Exhibit 4.16



 Exhibit 4.16



ESCROW AGREEMENT


          ESCROW
AGREEMENT, dated as of December 21, 2000 (this "Escrow Agreement"), by
and among Delta Financial Corporation, a Delaware corporation (the
"Company"), U.S. Bank Trust National Association, a national banking
association under the laws of the United States, as trustee under the Indenture
(as defined below) (the "Trustee"), and U.S. Bank Trust National
Association, a national banking association incorporated under the laws of the
United States, as escrow agent (the "Escrow Agent"). 


W I T N E S S E T H:


          WHEREAS,
contemporaneously with the execution of this Escrow Agreement, the Company is
entering into that certain Indenture dated as of December 21, 2000 (the
"Indenture") among the Company, as issuer, each of Delta Funding
Corporation, a New York corporation, DF Special Holdings Corporation, a Delaware
corporation, Fidelity Mortgage, Inc., a Delaware corporation, DFC Financial of
Canada Limited, an Ontario, Canada corporation, DFC Funding of Canada Limited,
an Ontario, Canada corporation, Continental Property Management Corp., a New
York corporation, DFC Financial Corporation, a Delaware corporation, Delta
Funding Residual Holding Trust 2000-1, Delta Funding Residual Holding Trust
2000-2 and the Trustee; 


          WHEREAS,
pursuant to the terms and conditions of the Indenture, the Company is issuing
its 91⁄2% Senior Secured Notes due 2004 (the "Senior Notes"), which
notes will be exchanged (the "Exchange") for the Company's
outstanding 91⁄2% Senior Notes due 2004 (the "Old Notes"); 


          WHEREAS,
the Company is obligated under Section 4.24 of the Indenture to deposit from
time to time in escrow with the Escrow Agent funds (such funds, including
interest or dividends thereon, the "Escrow Amount") sufficient to meet
the Company's obligation to make payments of interest on the Senior Notes; 


          WHEREAS,
the parties hereto desire to set forth the terms and conditions under which the
Escrow Amount shall be held by the Escrow Agent and released by the Escrow Agent
to the Trustee; and 


          
WHEREAS, the parties desire that the Escrow Agent be appointed as escrow agent
to act in accordance with the terms hereof.


          NOW,
THEREFORE, in consideration of the foregoing and of the promises contained
herein, the parties, intending legally to be bound, agree as follows: 


          1.
Definitions. Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the Indenture.


          2.
Appointment and Agreement of Escrow Agent. The Company and the Trustee hereby
appoint the Escrow Agent to serve hereunder and the Escrow Agent hereby accepts
such appointment and agrees to perform all duties which are expressly set forth
in this Escrow Agreement to be performed by it. Escrow Agent represents and
warrants that in the ordinary course of its business it maintains securities
accounts for others and that it is acting in that capacity in establishing and
maintaining the Escrow Account (as defined below). 


          3.
Deposit of the Escrow Amount; Pledge. The Escrow Agent agrees to establish and
maintain a separate account (the "Escrow Account") in the name of the
Escrow Agent in trust and as agent for the benefit of the Trustee in accordance
with the terms hereof. As required by Section 4.24 of the Indenture, the Company
shall deposit funds into the Escrow Account in an amount sufficient to pay the
interest on the Senior Notes due to be paid on the immediately upcoming Interest
Payment Date. All funds deposited into the Escrow Account shall be held by the
Escrow Agent in trust as agent for and for the benefit of the Trustee in
accordance with and subject to the terms and conditions hereof. As collateral
security for all of the Guaranteed Obligations (as that term is defined in the
Indenture), the Company hereby grants to the Trustee a lien and security
interest in and to all funds, U.S. Governmental Obligations, certificates of
deposit, securities and other investment property and financial assets from time
to time on deposit in (or which are proceeds of funds deposited in) the Escrow
Account, the earnings thereon, and the proceeds thereof. The Escrow Agent agrees
that all assets maintained in the Escrow Account shall be treated as financial
assets (as defined in Section 8-102(9)) of the New York UCC and shall require
that any securities intermediary utilized by the Escrow Agent to expressly agree
to treat such assets as financial assets. 


          4.
Receipt. The Escrow Agent agrees to hold and disburse the Escrow Amount
and all earnings it receives thereon in accordance with the terms and conditions
of this Escrow Agreement.


