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

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FORM 10-Q

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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 March 31, 2005 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 April 29, 2005, 65,239,303 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 for the Period Ended March 31, 2005
                                TABLE OF CONTENTS



|PART I.   FINANCIAL INFORMATION                                                                                       | Page No.
|--------------------------------------------------------------------------------------------------------------------- | --------
|                                                                                                                      |         
|Item 1.   Interim Financial Statements
                  (unaudited):                                                 |         
|                                                                                                                      |         
|Condensed Consolidated Balance Sheets as of December 31, 2004 and March 31, 2005                                      | **      
|                                                                                                                      |         
|Condensed Consolidated Statements of Operations for the
    three months ended March 31, 2004 and 2005                | **      
|                                                                                                                      |         
|Condensed Consolidated Statements of Cash Flows for the
    three months ended March 31, 2004 and 2005                | **      
|                                                                                                                      |         
|Notes to Condensed Consolidated Unaudited Financial Statements                                                        | **      
|                                                                                                                      |         
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations | **      
|                                                                                                                      |         
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                  | **      
|                                                                                                                      |         
|Item 4.   Controls and Procedures                                                                                     | **      
|                                                                                                                      |         
|PART II.  OTHER INFORMATION                                                                                           |         
|                                                                                                                      |         
|Item 1.   Legal Proceedings                                                                                           | **      
|                                                                                                                      |         
|Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds                                                 | **      
|                                                                                                                      |         
|Item 3.   Defaults Upon Senior Securities                                                                             | **      
|                                                                                                                      |         
|Item 4.   Submission of Matters to a Vote of Security Holders                                                         | **      
|                                                                                                                      |         
|Item 5.   Other Information                                                                                           | **      
|                                                                                                                      |         
|Item 6. Exhibits                                                                                                      | **      
|                                                                                                                      |         
|Signatures                                                                                                            | **      

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PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

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E-LOAN, INC.
                                 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                        (IN THOUSANDS)

`December 31,   March 31,
                                                                                    2004          2005
                                                                                ------------  ------------

ASSETS
Cash and cash equivalents (includes $2,350 of restricted cash)................ $     55,066  $     65,210
Loans held-for-sale...........................................................       17,505        26,204
Accounts receivable, prepaids and other assets................................       19,014        27,248
Fixed assets, net.............................................................       15,860        15,582
Retained interests in auto loans - trading....................................       13,954            --
                                                                                ------------  ------------
           Total assets....................................................... $    121,399  $    134,244
                                                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Warehouse and other lines payable............................................. $     14,735  $     25,163
Accounts payable, accrued expenses and other liabilities......................       20,476        20,116
                                                                                ------------  ------------
           Total liabilities..................................................       35,211        45,279
                                                                                ------------  ------------
Commitments and contingencies (Note 14):
Stockholders' equity:
    Preferred stock, 5,000,000 $0.001 par value shares authorized at
      December 31, 2004 and March 31, 2005; 0 shares issued and
      outstanding at December 31, 2004 and March 31, 2005.....................           --            --
    Common stock, 150,000,000 $0.001 par value shares authorized at
      December 31, 2004 and March 31, 2005; 64,427,390 and
      65,239,303 shares issued and outstanding at December 31, 2004
      and March 31, 2005......................................................           64            65
Additional paid-in capital....................................................      268,894       269,449
Accumulated deficit...........................................................     (182,770)     (180,549)
                                                                                ------------  ------------
           Total stockholders' equity.........................................       86,188        88,965
                                                                                ------------  ------------
           Total liabilities and stockholders' equity......................... $    121,399  $    134,244
                                                                                ============  ============`

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

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E-LOAN, INC.
                                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                   (UNAUDITED)

`Three Months Ended
                                                               March 31,
                                                            2004         2005
                                                         -----------  -----------
Revenues (Note 12)..................................... $    30,631  $    38,385

Operating expenses:
    Operations (Note 13)...............................      14,942       17,595
    Sales and marketing................................      11,132       13,408
    Technology.........................................       2,166        2,476
    General and administrative.........................       3,516        2,666
                                                         -----------  -----------
           Total operating expenses....................      31,756       36,145
                                                         -----------  -----------
Income (loss) from operations..........................      (1,125)       2,240
Other income, net......................................          15           14
                                                         -----------  -----------
Income (loss) before taxes.............................      (1,110)       2,254
Income taxes...........................................          --          (33)
                                                         -----------  -----------
Net income (loss)...................................... $    (1,110) $     2,221
                                                         ===========  ===========

Net income (loss) per share:
    Basic.............................................. $     (0.02) $      0.03
                                                         ===========  ===========
    Diluted............................................ $     (0.02) $      0.03
                                                         ===========  ===========

    Weighted-average shares - basic....................      62,325       65,092
                                                         ===========  ===========
    Weighted-average shares - diluted..................      62,325       68,291
                                                         ===========  ===========`

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

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

`Three Months Ended
                                                                       March 31,
                                                                    2004         2005
                                                                 -----------  -----------
Cash flows from operating activities:
   Net income (loss)........................................... $    (1,110) $     2,221
   Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
     Depreciation and amortization of fixed assets.............       1,418        1,594
     Non-cash compensation expense.............................         636           --
     Changes in operating assets and liabilities:
       Loans held-for-sale.....................................     (30,680)      (8,699)
       Retained interests in auto loans - trading..............      (1,720)      13,954
       Accounts receivable, prepaids, and other assets.........       8,314       (8,235)
       Accounts payable, accrued expenses and
         other payables........................................       4,406         (360)
                                                                 -----------  -----------
         Net cash (used in) provided by operating activities...     (18,736)         475
                                                                 -----------  -----------
Cash flows from investing activities:
   Acquisition of fixed assets.................................      (3,512)      (1,315)
                                                                 -----------  -----------
         Net cash used in investing activities                       (3,512)      (1,315)
                                                                 -----------  -----------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net.................         352          556
   Proceeds from warehouse and other lines payable.............   1,074,149    1,145,251
   Repayments of warehouse and other lines payable.............  (1,040,667)  (1,134,823)
                                                                 -----------  -----------
         Net cash provided by financing activities.............      33,834       10,984
                                                                 -----------  -----------
Net increase in cash...........................................      11,586       10,144
Unrestricted cash and cash equivalents, beginning of period....      29,123       52,716
Change in restricted cash......................................       2,500           --
                                                                 -----------  -----------
Unrestricted cash and cash equivalents, end of period..........      43,209       62,860
Restricted cash and cash equivalents, end of period............       2,350        2,350
                                                                 -----------  -----------
Total cash and cash equivalents, end of period................. $    45,559  $    65,210
                                                                 ===========  ===========`

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 a 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 (unaudited)

The accompanying financial statements as of March 31, 2004 and 2005 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 March 31, 2004 and 2005. 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, 2004, as
amended May 2, 2005. The results for the three months ended March 31, 2005 are not necessarily
indicative of the expected results for the year ending December 31, 2005.

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.

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America 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, 2004 and March 31, 2005 (in thousands):

`December 31,  March 31,
                                                         2004         2005
                                                      -----------  -----------
Cash................................................ $    51,252  $    61,617
Certificates of deposit, unrestricted...............          75           76
Documentary drafts..................................       1,389        1,167
Restricted cash.....................................       2,350        2,350
                                                      -----------  -----------
                                                     $    55,066  $    65,210
                                                      ===========  ===========`

Documentary drafts

The Company originates auto loans directly to consumers partially through the
use of a documentary draft process. This process requires the borrower and the auto dealer 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 auto dealer, 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 auto dealer.

