UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549

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FORM 10-Q/A

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(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004 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    000-25621



E-LOAN, INC.



|Delaware                                                       | 77-0460084                          
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number)

6230 Stoneridge Mall Road
Pleasanton, California   94588

(925) 847-6200







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 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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
    Yes  
x    No

As of August 2, 2004, 63,241,934 shares of the Registrant's Common Stock,
$0.001 par value per share, were issued and outstanding.






E-LOAN, INC.
      Quarterly Report on Form 10-Q/A for the Period Ended June 30, 2004
                                TABLE OF CONTENTS



|PART I.   FINANCIAL INFORMATION                                                                                       | Page No.
|--------------------------------------------------------------------------------------------------------------------- | --------
|                                                                                                                      |         
|Item 1.   Interim Financial Statements
                  (unaudited):                                                 |         
|                                                                                                                      |         
|Condensed Consolidated Balance Sheets as of December 31, 2003 and June 30, 2004                                       | 1       
|                                                                                                                      |         
|Condensed Consolidated Statements of Operations for the
    three and six months ended June 30, 2003 and 2004         | 2       
|                                                                                                                      |         
|Condensed Consolidated Statements of Cash Flows for the
    six months ended June 30, 2003 and 2004                   | 3       
|                                                                                                                      |         
|Notes to Unaudited Condensed Consolidated Financial Statements                                                        | 4       
|                                                                                                                      |         
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations | 16      
|                                                                                                                      |         
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                  | 35      
|                                                                                                                      |         
|Item 4.   Controls and Procedures                                                                                     | 35      
|                                                                                                                      |         
|PART II.  OTHER INFORMATION                                                                                           |         
|                                                                                                                      |         
|Item 1.   Legal Proceedings                                                                                           | 36      
|                                                                                                                      |         
|Item 2.   Changes in Securities and Use of Proceeds                                                                   | 36      
|                                                                                                                      |         
|Item 3.   Defaults Upon Senior Securities                                                                             | 36      
|                                                                                                                      |         
|Item 4.   Submission of Matters to a Vote of Security Holders                                                         | 36      
|                                                                                                                      |         
|Item 5.   Other Information                                                                                           | 37      
|                                                                                                                      |         
|Item 6.   Exhibits and Reports on Form 8-K                                                                            | 37      
|                                                                                                                      |         
|Signatures                                                                                                            | 38      

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INTRODUCTORY NOTE

On November 4, 2004, E-LOAN, Inc. (the "Company") issued
a press release announcing that it would amend its Annual Report on Form 10-K
for the fiscal year ended December 31, 2003, and its Quarterly Reports on Form
10-Q for the fiscal quarters ended March 31, 2004 and June 30, 2004 to restate
the financial statements included in the reports to correct for an accounting
error.

Accordingly, this Form 10-Q/A is being filed to amend the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 2004 in order to reflect the
restatement of the Company's Condensed Consolidated Financial Statements and
amendments to related disclosures as of March 31, 2004, June 30, 2004 and for
the fiscal year ended December 31, 2003.  The restatement arose from
management's determination that interest income and interest expense in periods
subsequent to the sale of such loans related to mortgage and home equity loans
sold under its agreement with Greenwich Capital Financial Products, Inc.
(Greenwich).  Instead, such amounts should have been reflected as retained
interest and considered as part of the calculation of the gain on loans sold.
The impact of the error was an overstatement of pre-tax net income by $81,000, and $87,000
or $0.00 per share, for the three and six months ended June 30, 2004, respectively.

During the course of its review, the Company determined that
additional adjustments to previously reported results were required. These
additional adjustments related to the Company's accounting for the
mark-to-market of forward commitments associated with its adjustable rate mortgage
("ARM") production in accordance with Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative and Hedging
Activities". The Company improperly included amounts in the mark-to-market
calculation for ARM forward commitments on sold loans.
While the adjustment resulted in
decreases to revenue and income in the first and second quarter of 2003, it
resulted in an equal and off-setting increase to revenue and income in the third
quarter of 2003, with no net impact on the total 2003 revenue or income
amounts.
There was no impact to the three and six months ended June 30, 2004.

The Company also adjusted for leasehold improvement
allowances provided by the landlord on the Pleasanton, California facility, in
accordance with the terms of the lease on that facility. The Company had
previously recorded those amounts as a reduction of leasehold improvements, as
opposed to deferred rent, and ultimately a reduction of rent expense over the
period of the lease. The adjustment resulted in a $1,000 increase to net income
for the quarter ended June 30, 2004. There was no impact to the three and six months ended June 30, 2003.

Finally, the Company has elected to present an unclassified balance sheet by eliminating the
classification of current assets and current liabilities. Such presentation is in
accordance with the Illustrative Financial Statements for Mortgage Companies issued by the
AICPA released on February 16, 2004. The change was made to conform to
the financial statements presentation of other financial services companies and to
enhance financial statements comparability with peers. The prior year financial statements
were reclassified to conform to the current period presentation.

The adjustments, including their impact on the Condensed Consolidated
Financial Statements, are further described in Note 14 to the Condensed
Consolidated Financial Statements.

Generally, no attempt has been made in this Form 10-Q/A to modify or update
other disclosures presented in the original report on Form 10-Q except as
required to reflect the effects of the restatement.  This Form 10-Q/A does not
reflect events occurring after the filing of the original report on Form 10-Q or
modify or update those disclosures. Information not affected by the restatement
is unchanged and reflects the disclosure made at the time of the original filing
of the Form 10-Q with the Securities and Exchange Commission on August 9, 2004.
Accordingly, this Form 10-Q/A should be read in conjunction with the Company's
filings made with the Securities and Exchange Commission subsequent to the
filing of the original Form 10-Q, including any amendments to those filings.
The following items have been amended:

- Part I - Item 1 - Interim Financial Statements (unaudited)
- Part I - Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
- Part I - Item 4 - Controls and Procedures
- Part II - Item 6 - Exhibits and Reports on Form 8-K

PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

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E-LOAN, INC.
BALANCE SHEETS
(IN THOUSANDS)
(RESTATED)

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`December 31,  June 30,
                                                                                   2003         2004
                                                                                -----------  -----------
                                                                                             (unaudited)
ASSETS
Cash and cash equivalents (includes $4,850 and $2,350 of restricted cash)..... $    33,973  $    45,989
Loans held-for-sale...........................................................      50,874       25,328
Accounts receivable, prepaids and other assets................................      28,290       21,099
Fixed assets, net.............................................................      13,652       16,966
Retained interests in auto loans - trading....................................      11,658       14,139
                                                                                -----------  -----------
           Total assets....................................................... $   138,447  $   123,521
                                                                                ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Warehouse and other lines payable............................................. $    44,283  $    22,420
Accounts payable, accrued expenses and other liabilities......................      12,550       18,473
                                                                                -----------  -----------
           Total liabilities..................................................      56,833       40,893
                                                                                -----------  -----------
Commitments and contingencies (Note 13):
Stockholders' equity:
    Preferred stock, 5,000,000 $0.001 par value shares authorized at
      December 31, 2003 and June 30, 2004; 0 shares issued and
      outstanding at December 31, 2003 and June 30, 2004......................          --           --
    Common stock, 150,000,000 $0.001 par value shares authorized at
      December 31, 2003 and June 30, 2004; 62,136,790 and
      63,223,485 shares issued and outstanding at December 31, 2003
      and June 30, 2004.......................................................          62           63
Additional paid-in capital....................................................     265,144      267,077
Accumulated deficit...........................................................    (183,592)    (184,512)
                                                                                -----------  -----------
           Total stockholders' equity.........................................      81,614       82,628
                                                                                -----------  -----------
           Total liabilities and stockholders' equity......................... $   138,447  $   123,521
                                                                                ===========  ===========`

The accompanying notes are an integral part of these financial statements.

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E-LOAN, INC.
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
(RESTATED)

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`Three Months Ended        Six Months Ended
                                                               June 30,                  June 30,
                                                            2003         2004         2003         2004
                                                         -----------  -----------  -----------  -----------
Revenues (Note 11)..................................... $    45,231  $    33,399  $    81,440  $    64,030

Operating expenses:
    Operations (Note 12)...............................      19,993       16,264       36,442       31,206
    Sales and marketing................................      11,433       12,506       19,925       23,638
    Technology.........................................       2,479        2,091        4,355        4,257
    General and administrative.........................       2,901        2,358        4,899        5,874
                                                         -----------  -----------  -----------  -----------
           Total operating expenses....................      36,806       33,219       65,621       64,975
                                                         -----------  -----------  -----------  -----------
Income (loss) from operations..........................       8,425          180       15,819         (945)
Other income, net......................................          68           10          100           25
                                                         -----------  -----------  -----------  -----------
Income (loss) before taxes.............................       8,493          190       15,919         (920)
Income taxes...........................................      (1,008)          --       (1,837)          --
                                                         -----------  -----------  -----------  -----------
Net income (loss)...................................... $     7,485  $       190  $    14,082  $      (920)
                                                         ===========  ===========  ===========  ===========

Net income (loss) per share:
    Basic.............................................. $      0.12  $      0.00  $      0.24  $     (0.01)
                                                         ===========  ===========  ===========  ===========
    Diluted............................................ $      0.11  $      0.00  $      0.22  $     (0.01)
                                                         ===========  ===========  ===========  ===========

    Weighted-average shares - basic....................      60,177       62,915       59,888       62,620
                                                         ===========  ===========  ===========  ===========
    Weighted-average shares - diluted..................      66,708       65,784       65,302       62,620
                                                         ===========  ===========  ===========  ===========`

The accompanying notes are an integral part of these financial statements.

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E-LOAN, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
(RESTATED)

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`Six Months Ended
                                                                       June 30,
                                                                    2003          2004
                                                                 -----------  ------------
Cash flows from operating activities:
   Net income (loss)........................................... $    14,082  $       (920)
   Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
     Depreciation and amortization of fixed assets.............       2,370         3,032
     Non-cash compensation expense.............................          --           636
     Changes in operating assets and liabilities:
       Loans held-for-sale.....................................      92,194        25,546
       Retained interests in auto loans - trading..............      (5,030)       (2,481)
       Accounts receivable, prepaids, and other assets.........     (12,240)        7,191
       Accounts payable, accrued expenses and
         other payables........................................       5,449         5,923
                                                                 -----------  ------------
         Net cash provided by operating activities.............      96,825        38,927
                                                                 -----------  ------------
Cash flows from investing activities:
   Acquisition of fixed assets.................................      (4,684)       (6,346)
                                                                 -----------  ------------
         Net cash used in investing activities                       (4,684)       (6,346)
                                                                 -----------  ------------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net.................       1,434         1,298
   Proceeds from notes payable.................................       4,150            --
   Proceeds from warehouse and other lines payable.............   2,565,628     2,229,796
   Repayments of warehouse and other lines payable.............  (2,655,784)   (2,251,659)
   Payments on obligations under capital leases, net...........         (10)           --
                                                                 -----------  ------------
         Net cash provided by financing activities.............     (84,582)      (20,565)
                                                                 -----------  ------------
Net increase (decrease) in cash................................       7,559        12,016
Unrestricted cash and cash equivalents, beginning of period....      33,821        29,123
Change in restricted cash......................................          --         2,500
                                                                 -----------  ------------
Unrestricted cash and cash equivalents, end of period.......... $    41,380  $     43,639
Restricted cash and cash equivalents, end of period............       2,500         2,350
                                                                 -----------  ------------
Total cash and cash equivalents, end of period.................      43,880        45,989
                                                                 ===========  ============`

The accompanying notes are an integral part of these financial statements.

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E-LOAN, INC.

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.	THE COMPANY
E-LOAN, Inc. (the "Company") was incorporated on August
26, 1996 and began marketing its services in June 1997. The Company is an online
consumer direct lender of first and second mortgage loans, home equity loans and
home equity lines of credit and auto loans.  The Company operates as a single
operating segment.

2.	BASIS OF PRESENTATION
Interim Financial Information
The accompanying financial statements as of June 30, 2003
and 2004 are unaudited. The unaudited interim financial statements have been
prepared on the same basis as the annual financial statements and, in the
opinion of management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's financial
position, results of operations and cash flows as of June 30, 2003 and 2004.
These financial statements and notes thereto are unaudited and should be read in
conjunction with the Company's audited financial statements included in the
Company's 10-K for the year ended December 31, 2003, together with the amendment
filed on March 25, 2005, which includes restated financial statements as of and
for the fiscal year ended December 31, 2003 (see Note 14). The results for the
three and six months ended June 30, 2004 are not necessarily indicative of the
expected results for the year ending December 31, 2004.

Principles of Consolidation
These condensed consolidated financial statements include
the accounts of E-LOAN and its wholly owned subsidiary, Escrow Closing Services,
Inc. ("ECS").  ECS was incorporated on February 27, 2003 and began
marketing its services in November 2003.    All intercompany accounts and
transactions have been eliminated in consolidation.
Reclassification
Certain amounts in the financial statements have been
reclassified to conform to the 2004 presentation.

Restatement
Certain accounts have been restated from the amounts
previously reported to correct for certain accounting errors as discussed in Note 14.


3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid monetary
instruments with an original maturity of three months or less from the date of
purchase, including documentary drafts, to be cash equivalents.  The Company is
required to maintain a minimum cash and cash equivalents balance of $15 million
related to its warehouse lines. The following summarizes cash and cash
equivalents at December 31, 2003 and June 30, 2004 (in thousands):

December 31,  June 30,
                                                       2003         2004
                                                    -----------  -----------
Cash.............................................. $    28,179  $    41,539
Certificates of deposit, unrestricted.............          75           75
Documentary drafts................................         869        2,025
Restricted cash...................................       4,850        2,350
                                                    -----------  -----------
                                                   $    33,973  $    45,989
                                                    ===========  ===========

Documentary drafts
The Company originates auto loans directly to consumers
through the use of a documentary draft process. This process requires the
borrower and the seller to provide the Company with a series of supporting
documents and vehicle information to complete the loan.  For some borrowers, the
vehicle also must meet certain model year and loan-to-value restrictions.
Cash is allocated to satisfy documentary drafts presented by
borrowers before the required supporting documents are reviewed by the Company
to complete the loan. If the required documentation is not provided as agreed to
by the borrower and seller, then the allocation of cash is reversed and the cash
balance is restored. The Company's documentary draft process allows for at least
two business days to process the required supporting documentation prior to
determining whether to reverse or honor the original presentment by the
seller.


