<PAGE>   1
                                                                  SCHEDULE 10.20

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                           CONTITRADE SERVICES L.L.C.



                              ____________________


                               FUNDING COMMITMENT

                            dated as of May 17, 1996


                              ____________________



                        FIRSTCITY FINANCIAL CORPORATION





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                               TABLE OF CONTENTS

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SECTION 1.  DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1

         1.1       Defined Terms  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1

SECTION 2.  REPRESENTATIONS AND WARRANTIES OF FIRST CITY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2

         2.1       Representations and Warranties of FirstCity  . . . . . . . . . . . . . . . . . . . . . . . . . . .   2

SECTION 3.  FUNDING COMMITMENT OF FIRSTCITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5

         3.1       Commitments Re Credit Agreement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5
         3.2       FirstCity to Provide Subordinate Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
         3.3       Indemnification  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6

SECTION 4.  ADDITIONAL AFFIRMATIVE COVENANTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6

         4.1       Certain Information  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
         4.2       Conduct of Business and Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . .   6
         4.3       Notices  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
         4.4       Maintenance of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
         4.5       Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7

SECTION 5.  MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   8

         5.1       Miscellaneous Provisions Related to the Financial Commitments  . . . . . . . . . . . . . . . . . .   8
         5.2       Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
         5.3       Notices  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
         5.4       No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
         5.5       Survival of Representations, Warranties and Indemnities  . . . . . . . . . . . . . . . . . . . . .  11
         5.6       Payment of Expenses and Taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
         5.7       Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
         5.8       Termination  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
         5.9       Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
         5.10      Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
         5.11      Integration; Construction  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
         5.12      Limited Liability  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
         5.13      GOVERNING LAW  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
         5.14      SUBMISSION TO JURISDICTION; WAIVERS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
         5.15      Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
         5.16      WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
</TABLE>





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<PAGE>   3
                               FUNDING COMMITMENT


                 FUNDING COMMITMENT, dated as of May 17, 1996 (the
"Commitment"), by and among CONTITRADE SERVICES L.L.C., a Delaware limited
liability company ("Lender") and FirstCity Financial Corporation, a Delaware
corporation ("FirstCity").

                              W I T N E S S E T H:

                 WHEREAS, the NAF Auto Loan Trust (the "Borrower") has entered
into a Credit Agreement dated as of May 17, 1996 (as may from time to time, be
amended, supplemented, or modified, the "Credit Agreement") with the Lender and
National Auto Funding Corporation ("NAF Corp."), pursuant to which the Borrower
will receive the proceeds of Advances from time to time thereunder;

                 WHEREAS, the Borrower intends to enter into from time to time
Non-Standard Auto Loan Origination Agreements (each, as from time to time
amended, supplemented or modified, a "Loan Origination Agreement" and,
collectively, the "Loan Origination Agreements") with certain financial
institutions and agencies (the "FIs"), pursuant to which the Borrower will
agree to purchase Eligible Auto Loans;

                 WHEREAS, the Borrower and NAF Corp. have, in connection with
the transactions contemplated hereby, also entered into an Investment Banking
Services Agreement dated as of May 17, 1996 (the "IBSA") with the Lender and
the Lender's Affiliate, ContiFinancial Services Corporation;

                 WHEREAS, FirstCity is the parent corporation of NAF Corp.; and

                 WHEREAS, it is a condition to the obligations of the Lender to
make the Advances under the Credit Agreement that FirstCity shall have executed
and delivered to the Lender this Commitment.

                 NOW, THEREFORE, the parties hereto agree as follows:


                            SECTION 1.  DEFINITIONS

                 1.1       Defined Terms.  (a)  As used in this Commitment, the
capitalized terms used herein and therein shall, unless otherwise defined
herein or therein, have the meanings assigned to them in the Definitions List
dated as of the date hereof that refers to this Commitment, which is
incorporated herein by reference and attached as Exhibit A to the Credit
Agreement (the "Definitions List").
<PAGE>   4
                 (b)       As used herein or in any other Facility Agreement,
accounting terms not defined in the Definitions List and accounting terms
partly defined in the Definitions List to the extent not defined shall have the
respective meanings given to them under GAAP.

                 (c)       The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Commitment shall refer to this
Commitment as a whole and not to any particular provision of this Commitment
and Section, subsection, Schedule and Exhibit references are to this Commitment
unless otherwise specified.