Escrow deposits

The Company administers escrow deposits as a service to its customers. Escrow
deposits totaled $7.9 million and $14.2 million at December 31, 2004 and March 31, 2005,
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

The Company has a line of credit with Wells Fargo Bank, National Association.
The Company is 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 condensed consolidated
balance sheet. This line of credit is being utilized to support letters of credit related to the
Company's Pleasanton, California facility as well as a letter of credit related to the Company's
surety bonds.

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 Statements of Financial Accounting No. 138 and No. 140. In accounting for its derivative
financial instruments, SFAS 133 requires an entity to recognize all qualifying 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, qualifying 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 of the underlying loan. 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 measured. 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 months ended March 31, 2004 and 2005. The
effect on the Company's income statement from marking to market the locked pipeline and forward
commitments was a $0.7 million loss and $2.0 million gain, included in mortgage revenues for the three
months ended March 31, 2004 and 2005, respectively.

The Company also hedges 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 and are recorded
at fair value. Subsequent changes in the value of outstanding swap contracts 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 $62,000 gain and $18,000 loss,
included in auto revenues for the three months ended March 31, 2004 and 2005, 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 involved the Company surrendering control over these assets to assure
that the sold assets had been isolated from the Company and its creditors. In accordance with
Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, ("SFAS 140") and Financial Interpretation No
46(R), "Consolidation of Variable Interest Entities-an interpretation of ARB No.51" ("FIN 46(R)"),
the assets and liabilities of E-LOAN Auto were not consolidated in the financial statements of the
Company. The Company recognized a gain on the sale of auto loan receivables to E-LOAN Auto in the
period the sale occurred, which represented the difference between the sale proceeds to the Company
and the Company's net carrying value of the receivables. The Company retained an interest in the
future cash flows from the loans. Such cash flows were distributed to the Company by the QSPE
monthly. The retained interest was recorded on the balance sheet at fair value as a trading asset,
and was 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 was based upon a discounted cash
flow model of the estimated future cash flows to be received by the Company over the life of the
loans. The model entailed the use of 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 were 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 have produced different financial results.

On March 30, 2005, Merrill Lynch Bank USA purchased substantially all of the auto
loans held by E-LOAN Auto. The Company received net proceeds associated with the liquidation of
E-LOAN Auto's assets, which resulted in an increase in the fair value of the Company's retained
interest in the purchased auto loans. As the retained interest asset is classified as a trading
asset, the fair value adjustment is included in current period income as a component of auto
revenue. As of the purchase date, E-LOAN Auto was no longer a qualifying special purpose entity
(QSPE) as there were no external beneficial interest holders remaining. In accordance with EITF 2002-09, "Accounting for Changes That Result in a Transferor
Regaining Control of Financial Assets Sold", the Company deferred gain recognition on the auto loans
retained by E-LOAN Auto and those assets were consolidated in the Company's financial statements as
of March 31, 2005.

Loans held-for-sale

Mortgage loans held-for-sale consists of residential property mortgages
having maturities up to 30 years as well as second mortgages on residential properties. Pursuant to
the mortgage terms, the borrowers have pledged the underlying real estate as collateral for the
loans. It is the Company's practice to sell these loans to mortgage loan purchasers shortly after
they are funded. Mortgage loans held-for-sale are recorded at the lower of cost or aggregate market
value. Cost generally consists of loan principal balance adjusted for net deferred origination
income and SFAS 133 adjustments. The net deferred origination income is recognized at the time of
sale.

Auto loans held-for-sale consists of automobile loans having maturities up to 72
months. Pursuant to the loan terms, the borrowers have pledged the automobile as
collateral for the loan. It is the Company's practice to sell these loans shortly after they are
funded. Auto loans held-for-sale are recorded at the lower of cost or aggregate market value.

Fixed assets

Fixed assets are recorded at cost and depreciated using the straight-line method
over their useful lives, which is generally three years for computers and software and five years
for furniture and fixtures. Leasehold improvements are amortized over the remaining life of the
lease. Maintenance and repairs are charged to expense as incurred, and improvements and betterments
are capitalized. The Company assesses impairment of its fixed assets when there has been an event
that might indicate that the undiscounted future cash flows from the asset may not be
recoverable.If the estimated undiscounted future cash flows are not sufficient to recover
the carrying value of the asset, the carrying value of the asset is written down to its estimated
fair value.When assets are retired or otherwise disposed of, the cost and accumulated
depreciation are removed from the accounts and any resulting gain or loss is reflected in operations
in the period realized.

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 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.

Revenue

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 fees. These revenues are recognized at the time the loan is sold. The Company sells
these 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 (see Note 11).

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 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. The Company sells these 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 (see Note 11).

Auto Revenues

The Company funded prime auto loans using a line of credit and, prior to
April 2005, sold them either via whole loan sales or to a qualified special purpose entity (QSPE),
which was created in July 2002. Revenues from sales to the QSPE consisted of the estimated future
discounted cash flows net of interest, servicing fees and credit losses. Revenues on prime auto loan
sales to the QSPE were recognized when the loan was sold to the QSPE. In addition, in exchange for
the loans sold, the Company recorded a retained interest. A discount rate was 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 was an interest-earning asset. The difference between the estimated discounted
cash flows and the actual cash flows received over time was accreted and included as auto
revenue.

On March 30, 2005, Merrill Lynch Bank USA purchased substantially all of the auto
loans held by E-LOAN Auto. The Company received net proceeds associated with the liquidation of
E-LOAN Auto's assets, which resulted in an increase in the fair value of the Company's retained
interest in the purchased auto loans. As the retained interest asset is classified as a trading
asset, the fair value adjustment is included in current period income as a component of auto
revenue. As of the purchase date, E-LOAN Auto was no longer a qualifying special purpose entity
(QSPE) as there were no external beneficial interest holders remaining. In accordance with EITF 2002-09, "Accounting for Changes That Result in a Transferor
Regaining Control of Financial Assets Sold", the Company deferred gain recognition on the auto loans
retained by E-LOAN Auto and those assets were consolidated in the Company's financial statements as
of March 31, 2005.

In July 2004, the Company began selling a portion of its prime auto loan
production to Merrill Lynch Bank USA pursuant to a Purchase and Sale agreement. The revenue on these
loans is based on a fee derived from the composition of the loans being sold, and is recognized at
time of transfer. As of April 2005, all prime auto loan production is being sold under this
agreement.

Closing Services Revenues

In the fourth quarter of 2003, the Company formed Escrow Closing Services,
Inc. ("ECS") a wholly-owned subsidiary, which provides mortgage closing services, including HUD-1
and document preparation and signing, disbursement and recording services for a portion of our home
equity business. In the first quarter of 2005, ECS began offering appraisal services for a portion
of the company's mortgage business.

Advertising and marketing costs

Advertising and marketing costs related to various media content advertising such
as television, direct mail and radio are charged to operating expenses as incurred. These costs
include the cost of production as well as the cost of any airtime.

Income taxes

The Company accounts for income taxes using the liability method in
accordance with Statement of Financial Accounting Standard No. 109, Accounting for Income Taxes
("SFAS 109"). 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.
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 and 2004. During most of 2002 and 2003, the sustained low interest rate environment created
favorable operating conditions for the Company. However, during the fourth quarter of 2003 and for
the first nine months of 2004, the Company reported a loss from operations, largely as a result in
declines in mortgage refinance volume as mortgage rates increased.