Escrow deposits

The Company administers escrow deposits as a service to
its customers. Escrow deposits totaled $5.8 million and $17.9 million at
December 31, 2003 and June 30, 2004, respectively, which were held at third
party financial institutions. Escrow deposits are not considered assets of the
Company and, therefore, are not included in the accompanying balance sheet.
However, the Company remains contingently liable for the disposition of these
deposits.
Restricted Cash
In December 2003, the Company renegotiated its line of
credit with Wells Fargo Bank, National Association.  As part of the amendment,
the Company was required to provide restricted cash in the amount of $2.35
million as collateral for this line of credit.  This restricted cash is being
held in certificates of deposit which mature in less than 90 days and is
classified as an asset on the Company's accompanying consolidated balance sheet.
This line of credit is being utilized to support letters of credit related to
its Pleasanton, California facility as well as a letter of credit related to the
Company's surety bonds.
In March 2004, the Company renegotiated its $400 million
warehouse line agreement with Greenwich Capital that required the Company to
maintain a restriction of $2.5 million in cash as additional collateral.  As
part of the amendment, the restriction of this cash was removed.Derivative Instruments
On January 1, 2001, the Company adopted Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative and
Hedging Activities" ("SFAS 133"), as subsequently amended by
Statement of Financial Accounting No. 138.  In accounting for its derivative
financial instruments, SFAS 133 requires an entity to recognize all derivative
assets or liabilities in the statement of financial condition and measure those
instruments at fair value.  The accounting for changes in fair value of the
derivative depends on the intended use of the derivative and the resulting
designation.  An entity that elects to apply hedge accounting is required to
establish at the inception of the hedge, the method it will use in assessing the
effectiveness of the hedging derivative and the measurement approach for
determining the ineffectiveness of the hedge.  These methods must be consistent
with the entity's approach to managing risk.  The Company is a party to mortgage
rate lock commitments to fund mortgage loans at interest rates previously agreed
(locked) by both the Company and the borrower for specified periods of time.
When the borrower locks their interest rate, the Company effectively extends a
put option to the borrower, whereby the borrower is not obligated to enter into
the loan agreement, but the Company must honor the interest rate for the
specified time period.  Under SFAS 133 mortgage interest rate locks are
derivatives.  The Company is exposed to interest rate risk during the
accumulation of interest rate lock commitments and loans prior to sale. The
Company utilizes either a best efforts sell forward commitment or a mandatory
sell forward commitment to economically hedge the changes in fair value of the
loan due to changes in market interest rates.  Both best efforts and mandatory
sell forward commitments are derivatives under SFAS 133.  Throughout the lock
period the changes in the market value of interest rate lock commitments, best
efforts and mandatory sell forward commitments are recorded as unrealized gains
and losses and are included in the statement of operations in mortgage revenue.
The Company's management has made complex judgments in their
application of SFAS 133.  The judgments include the identification of hedging
instruments, hedged items, nature of the risk being hedged, and how the hedging
instrument's effectiveness will be assessed.  The Company designates forward
delivery commitments, where the Company intends to deliver the underlying loan
into the commitment, as a fair value SFAS 133 hedge at the commitment date.   In
addition, the Company designates all best efforts sell forward commitments as
fair value SFAS 133 hedges for underlying loans at funding date.  The Company
does not designate mandatory sell forward agreements as SFAS 133 hedges but does
utilize them to economically hedge the changes in fair value of rate lock
commitments with borrowers for which a best effort sell forward commitment has
not been obtained.  The Company did not have a material gain or loss
representing the amount of hedge ineffectiveness related to designated SFAS 133
hedges during the three and six months ended June 30, 2004.  The net effect on
the Company's income statement from marking to market the locked pipeline and
forward commitments was a $0.9 million and $0.2 million gain, included in
mortgage revenues for the three and six months ended June 30, 2004,
respectively.
In September 2003, the Company began hedging its interest
rate risk on auto loan approvals. When the Company issues an auto loan approval,
the Company extends a put option to the borrower, whereby the borrower is not
obligated to enter into the loan agreement, but the Company must honor the
interest rate for up to a 45-day period.  Under SFAS 133, auto loan approvals
are not considered derivatives. However, the company is still exposed to
interest rate risk from issuance of approval to loan sale. The Company enters
into amortizing swap contracts to economically hedge the interest rate changes
in auto loan approvals. These swap contracts are considered derivatives under
SFAS 133. The Company marks-to-market any changes in the value of outstanding
swap contracts, which are recorded as unrealized gains and losses and included
in the statement of operations in auto revenue. The effect on the Company's
income statement from applying SFAS 133 was a $32,000 loss and a $30,000 gain,
included in auto revenues in the three and six months ended June 30, 2004,
respectively.
Sale of Auto Loans to Qualified Special Purpose Entity
On June 17, 2002, the Company entered into an arrangement
to sell auto loan receivables to a qualified special purpose entity ("QSPE"),
E-LOAN Auto Fund One, LLC ("E-LOAN Auto"). These transactions involve
the Company surrendering control over these assets to assure that the sold
assets have been isolated from the Company and its creditors. As E-LOAN Auto has
met the appropriate tests to be considered a QSPE, the assets and liabilities of
E-LOAN Auto are not consolidated in the financial statements of the Company.
E-LOAN Auto has obtained a secured borrowing facility from Merrill Lynch Bank USA
to finance all purchases of loans from the Company. The Company recognizes a
gain on the sale of auto loan receivables to E-LOAN Auto in the period the sale
occurs, which represents the difference between the sale proceeds to the Company
and the Company's net carrying value of the receivables. The Company retains an
interest in the future cash flows from the loans.  Such cash flows are
distributed to the Company by the QSPE monthly.  The retained interest is
recorded on the balance sheet at fair value as a trading asset, and is marked to
market at each subsequent reporting period in accordance with Statement of
Financial Accounting Standards No, 115, "Accounting for Certain Investments
in Debt and Equity Securities" ("SFAS 115").  The fair value of
the retained interest is based upon the net present value of the estimated
future cash flows to be received by the Company over the life of the loans.  The
Company makes various assumptions in order to determine the fair value of the
estimated future excess cash flows to be generated by the auto loans sold to the
QSPE. The most significant assumptions are the cumulative credit losses to be
incurred on the pool of auto loan receivables sold, prepayment rates of the auto
loans and the rate at which the estimated future excess cash flows are
discounted. The assumptions used represent the Company's best estimates, and the
use of different assumptions could produce different financial results. The
Company will continue to monitor and may update its assumptions over time.RevenueMortgage RevenuesThe Company's mortgage revenues are derived from the
origination and sale of loans.  Mortgage loans are funded through the Company's
warehouse lines of credit and sold to mortgage loan purchasers typically within
thirty days. Mortgage loan revenues consist of proceeds in excess of the
carrying value of the loan, origination fees less certain direct origination
costs and other processing fees. These revenues are recognized at the time the
loan is sold. Also included in mortgage revenues are amounts recorded in
connection with loans sold under a Sale Agreement with Greenwich Capital (see
Note 9 and Note 14). These amounts consist of gain on sale from transferred
loans, in the form of a retained interest comprised of interest income, net of
interest expense, and additional cash flows to be received at the time of
settlement with the committed loan purchaser. The Company
sells these loans to loan purchasers on a servicing released basis without
recourse, subject to certain representations and warranties, including but not
limited to a guarantee that the borrower will make a minimum number of payments
on his/her loan. As such, the Company records reserves as a contra-revenue at
the time a loan is sold, based on certain assumptions in anticipation of future
losses (see Note 10).

Interest Income on Mortgage and Home Equity Loans

The Company generates revenues from interest income on
mortgage and home equity loans.  The revenues realized are based on the loan
amount multiplied by the contractual interest rate from the time of funding by
the Company through time of sale.  These revenues are recognized as earned
during the period from funding to sale.

Home Equity Revenues

Home equity revenues are derived from the origination and
sale of loans. Home equity loans are funded through the Company's warehouse
lines of credit and sold to home equity loan purchasers typically within sixty
days. Home equity loan revenues consist of proceeds in excess of the carrying
value of the loan, origination fees less certain direct origination costs and
other processing costs.  These revenues are recognized at the time the loan is
sold. Also included in mortgage revenues are amounts recorded in connection with
loans sold under a Sale Agreement with Greenwich Capital (see Note 9 and Note
14). These amounts consist of gain on sale from transferred loans, in the form
of a retained interest comprised of interest income, net of interest expense,
and additional cash flows to be received at the time of settlement with the
committed loan purchaser. The Company sells these loans to loan purchasers on a
servicing released basis without recourse, subject to certain representations
and warranties, including but not limited to a guarantee that the borrower will
make a minimum number of payments on his/her loan. As such, the Company records
reserves as a contra-revenue at the time a loan is sold, based on certain
assumptions in anticipation of future losses (see Note 10).

Auto Revenues

The Company funds prime auto loans using a line of credit
and then sells them to a qualified special purpose entity (QSPE), which was
created in July 2002 (see Note 7). Revenues from these sales consist of the
estimated future discounted cash flows net of interest, servicing fees and
credit losses.  Revenues on prime auto loan sales are recognized when the loan
is sold to the QSPE.  In addition, in exchange for the loans sold, the Company
receives cash proceeds and records a retained interest.  A discount rate has
been applied to the asset to account for the estimated cash flows to be received
over the life of the loans.  The retained interest is an interest-earning asset.
The difference between the estimated discounted cash flows and the actual cash
flows received over time are accreted and included as auto revenue.

Prior to the third quarter of 2003, sub-prime auto loans were
sold to sub-prime auto loan purchasers. The revenue on these loans consisted of
the mark-up to the lending partner's loan price or a set origination fee. These
revenues were recognized at the time the loan was sold. In the third quarter of
2003, the Company stopped processing and funding sub-prime auto loans and
shifted this portion of the business to a referral based system. Loan
applications that do not meet the prime auto lending criteria are referred out
to other sub-prime lenders in exchange for a fee. This fee is recognized as
revenue at the time of application transfer to the sub-prime lender.

Other Revenues

The Company generates revenues from fees paid by various
partners in exchange for consumer loan applications generated by advertising
such partners' products on the Company's website.  The current consumer loan
programs offered include credit cards and unsecured personal loans.
Additionally, the Company earns revenue from its credit report services.  The
fees related to these credit report services are paid upfront.  As such, any
fees that have been paid but not yet earned at the end of each period are
accounted for as deferred revenue and are included in accounts payable, accrued
expenses and other liabilities in the accompanying consolidated balance sheets.
These revenues are recognized as earned.

Net Income (Loss) Per Share

The Company computes net income (loss) per share
in accordance with SFAS No. 128, Earnings per Share. Under the provisions
of SFAS No. 128 basic net income (loss) per share is computed by dividing the
net income (loss) for the period by the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per share is computed
by dividing the net income (loss) available to common stockholders for the
period by the weighted average number of common and potential dilutive shares
outstanding during the period, to the extent such potential dilutive shares are
dilutive. Potential dilutive shares are composed of incremental common shares
issuable upon the exercise of stock options and warrants.  Anti-dilutive shares
in the amounts of 1.4 million and 5.0 million were excluded from the dilutive
shares outstanding for the three months ended June 30, 2003 and 2004,
respectively.  Anti-dilutive shares in the amounts of 2.6 million and 12.4
million were excluded from the dilutive shares outstanding for the six months
ended June 30, 2003 and 2004, respectively.

The following table sets forth the computation of diluted
net income (loss) per share for the periods indicated (in thousands, except per
share amounts):

`Three Months Ended        Six Months Ended
                                                            June 30,                  June 30,
                                                       2003         2004         2003         2004
                                                    -----------  -----------  -----------  -----------
                                                        (In Thousands)            (In Thousands)
                                                          (restated)                (restated)
  Numerator:
    Net income (loss)............................. $     7,485  $       190  $    14,082  $      (920)
                                                    ===========  ===========  ===========  ===========
  Denominator:
    Weighted average shares, basic................      60,177       62,915       59,888       62,620
    Effect of potentially dilutive securities:
      Warrants....................................         767          530          669           --
      Employee stock option plan..................       5,764        2,339        4,745           --
                                                    -----------  -----------  -----------  -----------
    Weighted average number of shares
      assuming dilution...........................      66,708       65,784       65,302       62,620
                                                    ===========  ===========  ===========  ===========

  Diluted net income (loss) per share............. $      0.11  $      0.00  $      0.22  $     (0.01)
                                                    ===========  ===========  ===========  ===========`

Comprehensive Income

The Company adopted SFAS No. 130, Reporting
Comprehensive Income, during 1998. The Company classifies items of "other
comprehensive income" by their nature in the financial statements and displays
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of the balance
sheet. To date, the Company has not had any transactions that are required to be
reported in other comprehensive income.

Recent Accounting Pronouncements

In January 2003, the FASB issued FIN 46,
"Consolidation of Variable Interest Entities -- an interpretation of ARB
No. 51" ("FIN 46").  The objective of this Interpretation is not
to restrict the use of variable interest entities but to improve financial
reporting by enterprises involved with variable interest entities.  FIN 46
states that a business enterprise with a controlling financial interest in a
variable interest entity should include the assets, liabilities, and results of
the activities of the variable interest entity in consolidated financial
statements with those of the business enterprise. FIN 46 applied immediately to
variable interest entities created after January 31, 2003, and to variable
interest entities in which an enterprise obtains an interest after that date. It
applies in the first fiscal year or interim period beginning after December 15,
2003, to variable interest entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003. The adoption of this
interpretation has had no effect on the Company's financial statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment
of Statement 133 on Derivative Instruments and Hedging Activities"
("SFAS No. 149").  SFAS No. 149 amends and clarifies financial
accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities under FASB Statement No. 133, Accounting
for Derivative Instruments and Hedging Activities.  This Statement requires that
contracts with comparable characteristics be accounted for consistently as
either derivatives or hybrid instruments. This Statement is effective for
contracts entered into or modified after June 30, 2003, and for hedging
relationships designated after June 30, 2003.  The adoption of this statement
has had no effect on the Company's financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting
for Certain Financial Instruments with Characteristics of Both Liabilities and
Equity".  SFAS No. 150 changes the accounting for certain financial
instruments that under previous guidance issuers could account for as
equity.  It requires that those instruments be classified as liabilities in
balance sheets.  The guidance in SFAS No. 150 is generally effective for
all financial instruments entered into or modified after May 31, 2003, and
otherwise is effective on July 1, 2003.  The adoption of this statement has
had no effect on the Company's financial statements.

In March 2004, Securities and Exchange Commission ("SEC")
Staff Accounting Bulletin No. 105 was issued, which provides guidance regarding
loan commitments that are accounted for as derivative instruments under FASB No.
133 (as amended), "Accounting for Derivative Instruments and Hedging
Activities". In this Bulletin, the SEC ruled that the amount of the
expected servicing rights should not be included when determining the fair value
of derivative interest rate lock commitments. This guidance must be applied to
rate locks initiated after March 31, 2004.  Our previous method used to estimate
the fair value of interest rate lock commitments is consistent with SAB No. 105;
therefore, SAB No. 105 has had no impact on the Company's financial condition or
results of operations.

4.	STOCK-BASED COMPENSATION

The Company accounts for stock-based employee
compensation arrangements in accordance with the provisions of Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees and related interpretations, and complies with the disclosure
requirements of SFAS No. 123, Accounting for Stock-Based Compensation, as
amended by SFAS No. 148, Accounting For Stock-Based Compensation --
Transition And Disclosure -- An Amendment Of SFAS No. 123.  Under APB No.
25, compensation expense is based on the excess of the estimated fair value of
the Company's stock over the exercise price, if any, on the date of grant.
Deferred stock-based compensation is then amortized over the vesting period of
the option on an accelerated basis using the multiple option approach as defined
in paragraph 24 of FIN 28. The Company accounts for stock issued to
non-employees in accordance with the provisions of SFAS No. 123 and the Emerging
Issues Task Force Consensus in Issue No. 96-18, Accounting for Equity
Instruments That Are Issued to Non-Employees for Acquiring, or in Conjunction
with Selling, Goods or Services.

The following pro forma net income (loss) information has
been prepared as if the Company had followed the provisions of SFAS No. 123 (in
thousands, except per share amounts):

`Three Months Ended        Six Months Ended
                                                               June 30,                  June 30,
                                                          2003         2004         2003         2004
                                                       -----------  -----------  -----------  -----------
                                                            (In Thousands)            (In Thousands)
                                                              (restated)                (restated)
Reported net income (loss)........................... $     7,485  $       190  $    14,082  $      (920)
Add: Employee stock compensation expense included
  in reported net income (loss), net of taxes........          --           --           --          636
Less: Employee stock based compensation expense
  determined under fair value based method for all
  employee stock option awards, net of tax...........        (760)        (713)      (1,471)      (1,274)
                                                       -----------  -----------  -----------  -----------
Pro forma net income (loss).......................... $     6,725  $      (523) $    12,611  $    (1,558)
                                                       ===========  ===========  ===========  ===========

Reported basic net income (loss) per share........... $      0.12  $      0.00  $      0.24  $     (0.01)
Reported diluted net income (loss) per share......... $      0.11  $      0.00  $      0.22  $     (0.01)

Pro-forma basic net income (loss) per share.......... $      0.11  $     (0.01) $      0.21  $     (0.02)
Pro-forma diluted net income (loss) per share........ $      0.10  $     (0.01) $      0.19  $     (0.02)

Risk free interest rate - stock options..............         2.8%         3.2%         2.9%         2.6%
Risk free interest rate - ESPP.......................         2.4%         2.1%         2.4%         2.1%
Average expected life - stock options................         3.2          3.2          3.2          3.1
Average expected life - ESPP.........................         2.0          2.0          2.0          2.0
Dividend yield.......................................          --           --           --           --
Expected volatility - stock options..................        61.1%        55.3%        60.2%        62.1%
Expected volatility - ESPP...........................        87.2%        76.6%        87.2%        76.6%`

5.	LOANS HELD-FOR-SALE

The inventory of mortgage and home equity loans consists
primarily of first and second trust deed mortgage loans and home equity lines of
credit on residential properties located throughout the United States. All
mortgage and home equity loans held-for-sale are pledged as collateral for
borrowings at December 31, 2003 and June 30, 2004 (see Note 9).

The inventory of auto loans consists primarily of loans
against new and used automobiles located throughout the United States.  All of
the auto loans held-for-sale are pledged as collateral for borrowings at
December 31, 2003 and June 30, 2004 (see Note 9).  The following summarizes
loans held-for-sale at December 31, 2003 and June 30, 2004 (in thousands):

`December 31,  June 30,
                                                          2003         2004
                                                       -----------  -----------
Mortgage............................................. $    32,811  $    14,785
Home equity..........................................      13,803        6,698
Auto.................................................       4,158        3,802
Net deferred origination revenue.....................         102           43
                                                       -----------  -----------
                                                      $    50,874  $    25,328
                                                       ===========  ===========`

Included in loans held-for-sale is a SFAS 133 basis
adjustment amount of $0.1 million and $0 million at December 31, 2003 and June
30, 2004, respectively. The basis adjustment amount represents the change in
fair value from rate lock commitment date to funding of those loans
held-for-sale.  The total fair value of loans held-for-sale, including the expected
embedded gain on those loans, is $51.8 million and $25.9 million at December 31,
2003 and June 30, 2004, respectively.

6. 	ACCOUNTS RECEIVABLE, PREPAIDS AND OTHER ASSETS

The following summarizes accounts receivable, prepaids
and other assets at December 31, 2003 and June 30, 2004 (in thousands):

`December 31,  June 30,
                                                          2003         2004
                                                       -----------  -----------
                                                             (restated)
Prepaids............................................. $     4,574  $     2,181
Accounts receivable..................................      21,936       17,019
Interest receivable..................................       1,541        1,099
Other assets.........................................         239          800
                                                       -----------  -----------
                                                      $    28,290  $    21,099
                                                       ===========  ===========`

Included in prepaids at December 31, 2003 and
June 30, 2004 are prepayments for advertising in the amounts of $2.3 million and
$0.7 million, respectively. Included in accounts receivable is the receivable
due to the Company from sales of mortgage loans on its sale agreement with
Greenwich Capital Financial Products, Inc. ("Greenwich Capital") in
the amounts of $16.2 million and $10.0 million at December 31, 2003 and June 30,
2004, respectively (see Note 9).  Included in other assets is an amount related
to the fair value of SFAS 133 derivatives of $0.1 million and $0.8 million at
December 31, 2003 and June 30, 2004, respectively.