          5.
Investment. The Escrow Agent shall, pending the disbursement of the Escrow
Amount pursuant to this Escrow Agreement, invest such amounts in accordance with
the specific written instructions of the Company in (a) direct obligations of,
or obligations fully guaranteed by, the United States of America or any agency
thereof ("U.S. Government Obligations") having a maturity of not
longer than the period of time remaining prior to the next Interest Payment Date
which are rated "Aaa" by Moody's Investors Service, Inc. or a
similar grade by another nationally recognized statistical rating service, (b)
certificates of deposit having a maturity of not longer than the period of time
remaining prior to the next Interest Payment Date issued by commercial banks
(which may include the Escrow Agent) having a combined capital surplus and
undivided profits of not less than One Billion Dollars ($1,000,000,000), (c)
money market funds investing solely in any of the above or (d) other debt
securities having a maturity of not longer than the period of time remaining
prior to the next Interest Payment Date which are rated "Aaa" by
Moody's Investors Service, Inc. or a similar grade by another nationally
recognized statistical rating service. Absent such written instructions, the
Escrow Agent shall have no obligation to invest (or otherwise pay any interest
on) the Escrow Account. The Escrow Agent shall have no liability for any loss,
tax, fee or other charge on any investment or reinvestment, including any loss
incurred upon liquidation of any investment prior to maturity when necessary to
make a disbursement pursuant to this Escrow Agreement. All earnings received
from (or losses incurred on) any such investment shall be credited to (or
debited from, as the case may be) the Escrow Account (and earnings so received
may be reinvested and treated in the same manner). 


          6.
Earnings on the Escrow Amount. All interest, dividends, distributions, gains or
other income in respect of the Escrow Amount (collectively,
"Interest") shall constitute part of the Escrow Amount and shall be
deposited in the Escrow Account (and, as provided above, may from time to time
be reinvested) until disbursed in accordance with the terms hereof. 


          7.
Disbursement of the Escrow Amount. Subject to Section 8 of this Escrow
Agreement, on each Interest Payment Date the Escrow Agent shall (i) disburse to
the Trustee the entire Escrow Amount held in the Escrow Account sufficient to
pay the aggregate accrued interest on the Senior Notes due to be paid on such
Interest Payment Date, (ii) provided no Default or Event of Default has occurred
and is continuing, all as set forth in an Officers' Certificate to the
Escrow Agent dated as of the Interest Payment Date, remit to the Company all
remaining interest or other earnings (after payment to the Trustee pursuant to
subsection (i) above), if any, remaining on deposit (the "Remaining
Earnings") in the Escrow Account. 


          8.
Default under the Indenture. Notwithstanding any provisions in this Escrow
Agreement to the contrary, upon receipt by the Escrow Agent of a notice from any
of the Trustee, the Collateral Trustee, the Warrant Agent, the Owner Trustee,
the Administrator or Holders or Beneficial Holders of at least 25% in aggregate
principal amount of the Senior Notes then outstanding that a Default or an Event
of Default has occurred, then the Escrow Agent shall not remit the Remaining
Earnings to the Company unless and until (i) the Escrow Agent receives written
notice from the Trustee that such Default or Event of Default has been cured or
waived and (ii) the Company provides to the Escrow Agent an Officers'
Certificate certifying that there is then no Default or Event of Default that
has occurred and that is then continuing which has not been cured or waived.
Notwithstanding any provision in this Escrow Agreement to the contrary, upon
receipt of a notice from any of the Trustee or the Holders or Beneficial Holders
of at least 25% of the then outstanding Senior Notes that the Senior Notes have
been or thereby are declared to be due and payable immediately, the Escrow Agent
shall (a) forthwith remit all Remaining Earnings to the Trustee for application
in accordance with Section 6.10 of the Indenture, and (b) comply with all
entitlement orders or other directions concerning the Escrow Account originated
by the Trustee, without any requirement of notice to or consent by the Company. 


