program  by  the   federal   agencies,   all  Delta   officers   and   employees
whose  job  responsibilities  include contact with consumers or mortgage brokers
concerning  mortgage  loan   applications,  the pricing of mortgage loans or the
monitoring of mortgage pricing shall attend the Amended Training Program.

     C. All new Delta  officers  and   employees  whose   job   responsibilities
include contact  with  consumers  or  mortgage   brokers   concerning   mortgage
loan  applications,  the   pricing  of   mortgage  loans or  the  monitoring  of
mortgage pricing shall attend the Amended  Training  Program  within  forty-five
days of their employment with Delta.

     D. All Delta officers and employees attending the Amended Training  Program
shall   execute  a  certification   form   stating   that  the   individual  has
attended the  Amended  Training

                                       10

     Program,  that  the  individual   understands  Delta's  policies  regarding
non-discrimination  in the origination and underwriting of mortgage loans,  that
the  individual  understands  Delta's  disciplinary  policies  with  respect  to
originating and  underwriting  mortgage loans and compliance  with HOEPA,  ECOA,
FHA, and RESPA, and that the individual  understands that failure to comply with
such laws may subject the individual and/or Delta to sanctions.

     E. Delta  shall comply with the training provisions  described above in all
states in which it does business;  provided,  however, that in states other than
New York,  Delta shall not be required to provide  training in  connection  with
laws that apply only in New York.

VIII. RECORDKEEPING AND REPORTING REQUIREMENTS

     A. For a period of three years from the date of this Settlement  Agreement,
Delta agrees to retain all loan  application files submitted for mortgage loans,
all loan-related  documents and notices relevant to any pricing  decisions,  and
all  documents  related to  compliance  and  monitoring  as set forth in Section
VI,  above.   During  this  period, upon reasonable notice from the Civil Rights
Division  of  the United States Department of Justice ("DOJ"),  Delta shall make
individual  mortgage  loan  application  files and related records available for
inspection or copying by the DOJ.

     B. Delta  agrees that it will  periodically  review its lending  operations
for compliance with the RESPA, FHA and ECOA.

     C. For a period of three years from the date of this Settlement Agreement,
Delta shall report  its  compliance  with  this  Settlement   Agreement  to  the
DOJ semi-annually,  beginning  with  the  period   ending  September   30, 2000,
within forty-five days after the end of each half-year period.1 Each such report
shall include:

                                        11

          1.    A report on Delta's fair lending pricing requirements; and

          2.    A description  of corrective  actions taken by Delta to comply
                with this Settlement Agreement.

IX.   ADMINISTRATION OF SETTLEMENT AGREEMENT; MISCELLANEOUS

     A. The  Court  shall   retain jurisdiction for the purpose of enforcing the
terms of   this  Settlement  Agreement  for a  period  of three  years  from the
date it is  entered by the Court, at which time this Settlement  Agreement shall
terminate.  The  Settlement  Agreement  shall be binding on Delta and any of its
employees,   representatives,   officers,   heirs,  assigns,   subsidiaries,  or
successors  in interest.

     B. The  parties to this Settlement Agreement  shall  endeavor in good faith
to   resolve  informally   any   differences   regarding  interpretation  of and
compliance with this  Settlement Agreement prior to bringing such matters to the
Court for resolution.  Furthermore, the United States shall not bring any matter
involving  compliance with this Agreement to the Court for resolution  unless it
reasonably  believes that Delta has materially  violated the  provisions of this
Settlement  Agreement.   This   Settlement  Agreement may be modified by written
consent of Delta  and  the  federal  agencies.  Any  such    modification may be
submitted to the Court for approval, and shall be deemed  effective  immediately
upon execution by the  parties  until   such  time,   if   any,  that the  Court
indicates  a lack of such approval.

     C. For  purposes of  measuring time periods, the "date of" this  Settlement
Agreement shall be deemed to be the date of its entry by the Court.

     D. Each party to this Settlement Agreement will bear its own costs.

     E. This Settlement Agreement, when fully executed and performed by Delta to
the   reasonable  satisfaction   of the federal  agencies,  will resolve all the
issues between  Delta  and its  affiliates (including, without limitation, Delta
Financial Corporation),  and the United States respecting the  subject matter of
the United States' Complaint.

                                       12

     F. The entry into  this  Settlement  Agreement  shall  not  be  deemed   or
construed to  be an   admission  of, or  evidence  of,  any   violation   of any
statute,  law or regulation  or of any  liability  or   wrongdoing  or of    the
truth of any of the  claims  or allegations of the United States, and may not be
used against Delta in  any other  action  o  proceeding.    The  United   States
Agreement  shall not be  considered  by the Unites  States as a violation of any
federal or state law prohibiting discrimination.

     G. Any  requirement,  responsibility,  or  obligation  imposed  on Delta by
this  Agreement which is based upon statute,  regulation, or Statement of Policy
shall bind Delta  only    to  the extent  that  the  applicable  portion of that
authority remains in force and effect.