7.	RETAINED INTERESTS IN AUTO LOANS

In June 2002, the Company created a qualified special
purpose entity, E-LOAN Auto Fund One, LLC ("E-LOAN Auto"), which purchases prime
auto loans from the Company and then holds the loans.  For the six months ended
June 30, 2003 and 2004, the Company sold $238.6 million and $245.3 million in
auto loans to E-LOAN Auto and recognized $3.4 million and $4.1 million in gain
on sale.  In exchange for the loans sold, the Company received cash of $237.4
million and $244.0 million from E-LOAN Auto and recorded a retained interest
valued at $9.0 million and $14.1 million in the loans sold to E-LOAN Auto. From
inception through June 30, 2004, the Company has sold $934.5 million in auto
loans to E-LOAN Auto and recognized $14.2 million in gain on sale. For the three
months ended June 30, 2004, the average loan characteristics on auto loans sold
to E-LOAN Auto were $16,300 loan size, 723 credit score, 19% new versus used
car, and an average APR of 5.84%.  The retained interest represents the
Company's portion of the net present value of the expected excess cash flows
over the life of the loans, remaining after payment of interest, servicing fees
and credit losses. Included in the retained interest is a contributed basis in
the loans sold to E-LOAN Auto of 0.5%. The contributed basis is the difference
between the loan amount and the cash sale proceeds received from E-LOAN Auto of
99.5% (of the unpaid principal balance), which represents over collateralization
in those loans. Cash flows are to be distributed by E-LOAN Auto in the following
manner: first to the hedge counterparty, second to the servicer, custodian and
administrator, third to the lender for interest expense, fourth to the lender
for principal payments, fifth to the Company and the lender any remaining cash
flows, to be distributed in accordance with the agreement.  The servicing fee is
passed through to a sub-servicer of the Company, and as such the Company does
not capitalize a servicing asset for the loans sold to E-LOAN Auto, since the
cost to sub-service equals the servicing fee.

The following table provides a summary of activity in the
retained interests in auto loans:



|                                               | 2003         | 2004         
|---------------------------------------------- | ------------ | -------------
|Beginning Balance January 1,                   | $      3,969 | $      11,658
|Contributed basis in loans sold to E-LOAN
Auto | 1,193        | 1,226        
|Non-cash gain on sale                          | 3,389        | 4,081        
|Accretion of present value discount            | 448          | 711          
|Excess cash flows received                     | -            | (3,398)      
|Fair value adjustment                          | -            | (139)        
|Ending Balance June 30,                        | $     8,999  | $ 14,139     

At June 30, 2004, key valuation assumptions used to value the
retained interests and the sensitivity of those assumptions to immediate 10% and
25% adverse changes in those assumptions are as follows:

|                                                                 | June 30, 2004
(in thousands)
|---------------------------------------------------------------- | ----------------------------
|Balance sheet carrying value of retained
interests - fair value  | $14,139                     
|Weighted-average life (in months)                                | 49.9                        
|Weighted Average Prepayment speed assumptions
(ABS)              | 1.37                        
|Impact on fair value of 10% adverse change
(1.50)                | ($429)                      
|Impact on fair value of 25% adverse change
(1.71)                | ($1,093)                    
|Weighted Average Expected credit losses (life of
loan loss rate) | 67 bps                      
|Impact on fair value of 10% adverse change
(74 bps)              | ($453)                      
|Impact on fair value of 25% adverse change
(84 bps)              | ($1,141)                    
|Residual cash flows discount rate (average
annual rate)          | 12.0%                       
|Impact on fair value of 10% adverse change
(13.2%)               | ($200)                      
|Impact on fair value of 25% adverse change
(15.0%)               | ($490)                      

These sensitivities are hypothetical and should be used with
caution.  As the figures indicate, changes in fair value of the retained
interests based on a variation in assumptions generally cannot be extrapolated
because the relationship of the change in assumption to the change in fair value
may not be linear.  Also in the above table, the effect of a variation in a
particular assumption on the fair value of the retained interest is calculated
without changing any other assumption; in reality, changes in one factor may
result in changes in another (for example, increases in market interest rates
may result in lower prepayments but increased credit losses), which might
magnify or counteract the sensitivities.

The discount rate was determined by assessing the risk
related to the asset to account for the present value of the cash flows to be
received over the life of the loans. As a result, the retained interest asset is
an interest earning asset, with interest income accreted over time at the
discount rate and included in Auto Revenues.  The weighted average loss rate is
based on actual loss experience to date from the seasoned portions of the
portfolio.  The prepayment speed projects prepayments on a monthly percentage of
the original loan balance. All assumptions are monitored over time and are
adjusted to reflect actual performance.

8.	NOTES PAYABLE

On June 30, 2003, the Company obtained a $5 million line
of credit from Wells Fargo Bank, National Association to support working capital
needs.  The interest rate charged on borrowings against these funds is based on
LIBOR plus 2% and is payable monthly.  The line of credit was originally
scheduled to expire on June 30, 2004. However, on December 11, 2003, the
agreement was amended to reduce the line of credit to $2,350,000 and extend the
expiration date to June 30, 2005. As part of the amendment, the Company was
required to provide restricted cash as collateral for this line of credit (see
Note 3). Currently, the line of credit is being utilized to support letters of
credit related to the Pleasanton, California facility as well as a letter of
credit related to the Company's surety bonds. The Company was in compliance with
all debt covenants for this agreement during the three months ended and at June
30, 2004. No balance was outstanding on this line as of June 30, 2004.

9.	WAREHOUSE AND OTHER LINES PAYABLE

The Company has a warehouse line of credit for borrowings
of up to $75 million for the interim financing of mortgage loans with GMAC
Mortgage Corporation. The interest rate charged on borrowings against these
funds is variable based on LIBOR plus various percentage points. This warehouse
line requires the Company to pay GMAC a non-use fee when the average outstanding
principal amount of borrowings is less than 50% of the total commitment at a
rate of 0.25% per annum on the daily average unutilized commitment.  Borrowings
are collateralized by the related mortgage loans held-for-sale.  This warehouse
line of credit agreement generally requires the Company to comply with various
financial and non-financial covenants.  In particular, the Company must maintain
a minimum cash balance of $15.0 million. The Company was in compliance with
these covenants during the three and six months ended and at June 30, 2004. The
committed line of credit expires on March 31, 2005.

The Company has an agreement to finance up to $400 million of
mortgage loan inventory pending sale of these loans to the ultimate mortgage
loan  purchasers with Greenwich Capital.   Of this amount, $200 million is
available in committed funds. This loan inventory financing is secured by the
related mortgage loans. The interest rate charged on borrowings against these
funds is based on LIBOR plus various percentage points. As part of this
agreement the Company had to pay a commitment fee of $1.0 million for the period
March 31, 2003 through March 30, 2004.  The commitment fee was reduced to
$750,000 for the period March 15, 2004 through March 14, 2005.  This agreement
includes various financial and non-financial covenants. In particular, the
Company must maintain a minimum cash and cash equivalents balance of $15
million. Prior to an amendment in March 2004, the Company was required to
maintain a restriction of $2.5 million in cash as additional collateral.
Subsequent to the amendment, there is no restriction on cash related to this
facility.  The Company was in compliance with these covenants during the three
and six months ended and at June 30, 2004. The line will expire on March 14,
2005.

In addition, the Company has a mortgage loan purchase and
sale agreement with Greenwich Capital. Under the terms of this agreement,
mortgage loans which are allocated to a mandatory sell forward commitment
between the Company and a loan purchaser, but have not yet been settled, may be
sold to Greenwich Capital subject to the accompanying trade assignment.  Revenue
derived from sales under this agreement is included as a receivable on the
balance sheet until the transaction is settled (see Note 6). The balance of
loans sold related to these receivables was $305.1 million and $263.1 million as
of December 31, 2003 and June 30, 2004, respectively.

The Company has a $10 million line of credit facility with
Merrill Lynch Mortgage Capital, Inc. to support the interim funding of auto
loans prior to their sale to the ultimate auto loan purchaser.  The interest
rate charged on this line is based on LIBOR plus various percentage points.
This facility requires the Company to pay an unused line fee equal to 0.50% per
year on the average daily unused line balance.  This facility expires on July
13, 2005. This line includes various financial and non-financial covenants. The
Company was in compliance with the various covenants during the three and six
months ended and at June 30, 2004.

The Company has an uncommitted warehouse line of credit
agreement for borrowings of up to $150 million for the interim financing of
mortgage loans with Merrill Lynch Mortgage Capital, Inc. This warehouse line is
scheduled to decrease to $100 million on August 18, 2004. The interest rate
charged on borrowings against these funds is variable based on LIBOR plus
various percentage points. Borrowings are collateralized by the related mortgage
loans held-for-sale. The uncommitted warehouse line of credit expires on
February 4, 2005.  This line of credit agreement generally requires the Company
to comply with various financial and non-financial covenants. In particular, the
Company must maintain a minimum unrestricted cash balance of $12.5 million.
Failure to comply with these, or any other covenants, could result in the
obligation to repay all amounts then outstanding.  The Company was in compliance
with these covenants during the period ended and at June 30, 2004.

The following summarizes warehouse and other lines payable at
December 31, 2003 and June 30, 2004 (in  thousands):

`December 31,  June 30,
                                                          2003         2004
                                                       -----------  -----------
Warehouse lines - GMAC............................... $     8,066  $     5,639
Warehouse lines - Greenwich..........................      31,462        8,203
Warehouse lines - Merrill (Mortgage).................          --        3,279
Line of credit - Merrill (Auto)......................       4,755        5,299
                                                       -----------  -----------
                                                      $    44,283  $    22,420
                                                       ===========  ===========`

10.	ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER
LIABILITIES

The following summarizes accounts payable, accrued
expenses and other liabilities at December 31, 2003 and June 30, 2004 (in
thousands):

`December 31,  June 30,
                                                          2003         2004
                                                       -----------  -----------
                                                              (restated)
Accounts payable..................................... $     4,614  $     7,546
Accrued compensation.................................       1,987        2,619
Income tax payable...................................        (579)        (587)
Other liabilities....................................       3,795        6,362
Reserves.............................................       2,386        2,307
Interest payable.....................................         347          226
                                                       -----------  -----------
                                                      $    12,550  $    18,473
                                                       ===========  ===========`

Certain amounts in the above table have been reclassified and/or restated as discussed in Note 14.

Included in other liabilities is an amount related to the fair
value of SFAS 133 derivatives of $0.9 and $1.2 million at December 31, 2003 and
June 30, 2004, respectively.

Included in the accounts payable, accrued expenses and other
liabilities is an amount related to reserves the Company established for
representation and warranties and premium repayment liability.  The Company
sells loans to loan purchasers on a servicing released basis subject to certain
representations and warranties from the Company to the purchaser.  As such, the
risk of loss or default by the borrower has generally been assumed by these
purchasers. However, the Company is generally required by these purchasers to
make certain representations relating to borrower creditworthiness, loan
documentation and collateral. To the extent that the Company does not comply
with such representations, or there are early payment defaults, the Company may
be required to repurchase loans or indemnify these purchasers for any losses
from borrower defaults.  In connection with a majority of its loan sale
agreements, the Company is also responsible for ensuring that the borrower makes
a minimum number of payments to be made on each loan, or else the Company may be
required to refund the premium paid to it by the loan purchaser.  As such, the
Company records reserves based on certain assumptions in anticipation of future
losses as a result of current sales activity.

Loss reserves due to violations of representations and
warranties are recorded based on a percentage of current month sales.  The
Company currently calculates this loss rate exposure based on its historical
loss rates as well as similar lending portfolios.  Once the Company has endured
a complete economic cycle, the rate will be adjusted based on actual losses as a
percentage of origination volume on a historical basis.  Premium repayment
reserves, generated through early loan prepayments related to loans sold to loan
purchasers, are recorded based on a rate determined by calculating actual
prepayments as a percentage of sales on a historical basis applied to current
month sales.  The following illustrates the changes in the reserve balance for
the three months ended June 30, 2004 by product (in thousands):

`Home
                                                        Mortgage      Equity        Auto         Total
                                                       -----------  -----------  -----------  -----------
Balance at 1/1/04.................................... $     1,309  $       966  $       111  $     2,386
   Increase to reserve...............................         162          325           18          505
   Losses incurred...................................        (316)        (355)         (20)        (691)
                                                       -----------  -----------  -----------  -----------
Balance at 03/31/04...................................$     1,155  $       936  $       109  $     2,200
   Increase to reserve.................................       215          311           --          526
   Losses incurred.....................................      (286)        (145)          12         (419)
                                                       -----------  -----------  -----------  -----------
Balance at 06/30/04.................................. $     1,084  $     1,102  $       121  $     2,307
                                                       ===========  ===========  ===========  ===========`

11.	REVENUES AND OTHER INCOME, NET

The following table provides the components of revenues
(in thousands):

`Three Months Ended        Six Months Ended
                                                               June 30,                  June 30,
                                                          2003         2004         2003         2004
                                                       -----------  -----------  -----------  -----------
                                                              (restated)                (restated)
Revenues:
   Mortgage.......................................... $    31,039  $    17,089  $    55,312  $    32,597
   Interest income on mortgage loans.................       4,758        2,428        9,180        3,687
   Home equity.......................................       5,398        8,738        9,449       18,293
   Interest income on home equity loans..............         608          944          931        1,424
   Auto..............................................       3,035        2,921        5,920        5,983
   Closing services..................................          --          984           --        1,435
   Other.............................................         393          295          648          611
                                                       -----------  -----------  -----------  -----------
         Total revenues.............................. $    45,231  $    33,399  $    81,440  $    64,030
                                                       ===========  ===========  ===========  ===========`

Certain amounts in the above table have been reclassified and/or restated as discussed in Note 14.

The following table provides the components of other income,
net (in thousands):

`Three Months Ended        Six Months Ended
                                                               June 30,                  June 30,
                                                          2003         2004         2003         2004
                                                       -----------  -----------  -----------  -----------
Interest income on short-term investments............ $        70  $        22  $       102  $        45
Interest expense on non-warehouse
   facility borrowings...............................          (7)          (7)          (7)         (15)
Other................................................           5           (5)           5           (5)
                                                       -----------  -----------  -----------  -----------
                                                      $        68  $        10  $       100  $        25
                                                       ===========  ===========  ===========  ===========`

12.	OPERATING EXPENSES

The following table provides the components of operating
expenses (in thousands):

`Three Months Ended        Six Months Ended
                                                               June 30,                  June 30,
                                                          2003         2004         2003         2004
                                                       -----------  -----------  -----------  -----------
                                                              (restated)                (restated)
Compensation and benefits............................ $    16,336  $    13,248  $    29,015  $    27,311
Processing costs.....................................       3,091        3,235        5,890        6,037
Advertising and marketing............................      10,172       11,334       17,436       21,270
Occupancy and administration.........................       4,252        3,942        7,760        7,985
Interest expense on warehouse borrowings.............       2,955        1,460        5,520        2,372
                                                       -----------  -----------  -----------  -----------
         Total operating expenses.................... $    36,806  $    33,219  $    65,621  $    64,975
                                                       ===========  ===========  ===========  ===========`

Certain amounts in the above table have been reclassified and/or restated as discussed in Note 14.

Commissions and bonus compensation comprised 31% and 25% of
total compensation and benefits in the three months ended June 30, 2003 and
2004.  Net occupancy costs comprised 13% and 24% of total occupancy and
administration in the three months ended June 30, 2003 and 2004, respectively.
Commissions and bonus compensation comprised 28% and 22% of total compensation
and benefits in the six months ended June 30, 2003 and 2004.  Net occupancy
costs comprised 16% and 22% of total occupancy and administration in the six
months ended June 30, 2003 and 2004, respectively.  Included in compensation and
benefits for the six months ended June 30, 2004 is a charge related to the
resignation of the Company's prior President and Chief Operating Officer of
approximately $1.0 million. Certain amounts have been reclassified and/or restated as discussed in Note 14.

The following table provides detail of the operations component of total
operating expenses classified by the following revenue-related categories (in
thousands):

`Three Months Ended        Six Months Ended
                                                               June 30,                  June 30,
                                                          2003         2004         2003         2004
                                                       -----------  -----------  -----------  -----------
                                                              (restated)                (restated)
Mortgage ............................................ $    10,250  $     6,877  $    18,436  $    13,525
Interest expense on mortgage loans...................       2,314        1,004        4,492        1,606
Home equity..........................................       3,254        5,247        6,336       10,317
Interest expense on home equity loans................         473          435          693          718
Auto.................................................       3,702        1,836        6,485        3,670
Closing services.......................................        --          865           --        1,370
                                                       -----------  -----------  -----------  -----------
Total operations..................................... $    19,993  $    16,264  $    36,442  $    31,206
                                                       ===========  ===========  ===========  ===========`

Certain amounts in the above table have been reclassified and/or restated as discussed in Note 14.