          9.
Dispute Resolution. In the event of any disagreement between any of the
parties to this Escrow Agreement, or between them or any of them and any other
party, resulting in adverse claims or demands being made in connection with the
subject matter of the escrow, or in the event that the Escrow Agent, reasonably
and in good faith, shall be in doubt as to what action it should take hereunder,
the Escrow Agent may, at its option, refuse to comply with any claims or demands
on it, or refuse to take any action hereunder so long as such disagreement
continues or such doubt exists, and in any such event, the Escrow Agent shall
not be liable in any way or to any Person for its failure or refusal to act, and
the Escrow Agent shall be entitled to continue so to refrain from acting until
(a) the rights of all parties shall have been fully and finally adjudicated by a
court of competent jurisdiction, or (b) all differences and all doubt shall have
been resolved by agreement among all of the interested Persons, and the Escrow
Agent shall have been notified thereof in writing signed by all such Persons;
provided, however, that the Escrow Agent shall be under no
obligation to commence or defend such proceedings. The rights of the Escrow
Agent under this Section are cumulative of all other rights it may have by law
or otherwise.



          10.
Compensation. The Escrow Agent shall be entitled to compensation for its
services hereunder in accordance with Schedule 1 annexed hereto, which schedule
may be subject to change (upon written notice to the Company) on an annual
basis. In addition, the Escrow Agent shall be entitled to prompt reimbursement
upon demand for all expenses incurred in connection with the acceptance,
administration or enforcement of this Escrow Agreement, including, without
limitation, payment of any legal fees and expenses incurred in connection with
the resolution of any claim by any party hereunder or the execution of this
Escrow Agreement. The Company agrees to pay the Escrow Agent for any such
compensation and expenses that may be due and payable from time to time. 


          11.
Liability of Escrow Agent. The Escrow Agent assumes no responsibility or
liability to the Company, the Trustee, the holder of the Senior Notes or any
other Persons, other than to deal with the Escrow Amount held and received by it
pursuant to the terms of this Escrow Agreement. The Escrow Agent shall not be
held liable for anything which it may do or refrain from doing in connection
herewith, except for actions or omissions to act that constitute gross
negligence or willful misconduct. The Company hereby covenants and agrees to
indemnify and hold harmless the Escrow Agent for and from any and all
liabilities, claims, losses, judgments or costs (including reasonable
attorneys' fees and expenses) regardless of their nature, arising out of or
because of this Escrow Agreement, except for actions or omissions to act that
constitute gross negligence or willful misconduct on the part of the Escrow
Agent. The foregoing indemnification shall survive the termination of this
Escrow Agreement and the resignation or removal of the Escrow Agent. 


          12.
Resignation of Escrow Agent. The Escrow Agent may resign at any time upon
giving the parties hereto thirty (30) days' prior written notice. The Escrow
Agent shall continue to serve until its successor, appointed by notice of the
Company, accepts appointment as successor escrow agent and receives all funds
held in the Escrow Account. The holders of a majority in principal amount of the
outstanding Senior Notes may at any time remove the Escrow Agent by so notifying
the Company and the Trustee and may appoint a successor escrow agent with the
Company's consent, provided that after the occurrence of an Event of Default,
the Company's consent shall not be required. The Company may remove the Escrow
Agent if: 


	  	        
  (1) the Escrow Agent fails to fulfill its obligations hereunder;





	  	        
  (2) the Escrow Agent is adjudged a bankrupt or an insolvent;





	  	        
  (3) a receiver or other public officer takes charge of the Escrow Agent or its
property; or





	  	        
  (4) the Escrow Agent becomes incapable of acting.





          If
the Escrow Agent resigns or is removed or if a vacancy exists in the office of
Escrow Agent for any reason, each of the Company and the Escrow Agent shall
notify each Holder of such event and the holders of a majority in principal
amount of the Senior Notes shall promptly appoint a successor Escrow Agent. A
successor Escrow Agent shall deliver a written acceptance of its appointment to
the retiring Escrow Agent, the Trustee and the Company. Immediately after that,
the retiring Escrow Agent shall transfer all funds held in the Escrow Account to
the successor Escrow Agent, the resignation or removal of the retiring Escrow
Agent shall become effective, and the successor Escrow Agent shall have all the
rights, powers and duties of the Escrow Agent under this Escrow Agreement. If a
successor Escrow Agent does not take office within 60 days after the retiring
Escrow Agent resigns or is removed, the retiring Escrow Agent, the Company or
the Holders of at least 10% in principal amount of the outstanding Senior Notes
may petition any court of competent jurisdiction, at the expense of the Company,
for the appointment of a successor escrow agent. The terms and conditions of
this Escrow Agreement will remain unimpaired by resignation of the Escrow Agent
or the appointment of a successor escrow agent. Following the appointment of a
successor escrow agent, such person shall for all intents and purposes of this
Escrow Agreement be the "Escrow Agent" hereunder. In the event that
the Escrow Agent submits a notice of resignation, its only duty, until a
successor escrow agent shall have been appointed and shall have accepted such
appointment, shall be to hold, invest and dispose of the Escrow Amount in
accordance with this Escrow Agreement, but without regard to any notices,
requests, instructions, demands or the like received by it from the other
parties hereto after such notice shall have been given, unless the same is a
direction that the Escrow Amount be paid or delivered in its entirety out of the
Escrow Account. 