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 12.2 million and 2.0 million were excluded from the dilutive shares
outstanding for the periods ended March 31, 2004 and 2005, 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
                                                              March 31,
                                                         2004         2005
                                                      -----------  -----------
  Numerator:
    Net income (loss)............................... $    (1,110) $     2,221
                                                      ===========  ===========
  Denominator:
    Weighted average shares, basic..................      62,325       65,092
    Effect of potentially dilutive securities:
      Warrants......................................          --          153
      Employee Stock Option Plan....................          --        3,046
                                                      -----------  -----------
    Weighted average number of shares
      assuming dilution.............................      62,325       68,291
                                                      ===========  ===========

  Diluted net income (loss) per share............... $     (0.02) $      0.03
                                                      ===========  ===========`

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

On December 12, 2003, the American Institute of Certified Public Accountants
issued Statement of Position No. 03-3, "Accounting for Certain Loans or Debt Securities Acquired in
a Transfer" (SOP 03-3). SOP 03-3 requires acquired impaired loans for which it is probable that
the investor will be unable to collect all contractually required payments receivable to be recorded
at the present value of amounts expected to be received and prohibits carrying over or creation of
valuation allowances in the initial accounting for these loans. SOP 03-3 is effective for loans
acquired in fiscal years beginning after December 31, 2004. SOP 03-3 does not have an impact on the
Company's results of operations or financial condition.

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.

In March, 2004, the Emerging Issues Task Force (EITF) issued EITF 03-1, "The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" (EITF 03-1).
EITF 03-1 provides recognition and measurement guidance regarding when impairments of equity and
debt securities are considered other-than-temporary thereby requiring a charge to earnings.
EITF 03-1 also requires additional annual disclosures for investments in unrealized loss positions. The
additional annual disclosure requirements were previously issued by the EITF in November 2003 and
were effective for the year ended December 31, 2003. In September 2004, the FASB issued FASB Staff
Position (FSP) EITF 03-1-1, which delays the recognition and measurement provisions of EITF 03-1
pending the issuance of further implementation guidance. EITF 03-1 and EITF 03-1-1 do not have an
impact on the Company's results of operations or financial condition.

In June 2004, the FASB released EITF 03-6, "Participating Securities and the
Two-Class Method under FASB Statement No. 128" (EITF 03-6). This pronouncement provides
guidance on when to apply the two-class method for computing basic and diluted earnings per share
for participating securities. A participating security is a security that participates in
undistributed earnings with common stock regardless of whether the participation is dependent upon
the occurrence of a specific event. EITF 03-6 did not impact the Company's results of operations or
financial condition.

In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which
establishes standards for transactions in which an entity exchanges its equity instruments for goods
or services. In March 2005, the Securities and Exchange Commission (SEC) issued Staff Accounting
Bulletin No. 107 - Share-Based Payment, which provides interpretive guidance related to SFAS No.
123(R). SFAS No. 123(R) requires a public entity to measure the cost of employee services received
in exchange for an award of equity instruments based on the grant-date fair value of the award. This
eliminates the exception to account for such awards using the intrinsic method previously allowable
under APB Opinion No. 25. SFAS No. 123(R) will be effective for annual reporting periods beginning
on or after June 15, 2005, and interim periods beginning on or after December 15, 2005. The impact
of the adoption of SFAS No. 123(R) is addressed in Note 4 and the impact of adopting SFAS No. 123(R)
is not expected to be materially different from that presented in Note 4.

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.

In December, 2004, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 123 (revised 2004) "Share-based Payment" (SFAS 123R) which eliminates the ability to
account for share-based compensation transactions using Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees," (APB 25) and generally requires that such
transactions be accounted for using a fair value-based method with the resulting compensation cost
recognized over the period that the employee is required to provide service in order to receive
their compensation. SFAS 123R also amends SFAS No. 95, "Statement of Cash Flows," requiring the
benefits of tax deductions in excess of recognized compensation cost to be reported as a financing
cash flow, rather than as an operating cash flow as currently required. The provisions of this
statement are effective in the first interim reporting period beginning after December 15, 2005. The
impact of the adoption of SFAS 123 is addressed below and the impact of adopting SFAS 123R is not
expected to be materially different.

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
                                                              March 31,
                                                         2004         2005
                                                      -----------  -----------
Reported net income (loss).......................... $    (1,110) $     2,221
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..........      (1,029)        (506)
                                                      -----------  -----------
Pro forma net income (loss)......................... $    (1,503) $     1,715
                                                      ===========  ===========

Reported basic net income (loss) per share.......... $     (0.02) $      0.03
Reported diluted net income (loss) per share........ $     (0.02) $      0.03

Pro-forma basic net income (loss) per share......... $     (0.02) $      0.03
Pro-forma diluted net income (loss) per share....... $     (0.02) $      0.03

Risk free interest rate - stock options.............         2.4%         3.6%
Risk free interest rate - ESPP......................         2.1%          --
Average expected life - stock options...............         3.1          3.2
Average expected life - ESPP........................         1.7           --
Dividend yield......................................          --           --
Expected volatility - stock options.................        64.7%        61.3%
Expected volatility - ESPP..........................        76.6%          --`

5.   WARRANTS

In February 2001, the Company issued a warrant to purchase 300,000 shares of
common stock to Greenwich Capital in connection with a warehouse agreement at an exercise price of
$1.55 per share until February 23, 2006. In July 2003, Greenwich Capital assigned a portion of the
warrant to an institutional investor in the amount of 150,000 common shares. At March 31, 2005, both
warrants remain outstanding.

In June 2002, the Company issued a warrant to purchase 800,000 shares of common
stock to Merrill Lynch Mortgage Capital, Inc. in connection with a line of credit agreement at an
exercise price of $1.22 per share until June 1, 2005. In January 2005, Merrill exercised the warrant
on a net exercise basis and 505,752 shares of common stock were issued to complete the
settlement.

6.   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. Also included are amounts disbursed into escrow on a
borrower's behalf where the mortgage documents are signed generally the subsequent day. All mortgage
and home equity loans held-for-sale are pledged as collateral for borrowings at December 31, 2004
and March 31, 2005 (see Note 10).

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, 2004 and March 31, 2005 (see Note 10). The following
summarizes loans held-for-sale at December 31, 2004 and March 31, 2005 (in thousands):

`December 31,  March 31,
                                                         2004         2005
                                                      -----------  -----------
Mortgage............................................ $    12,356  $    19,426
Home equity.........................................       2,586        3,571
Auto................................................       2,558        3,187
Net deferred origination revenue....................           5           20
                                                      -----------  -----------
                                                     $    17,505  $    26,204
                                                      ===========  ===========`

Included in loans held-for-sale is a SFAS 133 fair value adjustment amount of
$0.1 million and $0.1 million for the year and three months ended December 31, 2004 and March 31,
2005, 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, which would be received at the time of
cash settlement, is $17.8 million and $26.8 million at December 31, 2004 and March 31, 2005,
respectively.

7.    ACCOUNTS RECEIVABLE, PREPAIDS AND OTHER ASSETS

The following summarizes accounts receivable, prepaids and other assets at
December 31, 2004 and March 31, 2005 (in thousands):

`December 31,  March 31,
                                                         2004         2005
                                                      -----------  -----------
Prepaids............................................ $     1,491  $     3,119
Accounts receivable.................................      15,484       20,387
Interest receivable.................................       1,647        1,436
Other assets........................................         392        2,306
                                                      -----------  -----------
                                                     $    19,014  $    27,248
                                                      ===========  ===========`

Included in prepaids at December 31, 2004 and March 31, 2005 are
prepayments for sales and marketing in the amounts of $0.4 million and $1.0 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 $12.6 million and $12.5 million at December 31, 2004 and March 31, 2005, respectively
(see Note 10).  Sensitivities associated with
our retained interest in loans sold under the Greenwich Capital agreement were insignificant at all
periods presented due to the short-term nature of the asset (amounts received generally within sixty
days or less).  Also included in accounts receivable at March 31, 2005, was a receivable in the amount
of $4.7 million related to the proceeds received in connection with the liquidation of E-LOAN Auto Fund One, LLC (See Note 8).
Included in other assets is an amount related to the fair value
of SFAS 133 derivatives of $0.3 million at December 31, 2004 and $2.2 million at March 31, 2005.