13.	COMMITMENTS AND CONTINGENCIES

Loan commitments and hedging activities

The Company originates mortgage loans and sells them
primarily through whole loan sales. The market values of mortgage loans are
sensitive to changes in market interest rates and product demand. If interest
rates rise between the time the Company enters into a rate lock with the
borrower, the subsequent funding of the loan and the time the mortgage loans are
committed for sale, there may be a decline in the market value of the mortgage
loans. To protect against such possible declines, the Company has adopted an
appropriate economic hedging strategy.

Individual mortgage loan risks are aggregated by loan type
and pipeline production status and matched, based on estimated duration, with
the appropriate hedging instrument, thus

The Company believes that it has implemented a cost-effective
economic hedging program to provide a high level of protection against
subsequent changes in the market value of rate-lock commitments. However, an
effective hedging strategy is complex and no hedging strategy can completely
insulate the Company against such changes.

At June 30, 2004, the Company had extended locks to originate
mortgage and home equity loans amounting to approximately $284.4 million (the
"locked pipeline").  At June 30, 2004, the Company had entered into best efforts
forward loan sale agreements amounting to approximately $63.7 million. These
forward loan sale agreements do not subject the Company to mandatory delivery
and there is no penalty if the Company does not deliver into the commitment. The
Company is exposed to counterparty risk, however, it is the Company's policy and
practice to use well-established U.S. financial institutions to mitigate that
risk; the Company does not require collateral to support these commitments, and
there has been no failure on the part of the counterparties to meet the terms of
these agreements to date.

At June 30, 2004, the Company had entered into mandatory sell
forward commitments amounting to approximately $113.7 million. The Company
adjusts the amount of mandatory sell forward commitments held to offset changes
in the locked pipeline and changes in the market value of unsold loans.  At June
30, 2004, the Company had entered into $10.7 million of commitments with  loan
purchasers to deliver loans related to funded loans held-for-sale.

The Company issues auto loan approvals on its prime loan
production. Approved auto loan applicants are provided a guaranteed rate for up
to a 45 day period. At June 30, 2004, the Company had entered into amortizing
swap contracts in the amount of $22.6 million, as an economic hedge of
anticipated funded loans from auto loan approvals.

Future Commitments

The Company has future payment commitments for
operating leases and non-cancelable TV media aggregating $6.0 million, $2.7
million, $2.7 million and $2.7 million for the years 2004, 2005, 2006 and 2007,
respectively. The Company has total commitments of $6.6 million for the years
2008 and beyond.

The Company has an available line of credit in the amount
$2,350,000.  The Company is required to provide restricted cash as collateral
for this line of credit (see Note 3). Currently, the line of credit is being
utilized to support letters of credit related to the new Pleasanton, California
facility as well as a letter of credit related to the Company's surety
bonds.

14.	RESTATEMENT

On November 3, 2004, the management of the Company
determined that its previously issued financial statements included in its
Annual Report on Form 10-K for the fiscal year ended December 31, 2003, and in
its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004 and
June 30, 2004 should be restated to correct the accounting error described
below.

On June 17, 1999, the Company entered into a Mortgage Loan
Purchase and Sale Agreement with Greenwich Capital Financial Products, Inc.
("Greenwich"), see Note 9.  Under the terms of this agreement, mortgage and home
equity loans that are allocated to a mandatory sell forward commitment between
the Company and a loan purchaser, but have not yet been settled, may be sold to
Greenwich with the accompanying trade assignment.  The Company accounts for
these transfers as sales, in accordance with Statement of Financial Accounting
Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities" (FAS 140).

The Company's historical practice has been to continue to
recognize interest income and interest expense on loans sold under its agreement
with Greenwich in the period from the time of sale until the time of settlement
with the committed loan purchaser.  As part of the Company's review and
preparation of its financial statements for the quarter ended September 30,
2004, the Company determined that this interest income and interest expense
should have been included in the calculation of the gain on loans sold rather
than to be recognized as additional interest income and interest expense in the
period subsequent to the sale of the loans.  The cumulative impact of this
restatement during 2003 and the first six months of 2004 was an understatement
of income of $615,000.

During the course of its review, the Company determined that
additional adjustments to previously reported results were required. These
additional adjustments related to the Company's accounting for the
mark-to-market of forward commitments associated with its adjustable rate mortgage
("ARM") production in accordance with Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative and Hedging
Activities". The Company improperly included amounts in the mark-to-market
calculation for ARM forward commitments on sold loans.
While the adjustment resulted in
decreases to revenue and income in the first and second quarter of 2003, it
resulted in an equal and off-setting increase to revenue and income in the third
quarter of 2003, with no net impact on the total 2003 revenue or income
amounts. There was no impact to the three and six months ended June 30, 2004.

The Company also adjusted for leasehold improvement
allowances provided by the landlord on the Pleasanton, California facility, in
accordance with the terms of the lease on that facility. The Company had
previously recorded those amounts as a reduction of leasehold improvements, as
opposed to deferred rent, and ultimately a reduction of rent expense over the
period of the lease. The adjustment resulted in a $1,000 increase to net income
for the quarter ended June 30, 2004. There was no impact to the three and six months ended June 30, 2003.

The Company increased its deferred tax asset valuation allowance in 2003 by $700,000. The
restatement resulted from the Company's determination that effective in the third quarter of 2003, it was no
longer more likely than not that such deferred tax asset was realizable in future periods. The adjustment
increased income tax expense and decreased other assets in the third quarter of 2003.

Finally, the Company has elected to present an unclassified balance sheet by eliminating the
classification of current assets and current liabilities. Such presentation is in
accordance with the Illustrative Financial Statements for Mortgage Companies issued by the
AICPA released on February 16, 2004. The change was made to conform to
the financial statements presentation of other financial services companies and to
enhance financial statements comparability with peers. The prior year financial statements
were reclassified to conform to the current period presentation.

These Condensed Consolidated Financial Statements have been
restated to reflect the above adjustments.  These amended financial statements
also include amendments to related disclosures for the three and six months
ended June 30, 2003 and 2004.  In addition, the Company has restated its
financial statements for the year ended December 31, 2003, and the quarter ended
March 31, 2004 that include amendments to related disclosures for the periods
covered by those reports.

The following schedule sets forth the error and the corrected
amounts (in thousands, except per share amounts):

`Three Months Ended      Six Months Ended
                                                                            --------------------   --------------------
                                                                            June 30,   June 30,    June 30,   June 30,
                                                                              2003       2004        2003       2004
                                                                            ---------  ---------   ---------  ---------
Net Income (Loss) as previously reported.................................. $   8,078  $     270   $  14,409  $    (850)
Restatement adjustments
  Restatement effects from Greenwich adjustment (pre-tax):
    Increase in Revenues, Mortgage........................................       259      1,083         796      2,055
    Increase in Revenues, Home Equity.....................................        64        410         176        715
    Decrease in Revenues, Interest Income on Mortgage Loans...............      (394)    (2,035)       (836)    (3,712)
    Decrease in Revenues, Interest Income on Home Equity Loans............       (75)      (710)       (176)    (1,703)
    Decrease in Operating Expenses, Interest Expense on Mortgage Loans....       191        843         411      1,645
    Decrease in Operating Expenses, Interest Expense on Home Equity Loans.        58        328         126        913
  Restatement effects from SFAS 133 adjustment (pre-tax):
    Decrease in Revenues, Mortgage........................................      (725)         0        (840)         0
  Restatement effect from leasehold improvement adjustment:
    Decrease in General and Administrative Expenses.......................         0          1           0         17
                                                                            ---------  ---------   ---------  ---------
      Total restatement adjustments (pre-tax).............................      (622)       (80)       (343)       (70)
  Tax effect of restatement adjustments ..................................        29          0          16          0
                                                                            ---------  ---------   ---------  ---------
      Total net restatement adjustments ..................................      (593)       (80)       (327)       (70)
                                                                            ---------  ---------   ---------  ---------
Net Income (Loss) after reclassification and restatement ................. $   7,485  $     190   $  14,082  $    (920)
                                                                            =========  =========   =========  =========`

The consolidated balance sheets as of December 31, 2003 and June 30, 2004
included in this Form 10-Q/A have been restated to include the effects of the
adjustments as follows (in thousands):

`Three Months Ended June 30,
                                                   ------------------------------------------
                                                      As                    As
                                                   Previously    As      Previously    As
                                                   Reported   Restated   Reported   Restated
                                                     2003       2003       2004       2004
                                                   ---------  ---------  ---------  ---------
ASSETS
Cash and cash equivalents                         $  33,973  $  33,973  $  45,989  $  45,989
Loans held-for-sale                                  50,874     50,874     25,328     25,328
Accounts receivable, prepaids and
   other assets                                      28,287     28,290     21,183     21,099
Fixed assets, net                                    11,484     13,652     12,775     16,966
Retained interests in auto loan-trading              11,658     11,658     14,139     14,139
Total assets                                      $ 136,276  $ 138,447  $ 119,414  $ 123,521

LIABILITIES AND STOCKHOLDERS' EQUITY
Warehouse and other lines payable                 $  44,283  $  44,283  $  22,420  $  22,420
Accounts payable, accrued expenses and               10,366     12,550     14,283     18,473
   other  liabilities
Total liabilities                                    54,649     56,833     36,703     40,893
Stockholders' equity:
Common stock                                             62         62         63         63
Additional paid-in capital                          265,144    265,144    267,077    267,077
Accumulated deficit                                (183,579)  (183,592)  (184,429)  (184,512)
Total stockholders' equity                           81,627     81,614     82,711     82,628
Total liabilities and stockholders' equity        $ 136,276  $ 138,447  $ 119,414  $ 123,521`

The adjustments addressed above resulted in changes to
certain components of net cash provided by operating activities included in the
consolidated statement of cash flows, but did not change net cash used in
financing activities or cash and cash equivalents at December 31, 2003 or June
30, 2004.

The consolidated statement of operations for the three and six months ended June 30, 2003 and 2004 included in this
Form 10-Q/A have been restated to include the effects of the adjustments as follows:

`Three Months Ended June 30,
                                         --------------------------------------------
                                             As                     As
                                         Previously     As      Previously     As
                                          Reported   Restated    Reported   Restated
                                            2003       2003        2004       2004
                                         ----------  ---------  ----------  ---------
Revenues                                $   46,102  $  45,231  $   34,651  $  33,399

Operating expenses:
    Operations.........................     20,243     19,993      17,435     16,264
    Sales and marketing................     11,433     11,433      12,506     12,506
    Technology.........................      2,479      2,479       2,091      2,091
    General and administrative.........      2,901      2,901       2,359      2,358
                                         ----------  ---------  ----------  ---------
           Total operating expenses....     37,056     36,806      34,391     33,219
                                         ----------  ---------  ----------  ---------
Income from operations.................      9,046      8,425         260        180
Other income, net......................         68         68          10         10
                                         ----------  ---------  ----------  ---------
Income before taxes....................      9,114      8,493         270        190
Income taxes...........................     (1,038)    (1,008)         --         --
                                         ----------  ---------  ----------  ---------
Net income............................. $    8,076  $   7,485  $      270  $     190
                                         ==========  =========  ==========  =========
Net income per share:
    Basic.............................. $     0.13  $    0.12  $     0.00  $    0.00
                                         ==========  =========  ==========  =========
    Diluted............................ $     0.12  $    0.11  $     0.00  $    0.00
                                         ==========  =========  ==========  =========

    Weighted-average shares - basic....     60,177     60,177      62,915     62,915
                                         ==========  =========  ==========  =========
    Weighted-average shares - diluted..     66,708     66,708      65,784     65,784
                                         ==========  =========  ==========  =========


                                                  Six Months Ended June 30,
                                         --------------------------------------------
                                             As                     As
                                         Previously     As      Previously     As
                                          Reported   Restated    Reported   Restated
                                            2003       2003        2004       2004
                                         ----------  ---------  ----------  ---------
Revenues                                $   82,320  $  81,440  $   66,675  $  64,030

Operating expenses:
    Operations.........................     36,982     36,442      33,764     31,206
    Sales and marketing................     19,925     19,925      23,638     23,638
    Technology.........................      4,354      4,355       4,257      4,257
    General and administrative.........      4,898      4,899       5,891      5,874
                                         ----------  ---------  ----------  ---------
           Total operating expenses....     66,159     65,621      67,550     64,975
                                         ----------  ---------  ----------  ---------
Income from operations.................     16,161     15,819        (875)      (945)
Other income, net......................        100        100          25         25
                                         ----------  ---------  ----------  ---------
Income before taxes....................     16,261     15,919        (850)      (920)
Income taxes...........................     (1,853)    (1,837)         --         --
                                         ----------  ---------  ----------  ---------
Net income............................. $   14,408  $  14,082  $     (850) $    (920)
                                         ==========  =========  ==========  =========
Net income per share:
    Basic.............................. $     0.24  $    0.24  $    (0.01) $   (0.01)
                                         ==========  =========  ==========  =========
    Diluted............................ $     0.22  $    0.22  $    (0.01) $   (0.01)
                                         ==========  =========  ==========  =========

    Weighted-average shares - basic....     59,888     59,888      62,620     62,620
                                         ==========  =========  ==========  =========
    Weighted-average shares - diluted..     65,302     65,302      62,620     62,620
                                         ==========  =========  ==========  =========`

The adjustments to the consolidated statements of cash flows
for the six months ended June 30, 2003 and 2004 are summarized below (in
thousands):

`2003       2004
                                                                  ---------  ---------
Adjustments to net income (loss)                                 $    (327) $     (70)

Change in "accounts receivable, prepaids and other assets"
 for increase in receivable related to loans sold under
 the sale agreement with Greenwich Capital                            (497)        87

Change in "accounts receivable, prepaids and other assets"
 for the decrease in receivable related to SFAS 133
 mark-to-market of ARM of forward commitments                          840         --

Change in "depreciation and amortization of fixed assets"
 for the reclassification of leasehold improvements                     --        285

Change in "accounts payable, accrued expenses and
 other payables" for the reclassification of leasehold
 improvements                                                           --      2,006

Change in "accounts payable, accrued expenses and
 other payables" for the increase in income related
 to the tax effect on restatements                                     (16)        --
                                                                  ---------  ---------
Adjustment to net cash provided by operating activities          $      --  $   2,308
                                                                  =========  =========
Change in "aquisition of fixed assets" for the reclassification
 of leasehold improvements                                       $      --  $  (2,308)
                                                                  ---------  ---------
Adjustment to net cash used in investing activities              $      --  $  (2,308)
                                                                  =========  =========`

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

The following discussion of the financial condition and
results of operations of the Company should be read in conjunction with the
Financial Statements and the related Notes thereto included elsewhere in this
Form 10-Q. This discussion contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below, as well as
those discussed below under "Factors Affecting Future Operating Results." The
Company disclaims any obligation to update information contained in any
forward-looking statement. See "Forward-Looking Statements."

RESTATEMENT OF FINANCIAL RESULTS

As discussed in the Introductory Note and as disclosed in more detail in
Note 14 to the condensed consolidated financial statements, this Form 10-Q/A is
being filed with the Securities and Exchange Commission to reflect the
restatement of the Company's Condensed Consolidated Financial Statements and
amendments to related disclosures as of December 31, 2003 and June 30, 2004 and
for the three and six months ended June 30, 2003 and 2004. Accordingly, the
discussion and amounts included in this MD&A have been revised to reflect
these amendments.
The impact of this restatement corrected a $593,000 and $80,000 overstatement of income for the three months ended
June 30, 2003 and 2004, respectively, and a $327,000 and $70,000 overstatement of income for the six months ended June 30, 2003 and 2004, respectively.

OVERVIEW

The Company is an online consumer direct lender,
specializing in mortgage, home equity and auto loans. As a retail lender, the
Company is heavily impacted by economic conditions (such as interest rates) and
seasonal/cyclical factors. To help mitigate this, the Company has focused on its
diversified revenue products, which consist of total revenues excluding prime
refinance mortgage and its related interest income. Additionally, the Company
strives to be a low-cost provider with a vision of driving overall prices lower,
which creates marketing efficiency. The result is a virtuous cycle connecting
efficiencies in capital markets, operations and customer acquisition.