                 (d)       Capitalized terms used herein or in any other
Facility Agreement shall be equally applicable to both the singular and plural
forms of such terms.


            SECTION 2.  REPRESENTATIONS AND WARRANTIES OF FIRST CITY

                 2.1       Representations and Warranties of FirstCity. To
induce Lender to enter into the Credit Agreement and to make the Advances,
FirstCity hereby represents and warrants to Lender that:

                 (a)       Corporate Existence Compliance with Law.  FirstCity
         (i) is duly organized, validly existing and in good standing under the
         laws of the jurisdiction of its incorporation, (ii) has the power and
         authority, and the legal right, as a Delaware corporation, to own and
         operate its property, to lease the property it operates as lessee and
         to conduct the business in which it is currently engaged, (iii) is
         duly qualified as a foreign corporation and is in good standing and
         has all licenses (in full force and effect) under the laws of each
         jurisdiction where its ownership, lease or operation of property or
         the conduct of its business requires such qualification and/or
         licensing and (iv) is in compliance with all Requirements of Law.

                 (b)       Corporate Power; Authorization; Enforceable
         Obligations.  FirstCity has the power and authority, and the legal
         right, as a Delaware corporation, to make, deliver and perform this
         Commitment and the other Facility Agreements to which it is a party
         and has taken all necessary action to authorize its obligations
         hereunder on the terms and conditions hereof and the other Facility
         Agreements to which it is a party and to authorize the execution,
         delivery and performance of this Commitment and the other Facility
         Agreements to which it is a party.  All consents or authorizations of,
         filing with or other act by or in respect of, any Governmental
         Authority or any other Person required to be obtained, made or given
         by it in connection with its obligations hereunder or with the
         execution, delivery, performance, validity or enforceability of this
         Commitment or the other Facility Agreements to which it is a party
         have been so obtained, made or received.  This Commitment and each
         other Facility Agreement to which it is a party has been duly executed
         and delivered on behalf of FirstCity.  This Commitment and each other
         Facility Agreement to which it is a party constitutes a legal, valid
         and binding


                                      2
<PAGE>   5
         obligation of FirstCity enforceable against FirstCity in accordance
         with its terms, except as enforceability may be limited by applicable
         bankruptcy, insolvency, reorganization, moratorium or similar laws
         affecting the enforcement of creditors' rights generally and by
         general equitable principles (whether enforcement is sought by
         proceedings in equity or at law).

                 (c)       No Legal Bar.  The execution, delivery and
         performance by FirstCity of this Commitment and the other Facility
         Agreements and its obligations hereunder will not violate any
         Requirement of Law or Contractual Obligation of FirstCity and will not
         result in, or require, the creation or imposition of any Lien on any
         of its properties or revenues pursuant to any such Requirement of Law
         or Contractual Obligation.

                 (d)       No Material Litigation.  No litigation,
         investigation or proceeding of or before any arbitrator, court or
         Governmental Authority is pending or threatened, by or against
         FirstCity or against any of its properties or revenues (i) with
         respect to this Commitment or the other Facility Agreements or any of
         the transactions contemplated hereby or thereby, or (ii) which could
         have a material adverse effect on the business, prospects, properties,
         assets, operations or condition, financial or otherwise, of FirstCity
         or the ability of FirstCity to perform its obligations hereunder or
         under the other Facility Agreements.

                 (e)       No Default; No Event of Default.  FirstCity is not
         in default under or with respect to any of its Contractual Obligations
         in any respect which could have a material adverse effect on the
         business, operations, properties, assets, condition or prospects,
         financial or otherwise, of FirstCity or on the ability of FirstCity to
         perform its obligations hereunder or under the other Facility
         Agreements.

                 (f)       No Burdensome Restrictions.  FirstCity is not a
         party to or subject to any Contractual Obligation which could have a
         material adverse effect on the business, properties, assets,
         operations, condition or prospects, financial or otherwise, of
         FirstCity, or on the ability of FirstCity to carry out its obligations
         hereunder or under the other Facility Agreements.