8.   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 purchased prime auto loans from the Company and then held
the loans. From inception through March 31, 2005, the Company sold $1,144 million in auto loans to
E-LOAN Auto and recognized $17.1 million in gain on sale. The retained interest represented 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 was 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 represented over collateralization in those
loans. The contributed basis was returned to the Company as part of the defined distribution of cash
flows from E-LOAN Auto. Cash flows were 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.

On March 30, 2005, Merrill Lynch Bank USA purchased $651 million in auto loans
held by E-LOAN Auto. The Company received $16.4 million in net proceeds associated with the
liquidation of E-LOAN Auto's assets, which resulted in a $2.7 million increase in the fair value of
the Company's retained interest in the purchased auto loans. As the retained interest asset is
classified as a trading asset, the fair value adjustment is included in current period income as a
component of auto revenue. As of the purchase date, E-LOAN Auto was no longer a qualifying special
purpose entity (QSPE) as there were no external beneficial interest holders remaining. In accordance with EITF 2002-09, "Accounting for Changes That Result in a
Transferor Regaining Control of Financial Assets Sold", the Company deferred gain recognition on
approximately $475 thousand in auto loans retained by E-LOAN Auto and those assets were consolidated
in the Company's financial statements as of March 31, 2005.

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



|                                               | 2004     | 2005      
|---------------------------------------------- | -------- | ----------
|Beginning Balance December 31,                 | $ 11,658 | $ 13,954  
|Contributed basis in loans sold to E-LOAN Auto | 600      | 174       
|Non-cash gain on sale                          | 2,410    | 836       
|Accretion of present value discount            | 339      | 346       
|Excess cash flows received                     | (1,584)  | (1,612)   
|Fair value adjustment                          | (45)     | 2,688     
|Sale proceeds received from E-LOAN Auto        | --       | (16,386)  
|Ending Balance March 31,                       | $ 13,378 | $       --

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 was an interest-earning asset, with interest income accreted
over time at the discount rate and included in Auto Revenues. The weighted average loss rate was
based on actual loss experience to date from the seasoned portions of the portfolio. The prepayment
speed projected prepayments on a monthly percentage of the original loan balance.

9.   NOTES PAYABLE

On June 30, 2003, the Company obtained a $5 million line of credit from Wells
Fargo Bank, N.A. 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 these covenants during the three months
ended and at March 31, 2005. No balance was outstanding on this line as of March 31, 2005.

10.   WAREHOUSE AND OTHER LINES PAYABLE

The Company has a warehouse line of credit with GMAC Mortgage Corporation for
borrowings of up to $75 million for the interim financing of mortgage loans. 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 months ended and at March 31, 2005. The committed line of credit expires on May 31, 2005.

The Company has an agreement with Greenwich Capital to finance up to $500 million
of mortgage loan inventory pending sale of these loans to the ultimate mortgage loan purchasers. 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. The commitment fee
was reduced to $600,000 for the period March 15, 2005 through March 13, 2006. 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. The Company was in compliance with these
covenants during the three months ended and at March 31, 2005. The line will expire on March 13,
2006.

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, in
the form of a retained interest, derived from sales under this agreement is included as a receivable
on the balance sheet until the transaction is settled (see Note 7). The balance of loans sold
related to these receivables was $337.8 million and $383.5 million as of December 31, 2004 and March
31, 2005, 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, 2007. This line includes
various financial and non-financial covenants. The Company had to obtain a waiver as a result of
failure to meet a quick ratio covenant for the month ended February 28, 2005, but was in compliance
with these covenants for all other periods during the three months ended and at March 31, 2005.

The Company has an uncommitted warehouse line of credit agreement with Merrill
Lynch Mortgage Capital Inc. for borrowings of up to $100 million for the interim financing of
mortgage loans. 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, 2006. 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
three months ended and at March 31, 2005.

In January 2005, the Company entered into an agreement for a warehouse line of
credit for borrowings of up to $150 million for the interim financing of mortgage loans with
JPMorgan Chase Bank, N.A. 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 committed line of credit expires on January 3, 2006. 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 these covenants during the
three months ended and at March 31, 2005.

The following summarizes warehouse and other lines payable at December 31, 2004 and March
31, 2005 (in thousands):

`December 31,  March 31,
                                                         2004         2005
                                                      -----------  -----------
Warehouse lines - GMAC.............................. $       210  $      (229)
Warehouse lines - Greenwich.........................      10,040       18,303
Warehouse lines - Merrill (Mortgage)................         877           --
Warehouse lines - JPMorgan Chase......................        --        2,017
Line of credit - Merrill (Auto).....................       3,608        5,072
                                                      -----------  -----------
                                                     $    14,735  $    25,163
                                                      ===========  ===========`

11.   ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES

The following summarizes accounts payable, accrued expenses and
other liabilities at December 31, 2004 and March 31, 2005 (in thousands):

`December 31,  March 31,
                                                         2004         2005
                                                      -----------  -----------
Accounts payable.................................... $     9,421  $     8,413
Accrued compensation................................       2,433        3,039
Income tax payable..................................         (21)          (5)
Other liabilities...................................       5,670        5,337
Reserves............................................       2,333        2,564
Interest payable....................................         640          768
                                                      -----------  -----------
                                                     $    20,476  $    20,116
                                                      ===========  ===========`

Included in other liabilities is an amount related to the fair value of SFAS 133 derivatives of
$188 thousand and $6 thousand at December 31, 2004 and March 31, 2005, 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 breaches 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 March 31, 2005 by product (in thousands):

`Home
                                                       Mortgage      Equity        Auto         Total
                                                      -----------  -----------  -----------  -----------
Balance at 1/1/05................................... $       994  $     1,279  $        60  $     2,333
   Increase to reserve..............................         175          313          162          650
   Losses incurred..................................        (167)        (251)          --         (418)
                                                      -----------  -----------  -----------  -----------
Balance at 03/31/05................................. $     1,002  $     1,341  $       222  $     2,565
                                                      ===========  ===========  ===========  ===========`

12.   REVENUES AND OTHER INCOME, NET

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

`Three Months Ended
                                                              March 31,
                                                         2004         2005
                                                      -----------  -----------
Revenues:
   Mortgage......................................... $    15,508  $    16,786
   Interest income on mortgage loans................       1,259        2,737
   Home equity......................................       9,555       10,247
   Interest income on home equity loans.............         480        1,389
   Auto.............................................       3,062        5,494
   Closing services.................................         451        1,438
   Other............................................         316          294
                                                      -----------  -----------
         Total revenues............................. $    30,631  $    38,385
                                                      ===========  ===========`

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

`Three Months Ended
                                                              March 31,
                                                         2004         2005
                                                      -----------  -----------
Interest income on short-term investments........... $        23  $        19
Interest expense on non-warehouse
   facility borrowings..............................          (8)          (5)
                                                      -----------  -----------
                                                     $        15  $        14
                                                      ===========  ===========`

13.   OPERATING EXPENSES

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

`Three Months Ended
                                                              March 31,
                                                         2004         2005
                                                      -----------  -----------
Compensation and benefits........................... $    14,063  $    14,150
Processing costs....................................       2,802        3,232
Advertising and marketing...........................       9,936       12,317
Occupancy and administration........................       4,042        3,796
Interest expense on warehouse borrowings............         913        2,650
                                                      -----------  -----------
         Total operating expenses................... $    31,756  $    36,145
                                                      ===========  ===========`

Commissions and bonus compensation comprised 19% and 21% of total compensation
and benefits in the three months ended March 31, 2004 and 2005. Net occupancy costs comprised 20%
and 10% of total occupancy and administration in the three months ended March 31, 2004 and 2005,
respectively. Included in compensation and benefits for the three months ended March 31, 2004 is a
charge related to the resignation of the Company's prior President and Chief Operating Officer of
approximately $1.0 million.