RESULTS OF OPERATIONS

The following table sets forth the unaudited results of
operations from the Company's statements of operations as a percentage of total
revenues for the periods indicated:

`Three Months Ended        Six Months Ended
                                                                 June 30,                  June 30,
                                                            2003         2004         2003         2004
                                                         -----------  -----------  -----------  -----------
                                                                 (restated)                (restated)
Revenues .............................................. $    45,231  $    33,399  $    81,440  $    64,030

Operating expenses:
    Operations ........................................      19,993       16,264       36,442       31,206
    Sales and marketing................................      11,433       12,506       19,925       23,638
    Technology.........................................       2,479        2,091        4,355        4,257
    General and administrative.........................       2,901        2,358        4,899        5,874
                                                         -----------  -----------  -----------  -----------
           Total operating expenses....................      36,806       33,219       65,621       64,975
                                                         -----------  -----------  -----------  -----------
Income (loss) from operations..........................       8,425          180       15,819         (945)
Other income, net......................................          68           10          100           25
                                                         -----------  -----------  -----------  -----------
Income (loss) before taxes.............................       8,493          190       15,919         (920)
Income taxes...........................................      (1,008)          --       (1,837)          --
                                                         -----------  -----------  -----------  -----------
Net income (loss)...................................... $     7,485  $       190  $    14,082  $      (920)
                                                         ===========  ===========  ===========  ===========

Net income (loss) per share:
    Basic.............................................. $      0.12  $      0.00  $      0.24  $     (0.01)
                                                         ===========  ===========  ===========  ===========
    Diluted............................................ $      0.11  $      0.00  $      0.22  $     (0.01)
                                                         ===========  ===========  ===========  ===========`

AS A PERCENTAGE OF REVENUES:

`Revenues ..............................................         100 %        100 %        100 %        100 %

Operating expenses:
    Operations ........................................          44 %         49 %         45 %         49 %
    Sales and marketing................................          25 %         37 %         24 %         37 %
    Technology.........................................           5 %          6 %          5 %          7 %
    General and administrative.........................           7 %          7 %          7 %          8 %
                                                         -----------  -----------  -----------  -----------
           Total operating expenses....................          81 %         99 %         81 %        101 %
                                                         -----------  -----------  -----------  -----------
Income (loss) from operations..........................          19 %          1 %         19 %         (1)%
Other income, net......................................          -- %         -- %         -- %         -- %
                                                         -----------  -----------  -----------  -----------
Income (loss) before taxes.............................          19 %          1 %         20 %         (1)%
Income taxes...........................................          (2)%         -- %         (3)%         -- %
                                                         -----------  -----------  -----------  -----------
Net income (loss)......................................          17 %          1 %         17 %         (1)%
                                                         ===========  ===========  ===========  ===========`

Revenues

The Company is a consumer direct lender whose revenues
are derived primarily from the gain on sale of mortgage, home equity and auto
loans that it underwrites, funds and sells. The Company also earns interest
income on mortgage and home equity loans during the brief time they are held
pending sale.

The following table provides the components of revenue shown as a
percentage of total revenues:

`Three Months Ended        Six Months Ended
                                                               June 30,                  June 30,
                                                            2003         2004         2003         2004
                                                         -----------  -----------  -----------  -----------
                                                                 (restated)                (restated)
Revenues:
   Mortgage............................................ $    31,039  $    17,089  $    55,312  $    32,597
   Interest income on mortgage loans...................       4,758        2,428        9,180        3,687
   Home equity.........................................       5,398        8,738        9,449       18,293
   Interest income on home equity loans................         608          944          931        1,424
   Auto................................................       3,035        2,921        5,920        5,983
   Closing services....................................          --          984           --        1,435
   Other...............................................         393          295          648          611
                                                         -----------  -----------  -----------  -----------
         Total revenues................................ $    45,231  $    33,399  $    81,440  $    64,030
                                                         ===========  ===========  ===========  ===========

   Mortgage............................................          69 %         51 %         68 %         51 %
   Interest income on mortgage loans...................          11 %          7 %         11 %          6 %
   Home equity.........................................          12 %         26 %         12 %         29 %
   Interest income on home equity loans................           1 %          3 %          1 %          2 %
   Auto................................................           7 %          9 %          7 %          9 %
   Closing services......................................        -- %          3 %         -- %          2 %
   Other...............................................          -- %          1 %          1 %          1 %
                                                         -----------  -----------  -----------  -----------
         Total revenues................................         100 %        100 %        100 %        100 %
                                                         ===========  ===========  ===========  ===========`

The following table summarizes dollar volume of loans sold and
the revenue (excluding interest income) in both dollars and average basis points
("BPS") (in thousands except BPS):

`Three Months Ended      Six Months Ended
                                June 30,                June 30,
                            2003        2004        2003        2004
                         ----------  ----------  ----------  ----------
                              (restated)               (restated)
Mortgage
$ Volume                $1,214,742  $  899,073  $2,324,750  $1,656,179
Revenue                 $   31,039  $   17,089  $   55,312  $   32,597
BPS                            256         190         238         197

Home Equity
$ Volume                $  192,169  $  331,673  $  359,958  $  633,923
Revenue                 $    5,398  $    8,738  $    9,449  $   18,293
BPS                            281         263         263         289

Auto
$ Volume                $  164,729  $  161,936  $  332,835  $  315,825
Revenue                 $    3,035  $    2,921  $    5,920  $    5,983
BPS                            184         180         178         189`

Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

Mortgage Revenues. The
Company's mortgage revenues are derived from the origination and sale of loans.
Mortgage loans are funded through the Company's warehouse lines of credit and
sold to mortgage loan purchasers typically within thirty days. Mortgage loan
revenues consist of proceeds in excess of the carrying value of the loan,
origination fees less certain direct origination costs and other processing
costs. These revenues are recognized at the time the loan is sold. Mortgage
revenues consist of refinance mortgage revenues and diversified mortgage
revenues - which are comprised of purchase and non-prime mortgage loans.
Mortgage revenues decreased $13.9 million to $17.1 million for the three months
ended June 30, 2004 from $31.0 million for the three months ended June 30, 2003.
Mortgage revenues decreased $22.7 million to $32.6 million for the six months
ended June 30, 2004 from $55.3 million for the six months ended June 30, 2003.
Mortgage revenues benefited significantly from refinance revenues during the
three and six months ended June 30, 2003.  Refinance revenue experienced large
declines in the three and six months ended June 30, 2004, compared to the same
period the prior year as the overall mortgage market shifted away from refinance
loans, and increased competitive pricing impacted the revenue earned per loan.
Diversified mortgage revenue was down slightly, both in volumes and revenue per
loan, as competition increased in this area with the large decline in refinance
volume.  The Company expects refinance activity to continue to decline in the
remainder of 2004 and that while growth in diversified mortgage revenue is
expected, we do not anticipate that it will completely offset the declining
refinance volume, resulting in lower mortgage revenue amounts in 2004 as
compared to 2003. Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

The following table summarizes the composition of the
mortgage dollar volume of loans sold and the revenue (excluding interest income)
in both dollars and average basis points ("BPS") ( in thousands except
BPS):

`Three Months Ended      Six Months Ended
                                June 30,                June 30,
                            2003        2004        2003        2004
                         ----------  ----------  ----------  ----------
                              (restated)               (restated)
Refinance Mortgage
$ Volume                $  778,835  $  496,332  $1,534,324  $  906,234
Revenue                 $   21,132  $    8,430  $   39,287  $   16,888
BPS                            271         170         256         186

Diversified Mortgage
$ Volume                $  435,907  $  402,741  $  790,426  $  749,946
Revenue                 $    9,907  $    8,659  $   16,025  $   15,709
BPS                            227         215         203         209`

Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

The following table reflects the percentages of the Company's
mortgage closed loan volume from purchase and refinance loans as compared to the
total market (according to Mortgage Bankers Association of America) through the
first quarter of 2004.  The Mortgage Bankers Association of America data for the
second quarter of 2004 below represents its estimate as of July 14, 2004:

`Q1 03    Q2 03    Q3 03    Q4 03    Q1 04    Q2 04
                    -------- -------- -------- -------- -------- --------
E-LOAN Mortgage*
    Purchase             25%      32%      45%      45%      37%      37%
    Refinance            75%      68%      55%      55%      63%      63%

Total Market*
    Purchase             29%      32%      32%      51%      47%      51%
    Refinance            71%      68%      68%      49%      53%      49%`

* Excludes home equity and auto loan volume

Interest Income on Mortgage and
Home Equity Loans.

Interest income on mortgage decreased $5.5 million to $3.7
million for the six months ended June 30, 2004 from $9.2 million for the six
months ended June 30, 2003 and interest income on home equity loans increased
$0.5 million to $1.4 million for the six months ended June 30, 2004 from $0.9
million for the six months ended June 30, 2003.  The Company anticipates that
with relatively lower mortgage fundings in the remainder of 2004, interest
income on mortgages will be slightly lower. Home equity fundings are expected to
increase in the remainder of 2004, as will interest income on home equity loans
and lines of credit.
Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

Home Equity Revenues.  Home equity revenues are
derived from the origination and sale of loans. Home equity loans are funded
through the Company's warehouse lines of credit and sold to home equity loan
purchasers in approximately forty days from funding. Home equity loan revenues
consist of proceeds recorded at settlement in excess of the carrying value of
the loan, origination fees less certain direct origination costs and other
processing costs.  These revenues are recognized at the time the loan is sold.
Home equity revenues increased $3.3 million to $8.7 million for the three months
ended June 30, 2004 from $5.4 million for the three months ended June 30, 2003.
Home equity revenues increased $8.9 million to $18.3 million for the six months
ended June 30, 2004 from $9.4 million for the six months ended June 30, 2003.
The significant increase in home equity revenue is due to increased volume of
sold loans as well as increased revenue per loan, in the six months ended June
30, 2004 compared to 2003.  The Company expects that home equity revenues will
continue to grow throughout 2004 as volumes continue to increase.
Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

Auto Revenues.  The Company funds prime auto
loans using a line of credit and then sells them to a qualified special purpose
entity (QSPE), which was created in July 2002. Revenues from these sales consist
of the estimated future discounted cash flows net of interest, servicing fees
and credit losses.  Revenues on prime auto loan sales are recognized when the
loan is sold to the QSPE.  In addition, in exchange for the loans sold, the
Company records a retained interest.  A discount rate has been applied to the
asset to account for the present value of the cash flows to be received over the
life of the loans.  The retained interest is an interest-earning asset.  The
difference between the estimated discounted cash flows and the actual cash flows
received over time are accreted and included as auto revenue.

Prior to the third quarter of 2003, sub-prime auto loans were
sold to sub-prime auto loan purchasers. The revenue on these loans consisted of
the mark-up to the lending partner's loan price or a set origination fee. These
revenues were recognized at the time the loan was sold. In the third quarter of
2003, the Company stopped processing and funding sub-prime auto loans and
shifted this portion of the business to a referral based system. Presently loan
applications that do not meet the prime auto lending criteria are referred out
to other sub-prime lenders in exchange for a fee. This fee is recognized as
revenue at the time of transfer to the sub-prime lender and paid to the Company
monthly for the previous month's referrals.  As expected, this transition
resulted in a reduction in overall auto loan volume in the three and six months
ended June 30, 2004 compared to the three and six months ended June 30,
2003.

Auto revenues were flat at $3.0 and $2.9 million for the
three months ended June 30, 2003 and 2004, respectively, and increased $0.1
million to $6.0 million for the six months ended June 30, 2004 from $5.9 million
for the six months ended June 30, 2003.  The slight increase is related to
referral revenue and interest income on the interest-earning asset.  Auto
revenues for the three and six months ended June 30, 2004 include a valuation
adjustment which reduced the residual interest asset in the amount of $45,000
and $95,000, respectively, related to increases in prepayment speeds and loss
rates.

The Company anticipates modest growth in both auto volume and
revenue in 2004 as compared to 2003.

Closing Services Revenues.  In the fourth
quarter of 2003, the Company formed Escrow Closing Services, Inc, a wholly-owned
subsidiary, which provides mortgage closing services, including HUD1 and
document preparation and signing, disbursement and recording services for a
portion of our home equity business.  For the three and six months ended June
30, 2004, closing services revenues were $1.0 million and $1.4 million,
respectively.  The Company expects that closing services revenue will continue
to grow throughout 2004 as volume increases.

Operating Expenses

Total Operating Expenses. Total operating expenses
include operational costs associated with the origination of mortgage, home
equity and auto loans, including interest expense on warehouse lines, as well as
costs associated with marketing, technology and administrative.

The following table provides detail of the Company's total
operating expenses classified by major types of expense, expressed as a
percentage of total operating expenses:

`Three Months Ended    Six Months Ended
                                          June 30,              June 30,
                                       2003       2004       2003       2004
                                     ---------  ---------  ---------  ---------
Compensation & Benefits                    44%        40%        44%        42%
Processing Costs                            8%        10%         9%         9%
Advertising & Marketing                    28%        34%        27%        33%
Occupancy & Administrative                 12%        12%        12%        12%
Interest Expense on Warehouse               8%         4%         8%         4%`

Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

As almost half of the total operating expenses of the Company
are compensation and benefit related, the following table shows full-time
headcount (including temporary and contract employees) by function at the end of
each respective quarter:

`June 30,
                                       2003       2004
                                     ---------  ---------
Mortgage                                  423        286
Home Equity                               177        288
Auto                                      114         82
Closing Services                            1         20
Sales & Marketing                          31         29
Technology                                 64         59
General & Administrative                   56         74
                                     ---------  ---------
Total                                     866        838`

Operations.

The following table provides detail of the Company's
operations expenses classified by the following revenue-related categories
(dollars in thousands):

`Three Months Ended        Six Months Ended
                                                               June 30,                  June 30,
                                                          2003         2004         2003         2004
                                                       -----------  -----------  -----------  -----------
                                                             (restated)                (restated)
Mortgage ............................................ $    10,250  $     6,877  $    18,436  $    13,525
Interest expense on mortgage loans...................       2,314        1,004        4,492        1,606
Home equity..........................................       3,254        5,247        6,336       10,317
Interest expense on home equity loans................         473          435          693          718
Auto.................................................       3,702        1,836        6,485        3,670
Closing services.......................................        --          865           --        1,370
                                                       -----------  -----------  -----------  -----------
Total operations..................................... $    19,993  $    16,264  $    36,442  $    31,206
                                                       ===========  ===========  ===========  ===========`

Operations expense decreased $3.7 million to $16.3 million
for the three months ended June 30, 2004 from $20.0 million for the three months
ended June 30, 2003.  However, operations expense increased as a percentage of
revenue from 44% to 49% for the three months ended June 31, 2003 and 2004,
respectively.  The decrease in absolute dollars is due to decreases in mortgage
operations (and its related interest expense) as a result of lower volumes, and
a decline in auto operations, which included one-time costs in 2003 related to
the transition of operations from Florida to California. These decreases were
offset by an increase in home equity due to higher volumes.  Operations expense
decreased $5.2 million to $31.2 million for the six months ended June 30, 2004
from $36.4 million for the six months ended June 30, 2003.  However, operations
expense increased as a percentage of revenue from 44% to 49% for the six months
ended June 31, 2003 and 2004, respectively.
Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

The following table provides detail of the Company's total
mortgage operations expenses (excluding interest expense) classified by major
types of expense, expressed as a percentage of total mortgage operations
expenses (excluding interest expense):

`Three Months Ended    Six Months Ended
                                            June 30,              June 30,
                                       2003       2004       2003       2004
                                     ---------  ---------  ---------  ---------
Mortgage Operations
   Headcount & Related                     45%        46%        45%        47%
   Commissions                             25%        21%        25%        20%
   Processing Costs                        20%        19%        20%        19%
   Facilities & Other                      10%        14%        10%        14%`

The following table provides detail of the Company's total
home equity operations expenses (excluding interest expense) classified by major
types of expense, expressed as a percentage of total home equity operations
expenses (excluding interest expense):

`Three Months Ended  Six Months Ended
                                            June 30,              June 30,
                                       2003       2004       2003       2004
                                     ---------  ---------  ---------  ---------
Home Equity Operations
   Headcount & Related                     59%        58%        62%        58%
   Commissions                             12%        12%        10%        12%
   Processing Costs                        18%        19%        18%        18%
   Facilities & Other                      11%        11%        10%        12%`

Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

The following table provides detail of the Company's total
auto operations expenses (excluding interest expense) classified by major types
of expense, expressed as a percentage of total auto operations expenses
(excluding interest expense):

`Three Months Ended    Six Months Ended
                                            June 30,              June 30,
                                       2003       2004       2003       2004
                                     ---------  ---------  ---------  ---------
Auto Operations
   Headcount & Related                     65%        64%        62%        66%
   Commissions                              1%        --         --         --
   Processing Costs                         9%        16%        12%        15%
   Facilities & Other                      25%        20%        26%        19%`

Direct Margin. Direct margin is defined as
revenue minus operations expense, which includes variable and fixed
expenses.