          13.
Responsibilities and Rights of the Escrow Agent. (a) The Escrow Agent
undertakes to perform only such duties as are expressly set forth herein. No
implied duties or obligations shall be read into this Escrow Agreement against
the Escrow Agent.


          (b)
The Escrow Agent shall not incur any liability with respect to (i) any action
taken or omitted in good faith upon the advice of its legal counsel given with
respect to any question relating to the duties and responsibilities of the
Escrow Agent under this Escrow Agreement, or (ii) any action taken or omitted in
reliance upon any instrument which the Escrow Agent shall in good faith believe
to be genuine (including the execution of such instrument, the identity or
authority of any person executing such instrument, its validity and
effectiveness, and the truth and accuracy of any information contained therein),
to have been signed by a proper person or persons and to conform to the
provisions of this Escrow Agreement. 


          (c)
The Escrow Agent (i) shall in no instance be obligated to take any legal or
other action which in its reasonable judgment might involve any expense or
liability unless it shall have been furnished with acceptable security or
indemnification, and (ii) may consult with counsel satisfactory to it, including
in-house counsel, with respect to matters arising under this Escrow Agreement
and the opinion or advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it in good faith and in accordance with such opinion or advice. 


          14.
Termination. This Escrow Agreement shall terminate (a) upon receipt by the
Escrow Agent of written notice from the Trustee that all of the Company's
obligations under the Indenture and the Senior Notes have been satisfied in full
or (b) by written mutual consent signed by all parties hereto. The parties
hereto, other than the Escrow Agent, may terminate the appointment of the Escrow
Agent hereunder upon notice specifying the date upon which such termination
shall take effect. In the event of such termination, the other parties hereto
shall within thirty (30) days of such notice jointly appoint a successor escrow
agent and the Escrow Agent shall turn over to such successor escrow agent the
Escrow Account and any other amounts held by it pursuant to this Escrow
Agreement. Following the appointment of a successor escrow agent, such person
shall for all intents and purposes of this Escrow Agreement be the "Escrow
Agent" hereunder. Upon receipt of the Escrow Account and other amounts, the
successor escrow agent shall thereupon be bound by all of the provisions hereof.
This Escrow Agreement shall not be otherwise terminated. 


          15.
Notices. Unless otherwise provided herein, any notice, request,
instruction or other document or communication to be given hereunder by any
party to any other party shall be in writing and shall be deemed to have been
given (a) if mailed, on the date received if mailed by registered or certified
mail (return receipt requested), (b) if sent by facsimile transmission, when so
sent and receipt acknowledged by an appropriate telephone or facsimile receipt
or (c) if sent by other means, when actually received by the party to which such
notice has been directed, in each case at the respective addresses or numbers
set forth below or such other address or number as such party may have fixed by
notice: 


          To
the Company:

	  	Delta Financial Corporation

1000 Woodbury Road

Woodbury, New York 11797

Attention: Mr. Marc Miller

Fax: (516) 364-9450




          With
a copy to:

	  	Stroock & Stroock & Lavan LLP

180 Maiden Lane

New York, New York 10038-4982

Attention: Bradley Kulman, Esq.

Facsimile (212) 806-6006




          To
the Trustee and/or the Escrow Agent:

	  	U.S. Bank Trust National Association

100 Wall Street, 16th Floor

New York, New York 10005

Attention: Ms. Amy S. Roberts, Vice President

Fax: (212) 809-5459





          With
copies to:


	  	Emmet, Marvin & Martin, LLP

120 Broadway

New York, New York 10271

Attention: Irving C. Apar, Esq.