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
                                                              March 31,
                                                         2004         2005
                                                      -----------  -----------
Mortgage ........................................... $     6,648  $     6,927
Interest expense on mortgage loans..................         602        1,811
Home equity.........................................       5,070        4,972
Interest expense on home equity loans...............         283          786
Auto................................................       1,834        2,000
Closing services....................................         505        1,099
                                                      -----------  -----------
Total operations.................................... $    14,942  $    17,595
                                                      ===========  ===========`

14.   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 March 31, 2005, the Company had extended locks to originate mortgage and home
equity loans amounting to approximately $245.5 million (the "locked pipeline"). At March 31, 2005,
the Company had entered into best efforts forward loan sale agreements amounting to approximately
$51.9 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 March 31, 2005, the Company had entered into mandatory sell forward
commitments amounting to approximately $88.8 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 March 31, 2005, the Company had entered into $12.9 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 March 31, 2005,
the Company had entered into amortizing swap contracts in the amount of $14.1 million, as an
economic hedge of anticipated funded loans from auto loan approvals.

Other Future Commitments

The Company has future commitments for operating leases totaling
$2.0 million for 2005, $2.7 million for each year from 2006 to 2008, and $4 million for 2009 and
thereafter. The operating lease expires in June 2010.

The Company has entered into fixed contracts to purchase national television
spots through the third quarter of 2005. The Company pays for this media in monthly installments,
generally thirty days in advance of the scheduled start date of the media. Future minimum payments
under these contracts amount to approximately $5.1 million for 2005.

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. 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.

As of March 31, 2005, the Company carried a mortgage bankers' blanket bond and
errors and omissions insurance coverage for $5.0 million. The premiums for the bond and insurance
coverage are paid through September 2005.

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."

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 purchase and non-prime
mortgage loans, home equity loans and lines of credit, and auto loans. 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 for the
Company as a percentage of total revenues for the periods indicated (in thousands, except per share amounts):

`Three Months Ended
                                                                 March 31,
                                                            2004         2005
                                                         -----------  -----------
Revenues .............................................. $    30,631  $    38,385

Operating expenses:
    Operations ........................................      14,942       17,595
    Sales and marketing................................      11,132       13,408
    Technology.........................................       2,166        2,476
    General and administrative.........................       3,516        2,666
                                                         -----------  -----------
           Total operating expenses....................      31,756       36,145
                                                         -----------  -----------
Income (loss) from operations..........................      (1,125)       2,240
Other income, net......................................          15           14
                                                         -----------  -----------
Income (loss) before taxes.............................      (1,110)       2,254
Income taxes...........................................          --          (33)
                                                         -----------  -----------
Net income (loss)...................................... $    (1,110) $     2,221
                                                         ===========  ===========

Net income (loss) per share:
    Basic.............................................. $     (0.02) $      0.03
                                                         ===========  ===========
    Diluted............................................ $     (0.02) $      0.03
                                                         ===========  ===========`

AS A PERCENTAGE OF REVENUES:

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

Operating expenses:
    Operations ........................................          49 %         46 %
    Sales and marketing................................          36 %         35 %
    Technology.........................................           7 %          6 %
    General and administrative.........................          12 %          7 %
                                                         -----------  -----------
           Total operating expenses....................         104 %         94 %
                                                         -----------  -----------
Income (loss) from operations..........................          (4)%          6 %
Other income, net......................................          -- %         -- %
                                                         -----------  -----------
Income (loss) before taxes.............................          (4)%          6 %
Income taxes...........................................          -- %         -- %
                                                         -----------  -----------
Net income (loss)......................................          (4)%          6 %
                                                         ===========  ===========`

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 in thousands and as
a percentage of total revenues:

`Three Months Ended
                                                                 March 31,
                                                            2004         2005
                                                         -----------  -----------
Revenues:
   Mortgage............................................ $    15,508  $    16,786
   Interest income on mortgage loans...................       1,259        2,737
   Home equity.........................................       9,555       10,247
   Interest income on home equity loans................         480        1,389
   Auto................................................       3,062        5,494
   Closing services....................................         451        1,438
   Other...............................................         316          294
                                                         -----------  -----------
         Total revenues................................ $    30,631  $    38,385
                                                         ===========  ===========

   Mortgage............................................          51 %         44 %
   Interest income on mortgage loans...................           4 %          7 %
   Home equity.........................................          31 %         27 %
   Interest income on home equity loans................           2 %          4 %
   Auto................................................          10 %         14 %
   Closing services....................................           1 %          4 %
   Other...............................................           1 %         -- %
                                                         -----------  -----------
         Total revenues................................         100 %        100 %
                                                         ===========  ===========`

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

`Three Months Ended
                                March 31,
                            2004        2005
                         ----------  ----------
Mortgage
$ Volume                $  757,107  $  809,687
Revenue                 $   15,508  $   16,786
BPS                            205         207

Home Equity
$ Volume                $  302,250  $  336,029
Revenue                 $    9,555  $   10,247
BPS                            316         305

Auto
$ Volume                $  153,889  $  128,639
Revenue                 $    3,062  $    5,494
BPS                            199         427`

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.

Total mortgage revenue during the first quarter of 2005 increased by $1.3 million
over the first quarter of 2004 primarily due to an increase in refinance revenue. Although rates
have continued to rise, periodic dips in rates have resulted in additional mortgage refinance
fundings.

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

`Three Months Ended
                                March 31,
                            2004        2005
                         ----------  ----------
Refinance Mortgage
$ Volume                $  409,902  $  474,842
Revenue                 $    8,458  $    9,896
BPS                            206         208

Diversified Mortgage
$ Volume                $  347,205  $  334,845
Revenue                 $    7,050  $    6,890
BPS                            203         206`

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 2005. The Mortgage Bankers Association
of America data for the first quarter of 2005 below represents its estimate as of April 14, 2005:

`Q1 04    Q2 04    Q3 04    Q4 04     2004     Q1 05
                    -------- -------- -------- -------- -------- ---------
E-LOAN Mortgage*
    Purchase             37%      37%      44%      35%      38%       33%
    Refinance            63%      63%      56%      65%      62%       67%

Total Market*
    Purchase             47%      51%      67%      58%      56%       54%
    Refinance            53%      49%      33%      42%      44%       46%`

* Excludes home equity and auto loan volume

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 $0.7 million to $10.3 million for the three months ended March 31, 2005 from $9.6 million
for the three months ended March 31, 2004. The increase in home equity revenue is due to increased
volume of sold loans despite a slight decrease in gain on sale in basis points.