                 (g)       Taxes.  FirstCity has filed or caused to be filed
         all federal, state and other tax returns which are required to be
         filed by it, or has filed extensions with respect thereto (which
         extensions have not expired) and has paid all taxes shown to be due
         and payable on said returns or on any federal, state and other tax
         assessments made against it or any of its property and all other
         taxes, fees or other charges imposed on it or any of its property by
         any Governmental Authority having taxing power; no tax Lien has been
         filed against it, and no claim is being asserted by any Governmental
         Authority with respect to any such tax, fee or other charge except, in
         each case, for filings which, if not made, taxes which, if not paid,
         and tax Liens which, if imposed, would not, in the aggregate, have a
         material adverse effect on the





                                       3

<PAGE>   6
         business, properties, assets, operations, condition or prospects,
         financial or otherwise, of FirstCity, or on the ability of FirstCity
         to carry out its obligations hereunder or under the other Facility
         Agreements.

                 (h)       Investment Company Act; Other Regulations. FirstCity
         is not an "investment company," or a company "controlled" by an
         "investment company," within the meaning of the Investment Company Act
         of 1940, as amended.  Borrower is not subject to regulation under any
         federal or state statute or regulation which limits its ability to
         incur Debt.

                 (i)       No Deduction.  FirstCity is not required to make any
         deduction or withholding from payments to be made by it to Lender
         under this Commitment and the execution and performance of this
         Commitment and any of the other Facility Agreements does not make
         FirstCity liable for any registration tax, stamp duty or similar tax
         or duty imposed by any authority of or within its jurisdiction of
         creation, which tax or duty has not been, or will not be, paid when
         due.

                 (j)       No Petition.  There is no intent to file a voluntary
         petition under the federal bankruptcy laws with respect to FirstCity
         and FirstCity is not insolvent or generally unable to pay its debts as
         they become due.

                 (k)       Principal Place of Business.  FirstCity's principal
         place of business is located at 6400 Imperial Drive, Waco, Texas
         76712.

                 (l)       Financial Condition.  (i)  The audited, consolidated
         balance sheet of FirstCity as of December 31, 1995 and the related,
         consolidated statements of income and of cash flows for the periods
         ended on such date, are complete and correct and present fairly the
         financial condition of FirstCity as at such date, and the results of
         its operations and its consolidated cash flows for the period then
         ended.  The financial statements referred to in clause (i) above have
         been audited by KPMG Peat Marwick, FirstCity's independent certified
         public accountants.  FirstCity does not have, and at the date of the
         December 31, 1995 balance sheet referred to above, did not have any
         material Debt, material contingent liability or material liability for
         taxes, or any long-term lease or unusual forward or long-term
         commitments, including, without limitation, any interest rate or
         foreign currency swap or exchange transaction except (i) to the extent
         reflected as a liability on the balance sheet referred to above or
         (ii) liabilities incurred in the ordinary course of business since the
         date of such balance sheet and fully reflected on FirstCity's books of
         account.  Since the date of the December 31, 1995 balance sheet
         referred to above, there has been no material change in the condition
         or prospects, financial or otherwise, of FirstCity except changes in
         the ordinary course of business, none of which individually or in the
         aggregate has been materially adverse.  All such financial statements,
         including the related schedules and notes thereto, have been prepared
         in accordance with GAAP applied consistently throughout the period
         covered thereby.





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<PAGE>   7
                  SECTION 3.  FUNDING COMMITMENT OF FIRSTCITY

                 3.1       Commitments Re Credit Agreement.

                 (a)(i)    FirstCity hereby agrees to indemnify and hold the
         Lender harmless with respect to any loss suffered by the Lender as of
         a default and resulting credit loss on any WAMCO Contract listed on
         Exhibit A hereto, provided that such default and resulting credit loss
         occurs prior to the date on which the servicing arrangements for the
         Contracts are acceptable to the Lender.  As used in this Section 3,
         the phrase "the servicing arrangements for the Contracts are
         acceptable to the Lender" means the satisfaction of each of the
         following conditions:

                           (x)    the Backup Servicer Effective Date (as
                                  defined in the Credit Agreement) shall have
                                  occurred;

                           (y)    the Lender shall be reasonably satisfied with
                                  the results of Baker & Associates' review of
                                  Milco Loan Servicing Corporation's servicing
                                  abilities and procedures; and

                           (z)    the three-month, rolling average Delinquency
                                  Ratio calculated with respect to the WAMCO
                                  Contracts listed on Exhibit A hereto does not
                                  exceed 15% as of the end of the most recent
                                  Collection Period.

                 At such time, if any, as the servicing arrangements for the
         Contracts are acceptable to the Lender, the Lender shall give written
         notice thereof to FirstCity and NAF Corp.