Fax: (212) 238-3100





          16.
Benefit and Assignment. This Escrow Agreement shall be binding upon and
inure to the benefit of the parties hereto, the Holders and their respective
successors and permitted assigns. This Escrow Agreement may not be assigned or
delegated by any party hereto without the prior written consent of the other
parties hereto. 


          17.
Entire Agreement; Amendment. This Escrow Agreement and the Indenture
contain all the terms agreed upon by the parties with respect to the subject
matter hereof and supersede any prior agreements with respect to the subject
matter hereof. This Escrow Agreement may be amended, waived, modified, extended
or discharged only by a written instrument signed by the parties against which
enforcement of any waiver, change, modification, extension or discharge is
sought. Notwithstanding the foregoing, no amendment to this Escrow Agreement may
be made without the prior written consent of the holders of a majority in
principal amount of the outstanding Senior Notes. No course of conduct shall
constitute a waiver of any terms and conditions (unless, and then only to the
extent, such waiver is in writing, in accordance with the preceding sentence),
and any waiver on any occasion shall not constitute a waiver with respect to any
other occasion (unless its terms expressly so provide). 


          18.
Headings. The headings of the sections and subsections of this Escrow
Agreement are for ease of reference only and do not evidence the intentions of
the parties.


          19.
Governing Law. This Escrow Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under principles of conflicts of laws
applicable thereto.


          20.
Counterparts. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


          21.
Tax Reporting. The parties hereto agree that, for tax reporting purposes,
interest or other income earned from the investment of the amounts in the Escrow
Account from time to time shall be allocable to the Company.


          22.
Certification of Tax Identification Number. The parties hereto agree to
provide the Escrow Agent with a certified tax identification number by signing
and returning a Form W-9 (or Form W-8, in case of non-U.S. persons) to the
Escrow Agent prior to the date on which any income earned on the investment of
the Escrow Account is credited to such account. The parties hereto understand
that, in the event their tax identification numbers are not certified to the
Escrow Agent, the Internal Revenue Code, as amended from time to time, may
require withholding of a portion of any interest or other income earned on the
investment of the Escrow Account amounts. 


          23.
Tax-Related Covenants. The Company agrees to assume any and all
obligations imposed now or hereafter by any applicable tax law with respect to
the payment of amounts held under this Escrow Agreement, and to indemnify and
hold the Escrow Agent harmless from and against any taxes, additions for late
payment, interest, penalties and other expenses, that may be assessed against
the Escrow Agent in any such payment or other activities under this Escrow
Agreement. The Company undertakes to instruct the Escrow Agent in writing with
respect to the Escrow Agent's responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting in connection with its acting as Escrow Agent under this Escrow
Agreement. The Company agrees to indemnify and hold the Escrow Agent harmless
from any liability on account of taxes, assessments or other governmental
charges, including, without limitation, the withholding or deduction or the
failure to withhold or deduct the same, and any liability for failure to obtain
proper certifications or to properly report to governmental authorities, to
which the Escrow Agent may be or become subject in connection with or which
arises out of this Escrow Agreement, including costs and expenses (including
reasonable legal fees and expenses), interest and penalties. The foregoing
indemnification shall survive the termination of this Escrow Agreement and the
resignation or removal of the Escrow Agent. 


          24.
Intermediaries. The Escrow Agent shall have no more or less
responsibility or liability on account of any action or omission of any
book-entry depository or securities intermediary employed by the Escrow Agent
than any such book-entry depository or securities intermediary has to the Escrow
Agent, except to the extent that such action or omission of any book-entry
depository or agent was caused by the Escrow Agent's own gross negligence, bad
faith or willful misconduct. 


          25.
Reproduction of Documents. This Escrow Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, and (b) certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, optical disk, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.




          IN
WITNESS WHEREOF, the parties have caused this Escrow Agreement to be executed
and delivered as of the day and year first written above.



	  	DELTA FINANCIAL CORPORATION





By:           
          
          
          
          

       Name:

       Title:





U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee





By:           
          
          
          
          

       Name:

       Title:





U.S. BANK TRUST NATIONAL ASSOCIATION,

     as Escrow Agent





By:           
          
          
          
          

       Name:

       Title:




SCHEDULE 1



Escrow Agent's Fee


No Fee Required.