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. Interest income is correlated to the volume of loans funded. While funded volume was up in
the period for both Mortgage and Home Equity loans, the increase in interest income is the result of
loans being held longer, prior to sale. As such, interest income on mortgage increased $1.4 million
to $2.7 million for the three months ended March 31, 2005 from $1.3 million for the three months
ended March 31, 2004 and interest income on home equity loans increased $0.9 million to $1.4 million
for the three months ended March 31, 2005 from $0.5 million for the three months ended March 31,
2004.

Auto Revenues. The Company funded prime auto loans using a line of
credit and, prior to April 2005, sold them either via whole loan sales or to a qualified special
purpose entity (QSPE), which was created in July 2002. Revenues from sales to the QSPE consisted of
the estimated future discounted cash flows net of interest, servicing fees and credit losses.
Revenues on prime auto loan sales to the QSPE were recognized when the loan is sold to the QSPE. In
addition, in exchange for the loans sold, the Company recorded a retained interest. A discount rate
was 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 was an interest-earning asset. The difference between the
estimated discounted cash flows and the actual cash flows received over time was accreted and
included as auto revenue.

On March 30, 2005, Merrill Lynch Bank USA purchased $651 million in auto loans
held by E-LOAN Auto. The Company received $16.4 million in net proceeds associated with the
liquidation of E-LOAN Auto's assets, which resulted in a $2.7 million increase in the fair value of
the Company's retained interest in the purchased auto loans. As the retained interest asset is
classified as a trading asset, the fair value adjustment is included in current period income as a
component of auto revenue. As of the purchase date, E-LOAN Auto was no longer a qualifying special
purpose entity (QSPE) as there were no external beneficial interest holders remaining. In accordance with EITF 2002-09, "Accounting for Changes That Result in a
Transferor Regaining Control of Financial Assets Sold", the Company deferred gain recognition on
approximately $475 thousand in auto loans retained by E-LOAN Auto and those assets were consolidated
in the Company's financial statements as of March 31, 2005.

In July 2004, the Company began selling a portion of its prime auto loan
production to Merrill Lynch Bank USA pursuant to a Purchase and Sale agreement. The revenue on these
loans is based on a fee derived from the composition of the loans being sold, and is recognized at
time of transfer. As of April 2005, all prime auto loan production is being sold under this
agreement.

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.

Closing Services Revenues. In the fourth quarter of 2003, the
Company formed Escrow Closing Services, Inc. ("ECS"), a wholly-owned subsidiary, which provides
mortgage closing services, including HUD-1 and document preparation and signing, disbursement and
recording services for a portion of our home equity business. In the first quarter of 2005, ECS
began offering appraisal services for a portion of the company's mortgage business. For the three
months ended March 31, 2005, closing services revenues were $1.4 million up $1.0 million from $0.4
million for the three months ended March 31, 2004. The Company expects that closing services revenue
will continue to grow throughout 2005 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
                                            March 31,
                                       2004       2005
                                     ---------  ---------
Compensation & Benefits                    44%        39%
Processing Costs                            9%         9%
Advertising & Marketing                    31%        34%
Occupancy & Administrative                 13%        11%
Interest Expense on Warehouse               3%         7%`

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:

`Three Months Ended
                                            March 31,
                                       2004       2005
                                     ---------  ---------
Mortgage                                  277        307
Home Equity                               256        308
Auto                                       81         87
Closing Services                           14         28
Sales & Marketing                          26         26
Technology                                 62         67
General & Administrative                   67         75
                                     ---------  ---------
Total                                     783        898`

Operations.Operations expense is comprised of both
fixed and variable expenses, including employee compensation and expenses associated with the
production and sale of loans and interest expense paid by the Company under the warehouse and line
of credit facilities it uses to fund mortgage, home equity and auto loans held-for-sale.

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

`Three Months Ended
                                                              March 31,
                                                         2004         2005
                                                      -----------  -----------
Mortgage ........................................... $     6,648  $     6,927
Interest expense on mortgage loans..................         602        1,811
Home equity.........................................       5,070        4,972
Interest expense on home equity loans...............         283          786
Auto................................................       1,834        2,000
Closing services....................................         505        1,099
                                                      -----------  -----------
Total operations.................................... $    14,942  $    17,595
                                                      ===========  ===========`

Operations expense increased $2.7 million to $17.6 million for the three months
ended March 31, 2005 from $14.9 million for the three months ended March 31, 2004. However,
operations expense decreased as a percentage of revenue from 49% to 46% for the three months ended
March 31, 2004 and 2005, respectively. The decrease in operations expense as a percentage of revenue
in the first quarter of 2005 was due to increased revenue, partly attributed to the benefit from the
sale of loans held by E-LOAN Auto Fund One, LLC.

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
                                            March 31,
                                       2004       2005
                                     ---------  ---------
Mortgage Operations
   Headcount & Related                     47%        50%
   Commissions                             20%        21%
   Processing Costs                        19%        18%
   Facilities & Other                      14%        11%`

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
                                            March 31,
                                       2004       2005
                                     ---------  ---------
Home Equity Operations
   Headcount & Related                     59%        63%
   Commissions                             12%        13%
   Processing Costs                        18%        15%
   Facilities & Other                      11%         9%`

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
                                            March 31,
                                       2004       2005
                                     ---------  ---------
Auto Operations
   Headcount & Related                     68%        66%
   Commissions                             --         --
   Processing Costs                        13%        20%
   Facilities & Other                      19%        14%`

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 (in thousands):

`Three Months Ended
                                            March 31,
                                       2004       2005
                                     ---------  ---------
Mortgage........................... $   8,860  $   9,859
Mortgage interest margin...........       657        926
Home equity........................     4,485      5,275
Home equity interest margin........       197        603
Auto...............................     1,228      3,494
Closing services...................       (54)       339
Other..............................       316        294
                                     ---------  ---------
Total direct margin................ $  15,689  $  20,790
                                     =========  =========`

Direct margin increased $5.1 million to $20.8 million for the three months ended
March 31, 2005 from $15.7 million for the three months ended March 31, 2004. The increase in direct
margin was primarily due to the $2.7 million benefit from the sale of loans held by
E-LOAN Auto Fund One, LLC.

Sales and Marketing. Sales and marketing expense is primarily
comprised of expenses related to advertising, promotion and marketing agreements, employee
compensations and other expenses related to marketing personnel. Sales and marketing expense
increased $2.3 million to $13.4 million for the three months ended March 31, 2005 from $11.1 million
for the three months ended March 31, 2004. Sales and marketing expense increased as a direct result
of increased spending for online advertising. Sales and marketing expense decreased as a percentage
of revenue from 36% to 35% for the three months ended March 31, 2004 and 2005, respectively.

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
                                            March 31,
                                       2004       2005
                                     ---------  ---------
Direct Response TV                         54%        45%
Direct Response Mail                       15%         1%
Online Advertising                         19%        41%
Other Advertising                           1%         5%
Headcount & Administrative                 11%         8%`

Technology. Technology expense includes employee compensation, the
introduction of new technologies and the support of E-LOAN's existing technological infrastructure.
Technology expense increased $0.3 million to $2.5 million for the three months ended March 31, 2005
from $2.2 million for the three months ended March 31, 2004. Technology expense decreased as a
percentage of revenue from 7% to 6% for the three months ended March 31, 2004 and 2005,
respectively. The Company expects technology expense to be approximately 6% of total revenues
throughout the remainder of 2005.