     H. This Agreement may be executed in  multiple counterparts,  each of which
shall    be deemed a duplicate original.

     I. Nothing in this  Agreement is  intended to confer or   limit  any right,
remedy, obligation or liability upon any person or entity other than the parties
hereto and their respective successors.

                                       13


It is so ORDERED this 5th day of April, 2000.


/S/ CHARLES SIFTON                _
United States District Judge


<PAGE>


The undersigned apply for and consent to the entry of this Order:

For the United States:

                                      JANET RENO
                                      ATTORNEY GENERAL


                                      BILL LANN LEE
                                      ACTING ASSISTANT ATTORNEY GENERAL
LORETTA E. LYNCH
UNITED STATES ATTORNEY                ----------------------------------
                                      /S/ JOAN A. MAGAGNA
                                      ALEXANDER C. ROSS
----------------------                VALERIE O'BRIAN
MARLA TEPPER (MT7529)                 Attorneys
Assistant U.S. Attorney               Housing and Civil Enforcement Section
1 PIERREPONT PLAZA, 16th Floor        Civil Rights Division U.S. Department of
Brooklyn, NY  11201                   Justice
                                      P.O. Box 65998
                                      Washington, DC 20035



GAIL W. LASTER
General Counsel

------------------------------
/S/ PETER S.                          For Delta Funding Corporation
RACE                                  and Delta Financial Corporation:
PETER S. RACE
Assistant General Counsel
KENNETH MARKISON                       /S/ THOMAS J.  NOTO
Assistant General Counsel             ----------------------------------
U.S. Department of Housing            THOMAS J. NOTO (TN-9279)
  and Urban Development


                                      /S/ MELANIE L. HIBBS
                                      ---------------------------------
                                      MELANIE L. HIBBS (MH-0154)
                                      EUGENE R. LICKER (EL-0334)
                                      Kirkpatrick & Lockhart LLP
                                      1800 Massachusetts Avenue, N.W
                                      Washington, DC  20036-1800
 /S/ MICHELLE CHUA                    (202) 778-9000
---------------------------
DAVID MEDINE
Associate Director for
Financial Practices
MICHELLE CHUA
Attorney
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, DC  20580

                                       14
<PAGE>



                                                                    ATTACHMENT A
                            DELTA FUNDING CORPORATION
                               1000 WOODBURY ROAD
                               WOODBURY, NY 11797
                                  800-225-5335


                          BROKER INFORMATION DISCLOSURE

Date:

File:

Dear Customer:

The purpose of this disclosure is to provide you with an estimate of the fee you
will be paying  to your  Mortgage  Broker in  connection  with your  loan.  This
disclosure  does NOT  include  all fees  you  will pay for this  loan.  For that
information please refer to the Good Faith Estimate of settlement costs that you
already have or soon will receive,  and the HUD-1 form that will be given to you
at closing. The HUD-1 will show the final charges for broker and other fees.

Please read this information  carefully so that you make an informed choice. You
are  entitled to a copy of this  disclosure.  Signing this  disclosure  does not
obligate you to obtain the mortgage loan described below, nor does it constitute
a mortgage loan approval.

We have  received  your  application  for a mortgage loan from (NAME OF MORTGAGE
BROKER) .

1)    The  Mortgage  Broker  is  expected  to charge a total of  $_________  for
      arranging a mortgage loan of $_______ at a proposed interest rate of ___%.
      This amount is made of:


      a)    $__________  paid  by you to the  Broker  as a  percentage  of the
            loan; and

            $__________  in  additional  amounts  paid by you to the Broker as
            noted on the  Good  Faith  Estimate.  These  amounts  will be paid
            from  the  proceeds  of  your  loan  and/or  directly  out of your
            pocket; and

      b)    $__________  paid  to  the  Broker  by  Delta  Funding  Corp.  which
            increases your interest rate on the loan;



IF ANY PORTION OF THE BROKER FEE  DESCRIBED  ABOVE IS PAID FROM THE  PROCEEDS OF
THE LOAN, YOU WILL BE OBLIGATED TO REPAY THIS AMOUNT WITH INTEREST OVER THE TERM
OF THE LOAN.

If you would rather pay a lower  interest rate on your loan,  you may be able to
pay higher upfront fees. If you pay less upfront,  you may pay a higher interest
rate. If you have any questions  about the different  options  available to you,
your mortgage broker and/or Delta will be glad to discuss them with you.

2) The Broker's Fee described  above is payable only if the loan is approved and
accepted by you.

Please sign and return one copy in the  enclosed  envelope.  Keep the other copy
for your files.


  ---------------------------------          --------------------
             (SIGNATURE)                            (DATE)


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1 All notices, correspondence,  reports, or documents required to be provided to
the United States shall be mailed to the following address:

Chief, Housing and Civil Enforcement Section
Civil Rights Division
U.S. Department of Justice
P.O. Box 65998
Washington, D.C. 20035