The following table provides detail of the Company's direct
margin classified by the following revenue-related categories (dollars in
thousands):

`Three Months Ended    Six Months Ended
                                          June 30,              June 30,
                                       2003       2004       2003       2004
                                     ---------  ---------  ---------  ---------
                                          (restated)            (restated)
Mortgage........................... $  20,789  $  10,212  $  36,876  $  19,072
Mortgage interest margin...........     2,444      1,424      4,688      2,081
Home equity........................     2,144      3,491      3,113      7,976
Home equity interest margin........       135        509        238        706
Auto...............................      (667)     1,085       (565)     2,313
Closing services.....................      --        119         --         65
Other................................     393        295        648        611
                                     ---------  ---------  ---------  ---------
Total direct margin................ $  25,238  $  17,135  $  44,998  $  32,824
                                     =========  =========  =========  =========`

Direct margin decreased $8.1 million to $17.1 million for the
three months ended June 30, 2004 from $25.2 million for the three months ended
June 30, 2003.  Direct margin decreased $12.2 million to $32.8 million for the
six months ended June 30, 2004 from $45.0 million for the six months ended June
30, 2003.  The decline in direct margin is primarily due to decreased mortgage
revenue per loan and decreased mortgage volumes.  This decrease was offset by
increased home equity volumes and revenues as well as a positive spread of home
equity interest income over interest expense.  The Company anticipates that
mortgage revenue per loan and the spread of interest income over interest
expense will continue to decline in 2004 as compared to 2003, as the overall
level of refinance activity declines and competitive pricing pressure increases.
Auto direct margins increased significantly for the three and six months ended
June 30, 2004 compared to the three and six months ended June 30, 2003 primarily
due to the transition of auto operations from Florida to California which began
during the three months ended March 31, 2003 driving auto direct margins down in
that period.  The Company expects auto direct margin to grow modestly throughout
2004. Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

Sales and Marketing. Sales and marketing
expense is primarily comprised of expenses related to advertising, promotion and
marketing agreements and employee compensation and other expenses related to
marketing personnel.  Sales and marketing expense increased $1.1 million to
$12.5 million for the three months ended June 30, 2004 from $11.4 million for
the three months ended June 30, 2003.  Sales and marketing expense increased
$3.7 million to $23.6 million for the six months ended June 30, 2004 from $19.9
million for the six months ended June 30, 2003.  Sales and marketing expense
increased as a direct result of increased spending in direct response
television, direct response mail and online advertising.  Sales and marketing
expense increased as a percentage of revenue from 25% to 37% for the three
months ended June 30, 2003 and 2004, respectively.  Sales and marketing expense
increased as a percentage of revenue from 24% to 37% for the six months ended
June 30, 2003 and 2004, respectively.  The increase in sales and marketing
expense as a percentage of revenues was due to a combination of increased
spending levels and the decreased volumes in revenue in the three and six months
ended June 30, 2004 compared to the three and six months ended June 30, 2003.
Sales and marketing expenses are expected to decrease as a percentage of total
revenues and remain constant in absolute dollars throughout the remainder of
2004. Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

The following table provides detail of the Company's total
sales and marketing expenses classified by major types of expense, expressed as
a percentage of total sales and marketing expenses:

`Three Months Ended    Six Months Ended
                                            June 30,              June 30,
                                       2003       2004       2003       2004
                                     ---------  ---------  ---------  ---------
Direct Response TV                         53%        46%        50%        50%
Direct Response Mail                       12%        18%        12%        17%
Online Advertising                         17%        25%        20%        22%
Other Advertising                           7%         2%         5%         1%
Headcount & Administrative                 11%         9%        13%        10%`

Technology. Technology expense includes employee
compensation, the introduction of new technologies and the support of E-LOAN's
existing technological infrastructure. Technology expense decreased $0.4 million
to $2.1 million for the three months ended June 30, 2004 from $2.5 million for
the three months ended June 30, 2003.  Technology expense decreased $0.1 million
to $4.3 million for the six months ended June 30, 2004 from $4.4 million for the
six months ended June 30, 2003.  Technology expense increased as a percentage of
revenue from 5% to 6% for the three months ended June 30, 2003 and 2004,
respectively, and increased from 5% to 7% for the six months ended June 30, 2003
and 2004, respectively.  The increase in technology expense as a percentage of
revenues was primarily due to the decreased volumes in revenue in the three and
six months ended June 30, 2004 compared to the three and six months ended June
30, 2003.  The Company expects technology expense to be approximately 7% of
total revenues throughout the remainder of 2004.

General and Administrative. General and
administrative expense is primarily comprised of employee compensation and
professional services. General and administrative expense decreased $0.5 million
to $2.4 million for the three months ended June 30, 2004 from $2.9 million for
the three months ended June 30, 2003. General and administrative expense
increased $1.0 million to $5.9 million for the six months ended June 30, 2004
from $4.9 million for the six months ended June 30, 2003.  Included in general
administrative expenses for the six months ended June 30, 2004 was a charge of
approximately $1.0 million as a result of the resignation of the Company's prior
President and Chief Operating Officer.  General and administrative expense
increased as a percentage of revenue from 6% to 7% for the three months ended
June 30, 2003 and 2004, respectively.  Excluding the one-time charge, general
and administrative expenses increased as a percentage of revenue from 6% to 8%
for the six months ended June 30, 2003 and 2004, respectively.   The Company
expects general and administrative expense to be approximately 8% of total
revenues throughout the remainder of 2004.

Other Income, net.  Other income, net, is
related to interest earned on cash equivalents offset by expense incurred on
non-warehouse facility borrowings.  Other income, net remained consistent at
less than $0.1 million for the three  and six months ended June 30, 2004 and
2003, respectively.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the U.S., which
require the Company to make estimates and assumptions.  The Company believes
that of its significant accounting policies, the following may involve a higher
degree of judgment and complexity.

Revenue Recognition. The Company's mortgage and home
equity revenues are derived from the origination and sale of loans.  Mortgage
and home equity loans are funded through the Company's warehouse lines of credit
and sold to loan purchasers typically within thirty days. Mortgage and home
equity loan revenues consist of proceeds in excess of the carrying value of the
loan, origination fees less certain direct origination costs and other
processing costs. These revenues are recognized at the time the loan is sold.
In addition, the Company generates revenues from interest income on mortgage and
home equity loans.  The revenues realized are based on the loan amount
multiplied by the contractual interest rate from the time of funding by the
Company through time of sale.  These revenues are recognized as earned during
the period from funding to sale.  Also included in mortgage and home equity loan
revenues are amounts recorded in connection with loans sold under a Sale
Agreement with Greenwich Capital (see "Off-Balance Sheet
Arrangements"). The Company sells all loans to loan purchasers on a
servicing released basis without recourse, subject to certain representations
and warranties. Additionally, the Company is responsible for a minimum number of
payments to be made on these loans. As such, the Company records reserves as a
contra-revenue at the time a loan is sold, based on certain assumptions in
anticipation of future losses as a result of current activity.

The Company funds prime auto loans using a line of credit and
then sells them to a qualified special purpose entity (QSPE), which was created
in July 2002 (see "Off-Balance Sheet Arrangements"). Revenues from
these sales consist of the estimated future discounted cash flows net of
interest, servicing fees and credit losses recorded in the form of the residual
interest.  Revenues on prime auto loan sales are recognized when the loan is
sold to the QSPE.  In addition, in exchange for the loans sold, the Company
receives cash and a retained interest.  A market discount rate has been applied
to the asset to account for the present value of the cash flows to be received
over the life of the loans.  As a result, the retained interest asset is an
interest-earning asset, and the difference between the estimated discounted cash
flows and the actual cash flows received over time are accreted and included as
auto revenue.  Effective in the fourth quarter of 2003, the Company adopted
Financial Interpretation No. 46, "Consolidation of Variable Interest Entities",
("FIN 46"). FIN 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both.   The Company had variable interests in its
qualified special purposes entity ("QSPE"), which are exempt from the provisions
of FIN 46. The Company reports the rights and obligations related to the QSPE
according to the requirements of Statement of Financial Accounting Standards No.
140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities.

Prior to the third quarter of 2003, sub-prime auto loans were
sold to sub-prime auto loan purchasers. The revenue on these loans consisted of
the mark-up to the lending partner's loan price or a set origination fee. These
revenues were recognized at the time the loan was sold. In the third quarter of
2003, the Company stopped processing and funding sub-prime auto loans and
shifted this portion of the business to a referral based system. Loan
applications that do not meet the prime auto lending criteria are referred out
to other sub-prime lenders in exchange for a fee. This fee is recognized as
revenue at the time of transfer to the sub-prime lender.

Valuation of derivative instruments.

The Company's management has made complex judgments in their
application of SFAS 133.  The judgments include the identification of hedging
instruments, hedged items, nature of the risk being hedged, and how the hedging
instrument's effectiveness will be assessed.  The Company designates forward
delivery commitments, where the company intends to deliver the underlying loan
into the commitment, as a fair value SFAS 133 hedge at the commitment date.   In
addition, the Company designates all best efforts sell forward commitments as
fair value SFAS 133 hedges for underlying loans at funding date.  The Company
does not designate mandatory sell forward agreements as SFAS 133 hedges but does
utilize them to economically hedge the changes in fair value of rate lock
commitments with borrowers for which a best efforts sell forward commitment has
not been obtained.  The Company did not have a material gain or loss
representing the amount of hedge ineffectiveness related to designated SFAS 133
hedges during the three and six months ended June 30, 2003 and 2004.

In September 2003, the Company began hedging its interest
rate risk on auto loan approvals. When the Company issues an auto loan approval,
the Company extends a put option to the borrower, whereby the borrower is not
obligated to enter into the loan agreement, but the Company must honor the
interest rate for up to a 45-day period.  Under SFAS 133, auto loan approvals
are not considered derivatives. However, the company is still exposed to
interest rate risk from issuance of approval to loan sale. The Company enters
into amortizing swap contracts to economically hedge the interest rate changes
in auto loan approvals. These swap contracts are considered derivatives under
SFAS 133. The Company marks-to-market any changes in the value of outstanding
swap contracts, which are recorded as unrealized gains and losses and included
in the statement of operations in auto revenue.

Capitalized software.  In 1999, the Company adopted
SOP 98-1,Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use, which requires that the Company expense computer software
costs as they are incurred in the preliminary project stage. Once the
capitalization criteria of the SOP have been met, external direct costs of
materials and services consumed in developing or obtaining internal-use computer
software and payroll and payroll related costs for employees who are directly
associated with and who devote time to the internal-use computer software are
capitalized. Capitalized costs are generally amortized over one to three years
on a straight-line basis.

Reserves for loan sales.  The Company sells loans to
loan purchasers on a servicing released basis subject to certain representations
and warranties from the Company to the purchaser.  As such, the risk of loss or
default by the borrower has generally been assumed by these purchasers. However,
the Company is generally required by these purchasers to make certain
representations relating to borrower creditworthiness, loan documentation and
collateral. To the extent that the Company does not comply with such
representations, or there are early payment defaults, the Company may be
required to repurchase loans or indemnify these purchasers for any losses from
borrower defaults.  In connection with a majority of its loan sales agreements,
the Company is also responsible for a minimum number of payments to be made on
each loan, or else the Company may be required to refund the premium paid to it
by the loan purchaser.  As such, the Company records reserves based on certain
assumptions in anticipation of future losses as a result of current sales
activity.

Loan loss reserves due to potential violations of
representations and warranties are recorded based on a percentage of current
month sales.  The Company currently calculates this loss rate exposure based on
its historical loss rates as well as similar lending portfolios.  Once the
Company has endured a complete economic cycle, the rate will be adjusted based
on actual losses as a percentage of sales volume on a historical basis.  Premium
repayment reserves, generated through early loan prepayments related to loans
sold to loan purchasers, are recorded based on a rate determined by calculating
actual prepayments as a percentage of sales on a historical basis applied to
current month sales.

Stock-Based Compensation. The Company accounts for
stock-based employee compensation arrangements in accordance with the provisions
of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees and related interpretations, and complies with the
disclosure requirements of SFAS No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS No. 148, Accounting For Stock-Based
Compensation -- Transition And Disclosure -- An Amendment Of SFAS No. 123.
Under APB No. 25, compensation expense is based on the excess of the estimated
fair value of the Company's stock over the exercise price, if any, on the date
of grant. The Company accounts for stock issued to non-employees in accordance
with the provisions of SFAS No. 123 and the Emerging Issues Task Force Consensus
in Issue No. 96-18, Accounting for Equity Instruments That Are Issued to
Non-Employees for Acquiring, or in Conjunction with Selling, Goods or
Services.

Deferred Tax Asset. The Company accounts for income
taxes using the liability method in accordance with SFAS No. 109, Accounting
for Income Taxes. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to be realized. Management evaluates the recoverability of the deferred tax
assets and the level of the valuation allowance. At such time as it is
determined that it is more likely than not that the deferred tax asset will be
realizable, the valuation allowance will be reduced.  The Company's deferred tax
asset arises principally from net operating loss carryforward (NOLs).  There are
significant judgments and estimates involved in projecting the recoverability of
the deferred tax asset, particularly with respect to the existence of future
taxable income sufficient to realize NOLs.  The Company reported its first
profitable year in 2002 and was again profitable in 2003.  However, the
sustained low interest rate environment created favorable operating conditions
for the Company.  During the fourth quarter of 2003 and the first six months of
2004, the Company reported a loss from operations, largely as a result in
declines in mortgage refinance volume.  Management will continue to monitor
projections of future taxable income and when it believes realization of the tax
benefits associated with the NOLs is more likely than not, management will
reduce the valuation allowance by recording a benefit through the income tax
provision recorded in the statement of operations.  Based upon the Company's
performance throughout the remainder of the year it is possible that management
would reduce the valuation allowance during 2004; however, management can
provide no assurances as to the amount of such reduction, the period in which it
might occur or if it will occur at all.

OFF-BALANCE SHEET ARRANGEMENTS

Retained interest in auto loans. On June 17, 2002,
the Company entered into an arrangement to sell auto loan receivables to a
qualified special purpose entity (QSPE), E-LOAN Auto Fund One, LLC ("E-LOAN
Auto"), for the purpose of being able to recognize the gain on sale from
these loans. These transactions involve the Company surrendering control over
these assets to assure that the sold assets have been isolated from the Company
and its creditors. As E-LOAN Auto has met the appropriate tests to be considered
a QSPE the assets and liabilities of E-LOAN Auto are appropriately not
consolidated in financial statements of the Company. In the event that the
entity no longer qualifies as a QSPE and is required to be consolidated, the
Company would no longer be in compliance with certain debt covenants related to
its warehouse and other lines of credit, as currently structured. In particular,
the Company's debt to tangible net worth covenants would be exceeded, however
management believes that it would be able to renegotiate its existing warehouse
related covenants to adequately accommodate the consolidation of this entity, if
needed. E-LOAN Auto has obtained a secured borrowing facility from Merrill Lynch
Bank USA to finance all purchases of loans from the Company. The Company
recognizes a gain on the sale of auto loan receivables to E-LOAN Auto in the
period in which the sale occurs, which represents the difference between the
sale proceeds to the Company and the Company's net carrying value of the
receivables. The Company retains an interest in the future cash flows from the
loans. Such cash flows are distributed to the Company by the QSPE monthly. The
fair value of the retained interest asset is based upon the net present value of
the estimated future cash flows to be received by the Company over the life of
the loans.  These retained interest assets are recorded on the balance sheet at
fair value as trading assets, and are adjusted to estimated fair value at each
subsequent reporting period. Changes in the estimated fair value of the residual
interests are recorded through the statement of operations. Estimates of future
cash flows to be received by the Company reflect assumptions regarding the
cumulative credit losses to be incurred on the pool of auto loan receivables
sold, prepayment rates of the auto loans and the rate at which the estimated
future excess cash flows are discounted. The assumptions used represent the
Company's best estimates, and the use of different assumptions could produce
different financial results. The Company will continue to monitor and update its
assumptions over time.

Sale Agreement with Greenwich Capital. The Company has
a loan purchase and sale agreement with Greenwich Capital, for the purpose of
controlling the timing associated with loan sales.  Under the terms of this
agreement, mortgage loans which are allocated to a mandatory sell forward
commitment between the Company and a loan purchaser, but have not yet been
settled, may be sold to Greenwich Capital with the accompanying trade
assignment.  Revenues from loans sold under this arrangement are included as a
receivable on the balance sheet. All loans sold under this arrangement are
already committed to another loan purchaser, and as such, hold little risk of
being unsaleable. Therefore, in the event that the Company was unable to utilize
this arrangement, the Company would experience a one-time impact to revenues in
the period this arrangement was discontinued.

LIQUIDITY AND CAPITAL RESOURCES

The Company's sources of cash include cash from the
sale of mortgage, home equity and auto loans, borrowings under warehouse lines
of credit and other credit facilities, brokerage fees, interest income, credit
card referrals and the sale of debt and equity securities in both private and
public transactions. The Company's uses of cash include the funding of mortgage,
home equity and auto loans, repayment of amounts borrowed under warehouse lines
of credit, operating expenses, payment of interest, and capital expenditures
primarily comprised of furniture, fixtures, computer equipment, software and
leasehold improvements.  Because the Company's loan origination operating
activities are funded principally through its warehouse and other lines payable,
the Company analyzes trends in operating cash flows by combining cash flows from
operating activities with cash flows from certain financing activities
(specifically cash flows from warehouse and other lines payable).

Cash provided by operating and financing activities related
to its warehouse and other lines payable was $17.1 million for the six months
ended June 30, 2004.  Specifically, the Company obtained cash from net income,
excluding non-cash related items, of $2.7 million for the six months ended June
30, 2004.  In addition, the Company benefited from positive cash flow due to the
reduction of other assets in the amount of $7.2 million, specifically prepaid
marketing expenses, and the reduction of receivables in connection with loan
sales.  Further, the Company benefited from positive cash flow as a result of
loans held-for-sale net of warehouse payable decreasing which provided $3.7
million in net cash, and the increase of accounts payables and other accrued
expenses in the amount of $5.9 million.  However, these sources of cash were
offset by the continued increase in the retained interest asset which grew
another $2.5 million as additional auto loans were sold to the QSPE in the six
months ended June 30, 2004.
Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

Cash provided by operating and financing activities related
to its warehouse and other lines payable, was $6.7 million for the six months
ended June 30, 2003.  Specifically, The Company utilized cash as a result of an
increase in receivables and other assets of $12.2 million, which included an
increase of $14.6 million related to receivables in connection with loan sales.
In addition, the Company utilized cash as a result of the continued increase of
the retained interest asset of $5.0 million as additional auto loans were sold
to the QSPE in the six months ended June 30, 2003.  These uses of cash were
offset by a source of cash from net income, excluding non-cash related items, of
$16.5 million for the six months ended June 30, 2003.  In addition, the Company
benefited from positive cash flow as a result of loans held-for-sale net of
warehouse payable decreasing and providing $2.0 million in net cash.
Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

Net cash used in investing activities was $4.7 million and
$6.3 million for the six months ended June 30, 2003 and 2004, respectively.  Net
cash used during the six months ended June 30, 2003 was primarily due to the
addition of infrastructure related to increased headcount and investment in new
technology systems.  In October 2003, the Company began relocating its corporate
headquarters and consolidating its operational facilities to a larger, single
facility in Pleasanton, California. Capital expenditures related to the new
facility were $4.4 million for the six months ended June 30, 2004.  The
remaining cash used on investing activities during the six months ended June 30,
2004 was related to capitalized development.
Certain amounts have been reclassified and/or restated as discussed in Note 14 to the Condensed Consolidated Financial Statements.