                 (ii)  FirstCity shall purchase from the Borrower, at a
         purchase price not less than 85% of the Outstanding Contract Balance
         thereof, each Pipeline Contract to the extent that the Lender shall
         not have received the Collateral Agent's approving Certification by
         the close of business on the third Business Day following the Lender's
         Advance against such Pipeline Contract, such purchase price shall be
         deposited to the Collection Account at the opening of business on the
         fourth Business Day following such Advance.

                 (b)       FirstCity may, at any time after the execution and
         delivery of this Commitment, deliver to the Lender FirstCity's
         additional funding commitment in the form of Exhibit B hereto, and,
         upon such delivery, the Lender shall inform TCB, NAF Corp. and the
         Borrower that the "Borrowing Base Adjustment amount", as defined in
         the Credit Agreement, shall thereafter be zero.  Notwithstanding the
         foregoing, if FirstCity proposes to deliver such additional funding
         commitment after the date on which this commitment is originally
         executed and delivered, such





                                       5

<PAGE>   8
         delivery shall only be effective if the Lender determines in its
         reasonable business judgment that no material adverse change has
         occurred in financial condition or prospects of FirstCity, or in the
         ability of FirstCity to carry out its financial obligations hereunder,
         in each case since the date of initial execution of this Commitment.

                 3.2       FirstCity to Provide Subordinate Financing.
FirstCity hereby agrees and covenants with Lender that FirstCity shall provide
sufficient Subordinate Financing in connection with each securitization
transaction with respect to the Contracts as may be required by independent
third parties (such as the Rating Agencies and/or Credit Enhancer(s)), it being
acknowledged that such level of Subordinate Financing so determined by such
independent third parties shall constitute a "market" level.  As used in this
Section 3.2, "Subordinate Financing" means any combination of the following:
cash, purchase of a "B piece" or "residual" certificate, funding of an initial
reserve account deposit, issuance of a guaranty, serving as account party on a
letter of credit, or other form of subordinate financing in the related
securitization.  Such subordinate financing shall be acceptable to the Rating
Agencies and the Credit Enhancer.

                 3.3       Indemnification.  FirstCity will indemnify the
Lender and its Affiliates (collectively, "Conti") against any losses, claims,
damages or liabilities to which Conti may become subject in connection with any
matter related to or arising out of a default by FirstCity under this
Commitment; provided, however, there shall be excluded from such
indemnification any such loss, claim, damage or liability which results from
the gross negligence or willful misconduct of Conti in performing the services
which it is to render pursuant to this Commitment or the other Facility
Agreements.


                  SECTION 4.  ADDITIONAL AFFIRMATIVE COVENANTS

                 4.1       Certain Information.  FirstCity shall furnish to
Lender copies of all financial statements, reports and other communications
that FirstCity may make to, or file or have with, the SEC (contemporaneously
with the filing thereof with the SEC) pursuant to the Securities Exchange Act
of 1934, as amended, together with, promptly, such additional financial and
other information as Lender may from time to time reasonably request.

                 4.2       Conduct of Business and Maintenance of Existence.
FirstCity shall continue to engage in business of the same type as now
conducted by it and preserve, renew and keep in full force and effect its
existence and take all action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business; and comply in all
material respects with all Contractual Obligations and Requirements of Law.

                 4.3       Notices.  FirstCity shall promptly give notice to
Lender of:





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<PAGE>   9
                 (a)       the occurrence of (i) any Event of Default or
         Unmatured Event of Default, in either case, under the Credit Agreement
         or (ii) a default by FirstCity hereunder;

                 (b)       any (i) default or event of default by FirstCity
         under any Contractual Obligation of FirstCity or (ii) litigation,
         investigation or proceeding which may exist at any time affecting
         FirstCity, which, in either case, is likely to have a material adverse
         effect on the financial condition or prospects of FirstCity or the
         ability of FirstCity to perform its obligations hereunder;

                 (c)       a material adverse change in the business,
         properties, assets, operations, prospects or condition (financial or
         otherwise) of FirstCity.

                 (d)       any change in its principal place of business or
         chief executive office from the address set forth in paragraph (v) of
         subsection 3.1.

Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action FirstCity proposes to take with respect
thereto.

                 4.4       Maintenance of Control.  FirstCity hereby covenants
and agrees to maintain direct or indirect ownership of (i) at least 80% of the
issued and outstanding shares of capital stock of NAF Corp. and (ii) 100% of
the issued and outstanding shares of capital stock of J-Hawk Servicing
Corporation.  Not more than 15% of the issued and outstanding shares of capital
stock of NAF Corp., and not more than one board seat of NAF Corp., may be
controlled by Cargill Financial Services Corporation or any Affiliate thereof.