General and Administrative. General and administrative expense is
primarily comprised of employee compensation and professional services. General and administrative
expense decreased $0.8 million to $2.7 million for the three months ended March 31, 2005 from $3.5
million for the three months ended March 31, 2004. Included in general administrative expenses for
the three months ended March 31, 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. Excluding this charge,
general and administrative expense increased $0.2 million from March 31, 2004 to March 31, 2005.
Excluding this one-time charge, general and administrative expense decreased as a percentage of
revenue from 8% to 7% for the three months ended March 31, 2004 and 2005, respectively. The Company
expects general and administrative expense to be approximately 7% of total revenues throughout the
remainder of 2005.

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 months ended March 31, 2004 and
2005.

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 (see Note 3 to the consolidated financial statements). The Company believes that of
its significant accounting policies (see Note 3 to the consolidated financial statements), 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 Purchase and Sale Agreement with Greenwich Capital (see "Off-Balance Sheet
Arrangements"). 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 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 sold them either
via whole loan sales or to a qualified special purpose entity (QSPE), which was created in July 2002
(see "Off-Balance Sheet Arrangements"). Revenues from sales to the QSPE consisted 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 to the QSPE were recognized when the
loan was sold to the QSPE. In addition, in exchange for the loans sold, the Company received cash
and a retained interest. A market discount rate was 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 was an interest-earning asset, and the difference between the estimated discounted
cash flows and the actual cash flows received over time was accreted and included as auto revenue.
Effective in the fourth quarter of 2003, the Company adopted Financial Interpretation No. 46(R),
"Consolidation of Variable Interest Entities", ("FIN 46(R)"). FIN 46(R) 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 were exempt from the provisions of FIN 46(R). The Company reported 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." As of March 31, 2005 there was no retained interest balance
outstanding.

In July 2004, the Company began selling a portion of its prime auto loan
production to Merrill Lynch Bank USA pursuant to a Purchase and Sale agreement. The revenue on these
loans is based on a fee derived from the composition of the loans being sold, and is recognized at
time of transfer. As of April 2005, all prime auto loan production is being sold under this
agreement.

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 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 measured. 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 months ended March 31, 2004 and 2005.

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 and are recorded at fair value. Subsequent changes in the value of outstanding swap
contracts 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. 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.

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 nine 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 2005; 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 involved the Company surrendering control over these assets to
assure that the sold assets had been isolated from the Company and its creditors. In accordance with
FAS 140 and FIN 46(R) the assets and liabilities of E-LOAN Auto were appropriately not consolidated
in financial statements of the Company. In the event that the entity no longer qualified as a QSPE,
it would be 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 have been exceeded. E-LOAN Auto
had obtained a secured borrowing facility from Merrill Lynch Bank USA to finance all purchases of
loans from the Company. The Company recognized a gain on the sale of auto loan receivables to E-LOAN
Auto in the period in which the sale occurred, which represented the difference between the sale
proceeds to the Company and the Company's net carrying value of the receivables. The Company
retained an interest in the future cash flows from the loans. Such cash flows were distributed to
the Company by the QSPE monthly. The fair value of the retained interest asset was based upon a
discounted cash flow model of the estimated future cash flows to be received by the Company over the
life of the loans. These retained interest assets were recorded on the balance sheet at fair value
as trading assets, and were adjusted to estimated fair value at each subsequent reporting period.
Changes in the estimated fair value of the residual interests were recorded through the statement of
operations. Estimates of future cash flows to be received by the Company reflected 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 were
discounted. The assumptions used represented the Company's best estimates, and the use of different
assumptions could have produced different financial results. As of March 31, 2005 there was no
retained interest balance outstanding.

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, in the form of a
retained interest, 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 activities net of cash used by financing activities
related to its warehouse and other lines payable was $10.9 million for the three months ended March
31, 2005. Specifically, the Company obtained cash from net income of $2.2 million for the three
months ended March 31, 2005 and $14.0 million from the reduction in the retained interest asset.
These sources of cash were offset as a result of an increase in accounts receivable, prepaids and other assets
in the amount of $8.2 million.

Cash provided by operating and financing activities related to its warehouse and
other lines payable was $14.7 million for the three months ended March 31, 2004. Specifically, the
Company obtained cash from net income, excluding non-cash related items, of $0.8 million for the
three months ended March 31, 2004. In addition, the Company benefited from positive cash flow due to
the reduction of other assets in the amount of $8.3 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 $2.8 million in net cash, and the increase of accounts payables and other
accrued expenses in the amount of $4.4 million. However, these sources of cash were offset by the
continued increase in the retained interest asset which grew another $1.7 million as additional auto
loans were sold to the QSPE in the three months ended March 31, 2004.

Net cash used in investing activities was $3.5 million and $1.3 million for the
three months ended March 31, 2004 and 2005, respectively. Net cash used during the three months
ended March 31, 2005 was primarily due to the addition of infrastructure related to 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 $2.8 million for the three months ended March
31, 2004.The remaining cash used on investing activities during the three months ended March 31,
2004 was related to capitalized development.

Cash provided by financing activities, net of cash used by its warehouse and other lines
payable was $0.4 million and $0.6 million for the three months ended March 31, 2004 and 2005,
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 May 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 three months ended and at March 31, 2005.

The Company has an uncommitted warehouse line of credit agreement with Merrill
Lynch Mortgage Capital Inc. for borrowings of up to $100 million for the interim financing of
mortgage loans. 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, 2006. 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
three months ended and at March 31, 2005.

The Company has an agreement to finance up to $500 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
commitment fee was reduced to $600,000 for the period March 15, 2005 through March 13, 2006. The
line expires March 13, 2006. 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 months ended and at
March 31, 2005.

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, 2007. 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 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 had to obtain a waiver
as a result of failure to meet a quick ratio covenant for the month ended February 28, 2005 but was
in compliance with all covenants for this agreement for all other periods during the three months
ended and at March 31, 2005.

In January 2005, the Company entered into an agreement for a warehouse line of
credit for borrowings of up to $150 million for the interim financing of mortgage loans with
JPMorgan Chase Bank, N.A.. 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 committed line of credit expires on January 3, 2006. 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 these covenants during the
three months ended and at March 31, 2005.

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

`GMAC       Greenwich      Merrill       Merrill       JPMorgan
                                     Mortgage      Capital        Lynch         Lynch         Chase
                                       $75M         $500M         $100M          $10M         $150M
                                   ------------  ------------  ------------  ------------  ------------
Cost of Funds
   Spread over LIBOR               1.25%-2.0%    0.75%-1.15%   0.75%-1.0%    1.0%-2.0%     1.0%-1.125%

Covenants
   Minimum Cash                    $15.0M        $15.0M        $12.5M        $15.0M (1)    $12.5M (1)
   Minimum Tangible Net Worth      $40.0M        $60.0M        $40.0M        $25.0M        $60.0M
   Debt to Tangible Net Worth      10:1          10:1          12:1               --       10:1
   Profitability                        --            --       Net Worth >        --       $1 in 6 mos
                                                               80% prior                   rolling period
                                                                2 qtrs
   Current Ratio                   1.0:1.0            --            --       1.0:1.0       1.0:1.0
   Additional Facility             $100.0M       $75.0M             --            --            --

Advance Rates                      95%-100%      96%-99%       96%-99%       92%-97%       95%-98%`

1. Inclusive of all restricted cash, not to exceed $5 million.

On June 30, 2003, the Company obtained a $5 million line of credit from Wells
Fargo Bank, N.A. 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 these covenants during the three months
ended and at March 31, 2005. No balance was outstanding on this line as of March 31, 2004 and March
31, 2005.