Cash provided by financing activities, net of cash
used by its warehouse and other lines payable was $5.6 million and $1.3 million
for the six months ended June 30, 2003 and 2004, respectively.  The increase for
both periods presented was due to the issuance of common stock from the exercise
of stock options.

The Company has committed and uncommitted
warehouse lines of credit that it uses to fund mortgage and home equity loans. A
committed line is a firm commitment from the warehouse lender that funds will be
available if requested through the specified termination date. The Company pays
for these committed funds either in the form of pre-paid commitment fees charged
as a percentage of the committed line available, or in the form of an unused
line fee, which is assessed monthly based on a percentage of the unused amount
during the previous month. Uncommitted funds are available to the Company at the
warehouse lenders discretion, and may not be accessible by the Company if the
warehouse lender denied the funding request.  The Company has not experienced
such a denied funding request from any of its current or previous warehouse
lenders.

The Company has a warehouse line of credit for borrowings of
up to $75 million for the interim financing of mortgage loans with GMAC Mortgage
Corporation. The interest rate charged on borrowings against these funds is
variable based on LIBOR plus various percentage points. This warehouse line
requires the Company to pay GMAC a non-use fee when the average outstanding
principal amount of borrowings is less than 50% of the total commitment at a
rate of 0.25% per annum on the daily average unutilized commitment.  Borrowings
are collateralized by the related mortgage loans held-for-sale. The committed
line of credit expires on March 31, 2005. Upon expiration, management believes
it will either renew its existing line or obtain sufficient additional lines.
This line of credit agreement generally requires the Company to comply with
various financial and non-financial covenants. In particular, the Company must
maintain a minimum cash balance of $15.0 million in addition to the requirement
that the Company maintain at least one other committed warehouse facility of no
less than $100 million. Failure to comply with these, or any other covenants,
could result in the obligation to repay all amounts then outstanding. The
Company was in compliance with all covenants for this agreement for the three
and six months ended and at June 30, 2004.

The Company has an uncommitted warehouse line of credit for
borrowings of up to $150 million for the interim financing of mortgage loans
with Merrill Lynch Mortgage Capital, Inc. This warehouse line is scheduled to
decrease to $100 million on August 18, 2004. The interest rate charged on
borrowings against these funds is variable based on LIBOR plus various
percentage points. Borrowings are collateralized by the related mortgage loans
held-for-sale. The uncommitted line of credit expires on February 4, 2005. Upon
expiration, management believes it will either renew its existing line or obtain
sufficient additional lines. This line of credit agreement generally requires
the Company to comply with various financial and non-financial covenants. In
particular, the Company must maintain a minimum cash balance of $12.5 million.
Failure to comply with these, or any other covenants, could result in the
obligation to repay all amounts then outstanding.  The Company was in compliance
with all covenants for this agreement for the three and six months ended and at
June 30, 2004.

The Company has an agreement to finance up to $400 million of
mortgage loan inventory pending sale of these loans to the ultimate mortgage
loan  purchasers with Greenwich Capital. Of this amount, $200 million is
available in committed funds. This loan inventory financing is secured by the
related mortgage loans. The interest rate charged on borrowings against these
funds is based on LIBOR plus various percentage points.  As part of this
agreement the Company had to pay a commitment fee of $1.0 million for the period
of March 31, 2003 through March 30, 2004.  The commitment fee was reduced to
$750,000 for the period March 15, 2004 through March 14, 2005.  The line
requires the restriction of $2.5 million in cash as additional collateral,
however, in March 2004, the line was amended to remove this restriction.  The
line expires March 14, 2005. Upon expiration, management believes it will either
renew its existing line or obtain sufficient additional lines. This agreement
includes various financial and non-financial covenants. In particular, the
Company must maintain a minimum cash and cash equivalents balance of $15
million. Additionally, the Company is required to maintain at least one other
warehouse facility of no less than $75 million in committed funds. Failure to
comply with these, or any other covenants, could result in the obligation to
repay all amounts then outstanding.  The Company was in compliance with all
covenants for this agreement for the three and six months ended and at June 30,
2004.

The Company has a $10 million line of credit facility with
Merrill Lynch Mortgage Capital, Inc. to support the interim funding of auto
loans prior to the sale to the ultimate auto loan purchaser. The interest rate
charged on this line is based on LIBOR plus various percentage points. This
facility requires the Company to pay an unused line fee equal to 0.50% per year
on the average daily unused line balance.  This facility expires on July 13,
2005. Upon expiration, management believes it will either renew its existing
line or obtain sufficient additional lines. This agreement includes various
financial and non-financial covenants. In particular, the Company must maintain
a minimum cash and cash equivalents balance of $15 million (including Restricted
Cash). Additionally, the Company is prohibited from obtaining or incurring any
debt or contingent liability in excess of $5 million without prior consent from
the lender. Failure to comply with these, or any other covenants, could result
in the obligation to repay all amounts then outstanding. The Company was in
compliance with all covenants for this agreement for the three and six months
ended and at June 30, 2004.

The following table summarizes the key terms of our current
warehouse and other lines payable:

`GMAC       Greenwich    Merrill       Merrill
                                    Mortgage      Capital       Lynch        Lynch
                                      $75M         $400M        $150M        $10M
                                   -----------  -----------  -----------  -----------
Cost of Funds
   Spread over LIBOR               1.25%-2.0%   0.75%-1.25%  0.75%-1.0%   1.0%-2.0%

Covenants
   Minimum Cash                    $15.0M       $15.0M       $12.5M       $15.0M (1)
   Minimum Tangible Net Worth      $40.0M       $60.0M       $40.0M       $25.0M
   Debt to Tangible Net Worth      10:1         10:1         12:1             --
   Profitability                       --           --       Net Worth >      --
                                                             80% prior
                                                              2 qtrs
   Current Ratio                   1.0:1.0          --           --       1.0:1.0
   Additional Facility             $100.0M      $75.0M           --           --

Advance Rates                      95%-100%     96%-99%      96%-99%      92%-97%`

(1) All minimum cash requirements include restricted cash,
however restricted cash related to the Merrill Lynch $10 million line may not
exceed $5 million

On June 30, 2003, the Company obtained a $5 million line of
credit from Wells Fargo Bank, National Association to support working capital
needs. The interest rate charged on borrowings against these funds is based on
LIBOR plus 2%, and is payable monthly. The line of credit was originally
scheduled to expire on June 30, 2004. On December 11, 2003, the agreement was
amended to reduce the line of credit to $2,350,000 and extend the expiration
date to June 30, 2005. As part of the amendment, the Company was required to
provide restricted cash as collateral for this line of credit. Currently, the
line of credit is being utilized to support letters of credit related to the
Pleasanton, California facility as well as a letter of credit related to the
Company's surety bonds. The Company was in compliance with all covenants for
this agreement for the three and six months ended and at June 30, 2004.

The adequacy of our liquidity depends on our ability to
successfully generate positive cash flow from an appropriate combination of
efficient operations and improvements therein, financing from third parties and
access to capital markets. With $46.0 million of cash on hand at June 30, 2004
and borrowing capacity under our warehouse and other lines of
credit of $635 million, we believe our liquidity (including operating and
other cash flows that we expect to generate) will be sufficient to meet
operating cash flow requirements as they occur for at least the next twelve
months; however, our ability to maintain positive liquidity going forward
depends on our ability to generate cash from operations and access to the
financial markets, both of which are subject to general economic, financial,
competitive, legislative, regulatory and other market factors that are beyond
our control.

FORWARD LOOKING STATEMENTS

The statements contained in this Report that are not
historical facts are "forward-looking statements" (as such term is defined in
Section 27A of the Securities Act of 1933 and section 21E of the Securities
Exchange Act of 1934), which can be identified by the use of forward-looking
terminology such as "estimated," "projects," "anticipated," "expects,"
"intends," "believes," or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involve risks and
uncertainties. These forward-looking statements, such as the Company's plans to
increase the number of purchase loans, the relative importance of loans E-LOAN
originates and sells and growth in the number of applications received,
statements regarding development of E-LOAN's business, future operating results,
anticipated capital expenditures, the expectations as to the use of capital
resources and the availability of additional financing, and other statements
contained in this Report regarding matters that are not historical facts, are
only estimates or predictions and cannot be relied upon. No assurance can be
given that future results will be achieved; actual events or results may differ
materially as a result of risks facing the company or actual results differing
from the assumption underlying such statements. Such risks and assumptions
include, but are not limited to, E-LOAN's ability to access additional debt or
equity financing in the future, secure replacement lines of credit for mortgage
and auto loans, respond to increasing competition, secure additional loan
purchasers, manage growth of E-LOAN's operations, as well as regulatory,
legislative, and judicial developments that could cause actual results to vary
materially from the future results indicated, expressed or implied in such
forward-looking statements. All written and oral forward-looking statements made
in connection with this Report which are attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the "Factors
Affecting Future Operating Results" and other cautionary statements included
herein. The Company disclaims any obligation to update information contained in
any forward-looking statement.

FACTORS AFFECTING FUTURE OPERATING RESULTS

The following important factors, among others, could
cause actual results to differ materially from those contained in
forward-looking statements made in this report or presented elsewhere by management from
time to time.

While we achieved profitability during fiscal years 2002
and 2003, we recently incurred losses, and we may not be able to maintain
profitability.

While we achieved profitability during fiscal years 2002
and 2003, we have an accumulated deficit of $184.5 million, as of June 30, 2004.
In the fourth quarter of 2003, we experienced a pre-tax loss of $1.5 million and
in the first six months of 2004, we experienced a loss of $0.9 million and may
not regain or increase profitability on a quarterly or annual basis in the
future.  If revenues grow more slowly than we anticipate, or if operating
expenses exceed our expectations or cannot be adjusted accordingly, our
business, results of operations and financial condition will be adversely
affected.

We have a limited operating history and consequently face
significant risks and challenges in building our business.

We were incorporated in August 1996, initiated our online
mortgage operations in June 1997 and acquired our online auto operations in
September 1999. We cannot assure that the Company will be able to operate
successfully if a downturn in the mortgage or auto business occurs. As a result
of our limited operating history, our recent growth and our reporting
responsibilities as a public company, we may need to expand operational,
financial and administrative systems and control procedures to enable us to
further train and manage our employees and coordinate the efforts of our
underwriting, accounting, finance, marketing, and operations departments.

Our quarterly financial results are vulnerable to
significant fluctuations and seasonality, which could adversely affect our stock
price.

Our revenues and operating results may vary significantly
from quarter to quarter due to a number of social and economic factors. Certain
months or quarters historically experience greater volumes of mortgage and auto
loan applications and funded loans.  Moreover, the level and direction of
interest rates regulate the relative volatility of seasonal loan origination
cycles.  As a result, we believe that quarter-to-quarter comparisons of our
operating results may not be a good indication of our future performance. It is
possible that in some future periods our operating results may not meet the
expectations of market analysts and investors. In this event, the price of our
common stock may fall.

Interest rate fluctuations could significantly reduce
customers' incentive to refinance existing mortgage loans.

Rising interest rates generally reduce the demand for
mortgage loans. Due to the low interest rate environment for the last several
years, a significant percentage of our mortgage customers used our services to
refinance existing mortgage loans.  As mortgage interest rates have risen,
consumers' incentive to refinance has been greatly reduced and the number of
refinance loans that we originated and the revenues generated from those loans
declined significantly. In an environment of rising or high interest rates
relative to the interest rates on existing loans, refinance loan revenue could
continue to decline. If we are unable to increase diversified product revenue to
offset the decline in refinance loan activity, our business and results of
operations may be adversely affected.

Our ability to engage in profitable secondary sales of
loans may also be adversely affected by increases in interest rates.

The mortgage loan purchase commitments we obtain are
contingent upon our delivery of the relevant loans to the purchasers within
specified periods. To the extent that we are unable to deliver the loans within
the specified periods and interest rates increase during those periods, we may
experience no gain or even a loss on the sale of these loans. In addition, any
increase in interest rates will increase the cost of maintaining our warehouse
and repurchase lines of credit on which we depend to fund the loans we
originate. The interest direct margin earned on loans held-for-sale
significantly benefited from the spread between long-term and short-term
interest rates starting in 2001 and continuing through the second quarter of
2003. Based on historical trends, we do not expect the same level of benefit
from interest rate spreads in a normal market. We have implemented a hedging
program to manage the risk of loss due to fluctuations in interest rates, but
our hedging efforts may not be successful, and no hedging strategy can
completely eliminate interest rate risk. A sharp decrease in interest rates over
a short period may cause customers who have interest rates on mortgage loans
committed through us to either delay closing their loans or refinance with
another lender. If this occurs in significant numbers, it may have an adverse
effect on our business or quarterly results of operations.

Our hedging strategy may not succeed in reducing our
exposure to losses caused by fluctuations in interest rates.

We attempt to manage our interest rate risk exposure on
mortgage loan interest rate locks through hedging transactions using a
combination of forward sales of mortgage-backed securities and forward
whole-loan sales to fix the sales price of loans we expect to fund. An effective
hedging strategy is complex, and we have limited experience administering a
hedging program. A successful hedging program depends in part on our ability to
properly estimate the number of loans that will actually close and is subject to
fluctuations in the prices of mortgage-backed securities, which do not
necessarily move in tandem with the prices of loans we originate and close. To
the extent that we implement a hedging strategy but are unable to effectively
match our purchases and sales of mortgage-backed securities with the sale of the
closed loans we have originated, our gains on sales of mortgage loans will be
reduced, or we will experience a net loss on those sales. In addition, in
September 2003, we began managing our interest rate exposure related to our auto
loan approvals by entering into amortizing swap contracts. Approved auto loan
applicants are provided a guaranteed rate for up to a 45 day period. To the
extent that we implement a hedging strategy but are unable to effectively match
our coverage with anticipated loan volume, it is possible that we could
experience a net loss on those loan approvals. Finally, if we are unable to
obtain the necessary liquidity to execute our hedging programs through multiple
hedge counterparties, our hedging strategy may not succeed. We currently have
one counter-party for auto hedging and 14 counterparties for mortgage
hedging.

Uncertainty with respect to the time it takes to close
mortgage loans can lead to unpredictable revenue and profitability.

The time between the date an application for a mortgage
loan is received from a customer and the date the loan closes can be lengthy and
unpredictable. The loan application and approval process is often delayed due to
factors over which we have little or no control, including the timing of the
customer's decision to commit to an available interest rate, the close of escrow
date for purchase loans, the timeliness of appraisals and the adequacy of the
customer's own disclosure documentation. Purchase mortgage loans generally take
longer to close than refinance loans as they are tied to the close of the
property sale escrow date. This uncertain timetable can have a direct impact on
our revenue and profitability for any given period. We may expend substantial
funds and resources supporting the loan fulfillment process and never generate
revenue from closed loans. Therefore, our results of operations for a particular
period may be adversely affected if the mortgage loans applied for during that
period do not close in a timely manner or at all.

The increasing number of federal, state and local
"anti-predatory lending" laws may restrict our ability to originate
certain mortgage loans, or increase our risk of liability or cost of doing
business.

The enactment of federal, state and local laws, rules and
regulations intended to eliminate so-called "predatory" lending
practices impose restrictions on loans on which certain points and fees or the
annual percentage rate ("APR") exceed specified thresholds. Our
mortgage loan purchasers and warehouse lenders are willing to buy or finance
only a very limited selection of such loans, and these loans are subject to
greater risks for actual or perceived non-compliance with such laws, rules and
regulations, including demands for indemnification or loan repurchases from our
loan purchasers, class action lawsuits, increased defenses to foreclosure of
individual loans in default, individual claims for monetary damages, and
administrative enforcement actions. The continued enactment of these laws, rules
and regulations may prevent us from making certain loans and may cause us to
reduce the APR or the points and fees on loans that we do make. In addition, the
difficulty of managing the risks presented by these laws, rules and regulations
may decrease the availability of warehouse financing and the overall demand for
certain subprime loans, making it difficult to fund or sell such loans. The
growing number of these laws, rules and regulations may increase our cost of
doing business, as we are required to develop systems and procedures to ensure
that we do not violate any aspect of these new requirements. Any of the
foregoing could adversely affect our business and results of operations.

We have recently experienced significant growth in our
business, and if we are unable to manage this growth, our business will be
adversely affected.

Over the past two years we have experienced significant
growth, which has placed a strain on our resources and will continue to do so in
the future. Failure to manage this growth effectively could adversely affect our
business. We may not be successful in managing or expanding our operations or
maintaining adequate management, financial and operating systems and controls.

Our future success is dependent upon increased acceptance
of the internet by consumers and lenders as a medium for lending.