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 $62.9 million of cash on hand at
March 31, 2005 and borrowing capacity under our warehouse and other lines of credit of
$835 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, 2003 and 2004, we
had a pre-tax loss in both the fourth quarter of 2003 and the first quarter of 2004 and we may not
be able to maintain profitability.

While we achieved profitability during fiscal years 2002, 2003 and 2004, we
have an accumulated deficit of $180.5 million, as of March 31, 2005. In the fourth quarter of 2003,
we experienced a pre-tax loss of $1.5 million. In the first quarter of 2004 we experienced a pre-tax
loss of $1.1 million and in the first nine months of 2004, we experienced a pre-tax loss of $0.2
million. We may not maintain 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 Greenwich Capital Financial Products, Inc. ("Greenwich
Capital"), JPMorgan Chase Bank, N.A. ("JPMorgan Chase") 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. 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 agreements with Greenwich Capital, JPMorgan Chase, and Merrill Lynch expire
on March 13, 2006, January 3, 2006, and February 4, 2006, respectively. 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.

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

For the quarter ended March 31, 2005, all of our home equity loans were
purchased by E*TRADE and Residential Funding Corporation 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 Merrill Lynch Bank USA
pursuant to a Purchase and Sale agreement. If this loan purchaser is unable or unwilling to purchase
our auto loans, we may experience delays in our ability to accept or process auto loan applications
until we are able to secure new sources of loan purchasers. Sufficient additional sources of loan
purchasers for our auto loans 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.

| | If our internal controls over financial reporting do not comply
with the requirements of the Sarbanes-Oxley Act of 2002, our business and stock price could be
adversely affected.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to
evaluate the effectiveness of our internal controls over financial reporting as of the end of each
year and, and to include a management report assessing the effectiveness of our internal controls
over financial reporting in our annual reports. Section 404 also requires our independent
registered public accounting firm to attest to, and report on, management's assessment of our
internal controls over financial reporting at the end of each year.

Our Company's management, including the Chief Executive Officer and Chief
Financial Officer, do not expect that the Company's disclosure controls or our internal control over
financial reporting 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 the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.

Although our management has determined, and our independent registered public
accounting firm has attested, that our internal control over financial reporting was effective as of
December 31, 2004, we cannot assure you that we or our independent registered public accounting
firm will not identify a material weakness in our internal controls in the future. A material
weakness in our internal controls over financial reporting would require management and our
independent registered public accounting firm to evaluate our internal controls as ineffective. If
our internal controls over financial reporting are not considered adequate, we may experience a loss
of investor confidence in our financial reports that which could have an adverse effect on our
business and our stock price.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate movements significantly impact our volume of closed loans and
represent the primary component of market risk to us. In a higher interest rate environment,
consumer demand for mortgage loans, particularly refinancing of existing mortgages, declines.
Interest rate movements affect the interest income earned on loans held for sale, interest expense
on the warehouse lines payable, the value of mortgage loans held for sale and ultimately the gain on
sale of mortgage and auto loans.

We attempt to minimize the interest rate risk associated with the time lag
between when fixed rate mortgage loans are rate-locked and when they are committed for sale or
exchanged in the secondary market, through our hedging activities. Individual mortgage loan risks
are aggregated by loan type and stage in the pipeline, and are then matched, based on duration, with
the appropriate hedging instrument, thus mitigating basis risk until closing and delivery. We
currently hedge our mortgage pipeline through mandatory forward sales of Fannie Mae mortgage-backed
securities in addition to both mandatory and best efforts forward loan sale agreements with the
ultimate loan purchaser. We determine which alternative provides the best execution in the secondary
market. In addition, we do not believe our net interest income would be materially affected as a
result of concurrent changes in long-term and short-term interest rates due to the short duration of
time loans are held on the balance sheet prior to being sold (typically under thirty days). We
manage our interest rate exposure related to our auto loan approvals by entering into amortizing
swap contracts.

We believe that we have implemented a cost-effective hedging program to provide a
high level of protection against changes in the market value of rate-lock commitments. However, an
effective strategy is complex and no hedging strategy can completely insulate the Company against
such changes.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of March 31, 2005, the Company carried out an evaluation, under the
supervision and with the participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of 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)).  Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures are effective at a
reasonable level.

Changes in Internal Control Over Financial Reporting

There has been no change 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's management, including the Chief Executive
Officer and Chief Financial Officer, do not expect that the Company's disclosure controls or our
internal controls over financial reporting 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 the 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 1. Legal Proceedings

The Company is subject to various other legal proceedings and
claims, either asserted or unasserted, which arise in the ordinary course of business. While the
outcome of these claims cannot be predicted with certainty, management does not believe that the
outcome of any of these legal matters will have a material adverse effect on the Company's results
of operations, financial position or liquidity.

Please refer to our Annual Report on Form 10-K for the fiscal year ended December
31, 2004, filed on March 28, 2005, as amended on May 2, 2005, which discloses claims which have been
filed against the Company. There have been no material developments with respect to these claims
since the previously filed Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

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

None

Item 5. Other Information

The Company's Compensation Committee adopted a 2005 Executive Bonus Plan on April 5,
2005. The Plan replaces the 2004 Executive Bonus Plan and provides for the granting of bonuses to
executive officers upon the achievement of certain performance goals and objectives set by the
Company's Chief Executive Officer and Compensation Committee, and the granting of a bonus to the
Chief Executive Officer upon the achievement of various performance goals set by the Compensation
Committee.

Item  6. 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 March 26, 2001
(2)                            
|3.3  | Amended and Restated Bylaws of E-LOAN, Inc. dated March
16, 2001 (3)                                                                            
|3.4  | Amendment to Amended and Restated Bylaws of E-LOAN, Inc. dated June 14, 2004 (3)                                                                
|10.1 | 1/05 Senior Secured Credit Agreement with JPMorgan Chase Bank, N.A. dated January 4, 2005 (4)                                                   
|10.2 | Amendment No. 2 to Master Repurchase Agreement with Merrill Lynch Mortgage Capital, Inc. dated February 4, 2005 (5)                             
|10.3 | Amendment Number Fourteen to the Master Loan and Security Agreement with Greenwich Capital
Financial Products, Inc. dated March 14, 2005 (6)    
|10.4 | Purchase and Sale Agreement dated March 30, 2005 between E-LOAN Auto Fund One, LLC and Merrill Lynch Bank USA (7)                               
|10.5 | Limited Guaranty dated March 30, 2005, executed by E-LOAN, Inc. in favor of Merrill Lynch Bank USA (7)                                          
|10.6 | E-LOAN, Inc. 2005 Executive Bonus Plan
    PDF                                                                                                  
|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 from the Company's
Quarterly Report on Form 10-Q (FQE 09/30/04) filed on November 9, 2004 (File No. 000-25621).

(2)    Incorporated by reference from the Company's Annual Report on Form 10-K/A
(FYE 12/31/00) filed on April 23, 2001 (File No. 000-25621).

(3)    Incorporated by reference from the Company's Quarterly Report on Form
10-Q (FQE 06/30/04) filed on August 9, 2004 (File No. 000-25621).

(4)    Incorporated by reference from the Company's Current Report on Form 8-K
filed on January 7, 2005 (File No. 000-25621).

(5)    Incorporated by reference from the Company's Current Report on Form 8-K
filed on February 10, 2005 (File No. 000-25621).

(6)    Incorporated by reference from the Company's Current Report on Form 8-K
filed on March 17, 2005 (File No. 000-25621).

(7)   Incorporated by reference from the Company's Current Report on Form 8-K
filed on April 5, 2005 (File No. 000-25621).

# Filed herewith

## Furnished herewith

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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: May 10, 2005

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

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