Our success will depend in large part on widespread
consumer acceptance of obtaining mortgage and auto loans online. Increased
consumer use of the Internet to provide for their lending needs is subject to
uncertainty. The development of an online market for mortgage and auto loans has
only recently begun, is rapidly evolving and likely will be characterized by an
increasing number of market entrants. If consumer acceptance of the Internet as
a source for mortgage, home equity and auto loans does not increase, our
business, results of operations and financial condition will be adversely
affected. A number of factors may inhibit Internet usage by consumers, including
privacy and security concerns regarding their personal information. The adoption
of online lending requires the acceptance of a new way of conducting business,
exchanging information and applying for credit by consumers that have
historically relied upon traditional lending methods. As a result, we cannot be
sure that we will be able to compete effectively with traditional borrowing and
lending methods.

The termination of one or more of our mortgage funding
sources would adversely affect our business.

We depend on GMAC Mortgage Corporation, formerly GMAC
Bank ("GMAC Mortgage"), Greenwich Capital Financial Products, Inc. ("Greenwich
Capital") and Merrill Lynch Mortgage Capital, Inc. ("Merrill Lynch")
to finance our mortgage loan activities through the warehouse credit facilities
they provide. If any of these warehouse credit facilities becomes unavailable,
our business would be adversely affected. Under our agreements with each of
these lenders, we make extensive representations, warranties and various
operating and financial covenants. A material breach of these representations,
warranties or covenants on any of our lines could result in the termination of
our agreements and an obligation to repay all amounts outstanding at the time of
termination. In the past, we have had to obtain waivers from our warehouse
lenders as a result of our failure to comply with covenants regarding the
issuance of capital stock, excess asset purchases and our failure to meet
financial ratios. More recently, we obtained a waiver from one of our warehouse
lenders due to a failure to meet a current ratio covenant for the months ended
April 30 and May 31, 2003. Our agreement with Greenwich Capital expires on
March 14, 2005, our agreement with GMAC Mortgage expires on March 31, 2005 and
our agreement with Merrill Lynch expires on February 4, 2005. Upon expiration of
these agreements, management believes it will either renew its existing
warehouse credit facilities or obtain sufficient additional credit facilities.
However, we cannot assure that these agreements will be renewed or extended past
their current expiration dates, and additional sources of funding for our
mortgage loans may not be available on favorable terms or at all.

The termination of our auto line of credit would adversely
affect our business.

We have obtained a line of credit from Merrill Lynch
Mortgage Capital, Inc. to finance the funding of our auto loans, and this is our
sole facility for auto loan fundings. If this credit facility becomes
unavailable, our business could be adversely affected. Under our line of credit
agreement, we make extensive representations, warranties and various operating
and financial covenants. A material breach of these representations, warranties
or covenants could result in the termination of the facility and an obligation
to repay all amounts outstanding at the time of termination. Our line of credit
with Merrill Lynch Mortgage Capital, Inc. expires July 13, 2005. Upon
expiration, management believes it will either renew its existing line or obtain
sufficient additional lines. However, we cannot assure you that this agreement
will be renewed or extended past its current expiration date, and additional
sources of funding for our auto loans may not be available on favorable terms or
at all.

We are primarily dependent on four loan purchasers for
most of our home equity business

For the quarter ended June 30, 2004, the majority of our
home equity loans were purchased by Citicorp and RFC, and the majority of our
home equity lines of credit were purchased by Wells Fargo and IndyMac, pursuant
to Home Equity Loan/Line purchase agreements. If any of these loan purchasers
are unable or unwilling to purchase our home equity loans, we may experience
delays in our ability to accept or process home equity loan applications until
we are able to secure new sources of loan purchasers. Sufficient additional
sources of loan purchasers for our home equity loans may not be available on
favorable terms or at all.

We are dependent on one loan purchaser for all of our auto
loan business.

We currently sell all of our prime auto loans to E-LOAN
Auto Fund One, LLC, a qualified special purpose entity (QSPE). The QSPE is
dependent on Merrill Lynch Bank USA to provide the necessary financing to
continue purchasing loans from us. If Merrill Lynch Bank USA is unable or
unwilling to provide continuing financing to the QSPE, additional forms of
financing may not be available on favorable terms or at all.

We depend on the timely and competent services of various
companies involved in the mortgage process; if these companies fail to timely
and competently deliver these services, our business and reputation will be
directly and adversely affected.

We rely on other companies to perform services related to
the loan underwriting process, including appraisals, credit reporting and title
searches. Any interruptions or delays in the provision of these services may
cause delays in the processing and closing of loans for our customers. If we are
unsuccessful in managing the timely delivery of these services we will likely
experience increased customer dissatisfaction and our business and reputation
could be adversely affected.

The loss of our relationship with any of our significant
providers of automated underwriting would have an adverse effect on our
business.

We depend on automated underwriting and other services
offered by government sponsored and other mortgage investors, including Fannie
Mae and Freddie Mac ("Agencies"), to help ensure that our mortgage services can
be offered efficiently and on a timely basis. We currently have an agreement
with the Agencies that authorizes our use of their automated underwriting
services and enables us to sell qualified first mortgages to these Agencies. We
cannot assure that we will remain in good standing with the Agencies or that the
Agencies will not terminate our relationship. We expect to continue to process a
significant portion of our conforming mortgage loans using the Agencies'
systems. Our agreement with the Agencies can be terminated by either party. The
termination of our agreements with the Agencies would adversely affect our
business by reducing our ability to streamline the mortgage origination
process.

Any outages, delays or other difficulties experienced
internally or through internet service providers, online service providers or
other website operators on which our users depend could adversely affect our
business.

Due to the complexities of providing effective and
responsive internet based products and services to customers, our information
technology business model could experience delays and outages caused by a number
of factors.  Our IT platform is an integration of complex technologies ranging
from proprietary and open source technologies to commercially available licensed
technologies from industry leaders such as Cisco Systems, Sun Microsystems and
Oracle.  Although our IT business systems are designed to minimize downtime in
the normal course of business, we cannot assure our service levels can be
maintained in all possible disaster scenarios. Moreover, our users depend on
Internet service providers, online service providers and other website operators
for access to our website. Many Internet users have experienced significant
outages in the past, and could experience outages, delays and other difficulties
due to component or system failures unrelated to our systems. Any of these
problems could adversely affect our business.

Our business will be adversely affected if we are unable
to safeguard the security and privacy of our customers' financial data.

Internet usage could decline if any well-publicized
compromise of security occurred. We may incur significant costs to protect
against the threat of security breaches or to alleviate problems caused by any
breaches that occur. We also retain on our premises personal financial documents
we receive from prospective borrowers in connection with their loan
applications. These documents are highly sensitive and if a third party were to
misappropriate our customers' personal information, customers could possibly
bring legal claims against us. We cannot assure that our privacy policy will be
deemed sufficient by our prospective customers or compliant with any federal or
state laws governing privacy, which may be adopted in the future.

While we have implemented a substantial program to comply
in a timely manner with the requirements of Section 404 of the Sarbanes-Oxley
Act of 2002, any failure to comply or any adverse results from the evaluation
required under such section is unknown at this time and could result in a loss
of investor confidence in our financial reports and have an adverse effect on
our stock price.

Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to perform
an evaluation of its internal control over financial reporting and have our
independent auditors attest to such evaluation.  We must implement these
requirements for the first time in connection with the preparation of the annual
report for the year ending December 31, 2004.  We have been actively preparing
for the implementation of this requirement by, among other things, establishing
an ongoing program to document, evaluate and test the systems and processes
necessary for compliance.  Certain deficiencies have been identified in
connection with this program which have been or are in the process of being
remediated.  If we fail to complete our evaluation, including the necessary
testing and remediation, on a timely basis and in a satisfactory manner, our
independent auditors may be unable to attest on a timely basis to the adequacy
of the Company's internal control. While the impact of this is uncertain at this
time, it could result in a loss of investor confidence in our financial reports
and have an adverse effect on our stock price.

ITEM 4. CONTROLS AND PROCEDURES

This Item has been amended to reflect the restatement of
the Company's condensed consolidated financial statements as discussed further
in the Explanatory Note and in Note 14 of the Notes to Condensed Consolidated
Financial Statements.

The Company determined that an error had been made in the
calculation of gain and loss on loans sold pursuant to its Mortgage Loan
Purchase and Sale Agreement with Greenwich Capital Financial Products, Inc.
("Greenwich") dated June 17, 1999.  The Company's historical practice had been
to continue to recognize interest income and interest expense on loans sold
under its agreement with Greenwich in the period from the time of sale until the
time of settlement with the committed loan purchaser.  The Company determined
that this interest income and interest expense should have been included in the
calculation of the gain on loans sold rather than be recognized as additional
interest income and interest expense in the period subsequent to the sale of the
loans.  The cumulative impact of this restatement during 2003 and the first six
months of 2004 was an understatement of pre-tax income by $615,000.

After making this determination, the Company conducted a
further review and determined that additional adjustments to the Condensed
Consolidated Financial Statements were necessary. These additional adjustments
related to the Company's accounting for the mark-to-market of forward
commitments associated with its adjustable rate mortgage ("ARM")
production in accordance with Statement of Financial Accounting Standards No.
133, "Accounting for Derivative and Hedging Activities". The Company
improperly included amounts in the mark-to-market calculation for ARM forward
commitments on sold loans.
While the adjustment resulted in decreases to revenue and
income in the first and second quarter of 2003, it resulted in an equal and
off-setting increase to revenue and income in the third quarter of 2003, with no net
impact on the total 2003 revenue or income amounts.
There was no impact to the three and six months ended June 30, 2004.

The Company also adjusted for leasehold improvement
allowances provided by the landlord on the Pleasanton, California facility, in
accordance with the terms of the lease on that facility. The Company had
previously recorded those amounts as a reduction of leasehold improvements, as
opposed to deferred rent, and ultimately a reduction of rent expense over the
period of the lease. The adjustment resulted in a $1,000 increase to net income
for the quarter ended June 30, 2004. There was no impact to the three and six months ended June 30, 2003.

The Company increased its deferred tax asset valuation allowance in 2003 by $700,000. The
restatement resulted from the Company's determination that effective in the third quarter of 2003, it was no
longer more likely than not that such deferred tax asset was realizable in future periods. The adjustment
increased income tax expense and decreased other assets in the third quarter of 2003.

These adjustments and other reclassifications are reflected
in this amended Quarterly Report on Form 10-Q/A for the period ended June 30,
2004.  In addition, the Company has filed amendments to its Annual Report on
Form 10-K for the period ended December 31, 2003 and its Quarterly Report on
Form 10-Q for the period ended March 31, 2004 that include restated financial
statements and amendments to related disclosures for the fiscal periods covered
by those reports.

The Company's management has determined that the above error related to the Greenwich agreement
resulted from a material weakness in the Company's internal controls and
procedures related to loan sales pursuant to such agreement.  It has
implemented changes to ensure that transactions pursuant to the agreement are
properly recorded through the introduction of improved policies and procedures
that include: a detailed process checklist, an incremental level of supervision
review, and documentation that evidences the improved procedures were
satisfactorily completed.  These enhancements were implemented during the
quarter ended September 30, 2004 and were operating as of that date.

In addition, during the course of management's evaluation of
the Company's controls and procedures in connection with the preparation and
filing of its Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2004, management identified what it considered to be a deficiency in
internal controls related to the documentation of the hedging policy adopted in
connection with the Company's QSPE.  The Company's QSPE is permitted by its
governing documents, which include a hedging policy, to enter into certain types
of hedging transactions.  There were properly approved changes to the hedging
policy that were not documented in a timely manner.  The deficiency did not
affect the economic performance of the hedges themselves, but rather was limited
to the timeliness of the documentation process of the hedging policy.  The
Company has developed and implemented procedures in order to make sure that any
changes to the hedging policy are documented in a timely fashion.

There have been no other changes in the Company's internal
control over financial reporting that occurred during the Company's most recent
fiscal quarter that has materially affected or is reasonably likely to
materially affect, the Company's internal control over financial reporting.

The Company evaluated as of June 30, 2004, in connection with
the preparation and filing of its Quarterly Report on Form 10-Q, under the
supervision and with the participation of the Company's management, including
the Company's Chief Executive Officer and Chief Financial Officer, the
effectiveness of the design and operation of the Company's disclosure controls
and procedures (as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e)).
In addition, in connection with the restatement of its financial statements, the
Company's management re-evaluated its disclosure controls and procedures.  Based
upon the re-evaluation, the Company's Chief Executive Officer and Chief
Financial Officer concluded that as of June 30, 2004 the disclosure controls and
procedures were not effective at a reasonable level in timely alerting them to
material information relating to the Company that is required to be included in
the Company's periodic filings with the Securities and Exchange Commission.

Consistent with the provisions and spirit of the
Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC thereunder, we
maintain a process of continuous review of our internal controls to improve and
enhance them, with the assistance of our internal accounting staff.  As part of
this review, subsequent to the period covered by this report the Company
identified various control deficiencies. While none of the deficiencies
individually are considered to be material, in the aggregate when measured
against the Company's relatively nominal profits during the 2004 fiscal year,
they may be deemed to be material.  The Company has remediated or is in the
process of remediating each of the deficiencies. Specific remediation efforts
have included: improved documentation of policies and procedures, improved
supervision review procedures, and enhanced segregation of duties.

The Company's management, including the Chief Executive
Officer and Chief Financial Officer, do not expect that the Company's disclosure
controls or internal controls will prevent all error and all fraud.  A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met due to
numerous factors, ranging from errors to conscious acts of an individual, or
individuals acting together.  In addition, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of inherent
limitations in a cost-effective control system, misstatements due to error
and/or fraud may occur and not be detected.

PART II OTHER INFORMATION

Item  6. Exhibits and Reports on Form 8-K

(a)    Exhibits:

|3.1   | Restated Certificate of Incorporation of E-LOAN dated
July 2, 1999 (1)                                                                                        
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.2   | Corrected Certificate of Amendment of Restated
Certificate of Incorporation of E-LOAN, Inc. dated February 15, 2001
(2)                                       
|3.3   | Amended and Restated Bylaws of E-LOAN, Inc. dated March
16, 2001 (3)                                                                                          
|3.4   | Amendment to Bylaws of E-LOAN, Inc. dated June 14, 2004 †                                                                                                     
|10.8  | Indemnification Agreement with James Jones dated April 26, 2004 †                                                                                             
|10.9  | Amendment No. 1 to Master Repurchase Agreement with Merrill Lynch Mortgage Capital, Inc. dated May 20, 2004 †                                                 
|10.10 | Indemnification Agreement with Dan Springer dated June 14, 2004 †                                                                                             
|10.11 | Amendment Number One to
Mortgage Loan Purchase and Sale Agreement with Greenwich Capital Financial
Products Inc. dated June 28, 2004 †                        
|10.12 | Fourth Amendment to Credit Agreement with Merrill Lynch
Bank USA dated June 29, 2004* †                                                                       
|10.13 | Fourth Amendment to Loan Agreement with Merrill Lynch
Mortgage Capital, Inc. dated June 29, 2004* †                                                           
|10.14 | Fourth Amendment to Systems & Services
Technologies, Inc. Servicing and Custodian Agreement with Systems and Services Technologies, Inc. dated June 29, 2004 †
|10.15 | First Amendment to Contribution and Sale Agreement with
E-LOAN Auto Fund One, LLC dated June 29, 2004 †                                                       
|10.16 | Indemnification Agreement with Susan Catherine Muriel
dated July 1, 2004 †                                                                                    
|10.17 | Purchase and Sale Agreement with Merrill Lynch Bank
USA dated July 14, 2004* †                                                                                
|31.1  | Chief Executive Officer Certification of Periodic Financial Report
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002#                                 
|31.2  | Chief Financial Officer Certification of Periodic Financial Report Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002#                                 
|32.1  | Chief Executive Officer Certification Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002##              
|32.2  | Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002##              

______

(1) Incorporated by reference to
Exhibit 3.1 of the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 2000, filed on August 14, 2000.

(2) Incorporated by reference to Exhibit 3.2 of the Company's
Amendment to its Annual Report on Form 10-K/A for the fiscal year ended December
31, 2000, filed on April 23, 2001.

(3) Incorporated by reference to Exhibit 3.3 of the Company's
Amendment to its Annual Report on Form 10-K/A for the fiscal year ended December
31, 2000, filed on April 23, 2001.

* Confidential Treatment Requested

# Filed herewith

## Furnished herewith

† Filed previously with original Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 2004, filed on August 9, 2004.

(b)    Reports on Form 8-K

The Company furnished to the Securities and Exchange Commission one report on
Form 8-K during the three months ended June 30, 2004 on May 3, 2004 for the
purpose of reporting under Item 12 thereof its first quarter financial results
and for the purpose of announcing the appointment of James G. Jones to the Board
of Directors.

The Company filed with the Securities and Exchange Commission one report on
Form 8-K  during the three months ended  June 30, 2004 on June 10, 2004 for the
purpose of announcing the promotion of Mark Lefanowicz, its Chief Operating
Officer, as the Company's new President and the hiring of  Susan C. Muriel as
its new Chief Marketing Officer.

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SIGNATURES

Pursuant to the requirement of the Security Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

| |             
| | ------------
| | E-LOAN, INC.

Dated: March 25, 2005

| |                                                                          |                    
| | ------------------------------------------------------------------------ | -------------------
| | By:                                                                      | /s/ Matthew Roberts
| | Matthew Roberts                                                         
| | Chief Financial Officer                                                 
| | (Principal Financial and Accounting Officer and Duly
Authorized Officer)

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