                 4.5       Further Assurances.  FirstCity shall do such further
acts and things and execute and deliver to Lender such assignments, agreements,
financing statements, powers and instruments as are required by Conti to carry
into effect the purposes of this Commitment or to better assure and confirm
unto Conti its rights, powers and remedies hereunder, including, without
limitation, to obtain such consents and give such notices, and to file and
record all such documents, financing statements and instruments, and renew each
such consent, notice, filing and recordation, at such time or times, in such
manner and at such places, as may be necessary or desirable to preserve and
protect the position of Conti hereunder.  This covenant shall survive the
termination of this Commitment.





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<PAGE>   10
                           SECTION 5.  MISCELLANEOUS

                 5.1       Miscellaneous Provisions Related to the Financial
Commitments.

                 (a)       The liabilities and obligations of FirstCity under
         Section 3.1 hereof (including any additional commitment delivered by
         FirstCity pursuant to Section 3.1(b) hereof) shall be absolute and
         unconditional under all circumstances and shall be performed by
         FirstCity regardless of (i) the validity, legality or enforceability
         of the Obligations or the Credit Agreement or the avoidance,
         subordination, discharge or disaffirmance of any of the foregoing by
         any Person (including a trustee in bankruptcy), (ii) any law,
         regulation, order or decree now or hereafter in effect which might in
         any manner affect any of the terms or provisions of the Credit
         Agreement, (iii) the merger or consolidation of any of the Lender or
         FirstCity into or with any corporation or any sale or transfer by the
         Lender or FirstCity of all or any part of its property, (iv) the
         waiver, amendment, consent, extension, forbearance or granting of any
         indulgence with respect to the Credit Agreement; IT BEING UNDERSTOOD,
         HOWEVER, that any such waiver, amendment, consent, extension,
         forbearance or indulgence with respect to the Credit Agreement shall
         be equally applicable to FirstCity's obligations and liabilities
         hereunder with respect to the subject matter thereof, (v) the failure
         by TCB to take any steps to perfect and maintain perfected its
         interests in the Collateral or in any other security or collateral
         related to the Credit Agreement, or (vi) any other circumstances
         whatsoever (with or without notice to or knowledge of FirstCity) which
         may in any manner or to any extent vary the risk of FirstCity, or
         might otherwise constitute a legal or equitable discharge of a surety
         or guarantor; it being the purpose and intent of FirstCity that the
         liabilities and obligations of FirstCity under Section 3.1 hereof
         (including any additional commitment delivered by FirstCity pursuant
         to Section 3.1(b) hereof) shall be absolute and unconditional under
         any and all circumstances, and shall not be discharged except by
         performance of the Credit Agreement and Section 3.1 hereof (including
         any additional commitment delivered by FirstCity pursuant to Section
         3.1(b) hereof).

                 (b)       The provisions of Section 3.1 hereof (including any
         additional commitment delivered by FirstCity pursuant to Section
         3.1(b) hereof) shall continue to be effective or be reinstated, as the
         case may be, if at any time payment of any of the Obligations payable
         to the Lender under the Credit Agreement or by FirstCity hereunder is
         rescinded, declared to be fraudulent or preferential, subsequently
         invalidated or set aside.  FirstCity hereby waives (i) notice of the
         occurrence of any default under any of the Facility Agreements, (ii)
         any requirement of diligence or promptness on the part of the Lender
         in making demand, commencing suit or exercising any other right or
         remedy under the Credit Agreement.

                 (c)       FirstCity hereby waives diligence, presentment,
         demand of payment, filing of claims with a court in the event of
         receivership or bankruptcy of the Lender, protest or notice with
         respect to the Credit Agreement and all demands whatsoever,





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<PAGE>   11
         and covenants that Section 3.1 hereof (including any additional
         commitment delivered by FirstCity pursuant to Section 3.1(b) hereof)
         will not be discharged, except by complete performance of the
         obligations contained herein.  FirstCity hereby waives all set-offs
         and counterclaims and all presentments, demands for performance,
         notices of nonperformance, protests, notices of protest, notices of
         dishonor and notices of acceptance of Section 3.1 hereof (including
         any additional commitment delivered by FirstCity pursuant to Section
         3.1(b) hereof).  FirstCity's obligations under Section 3.1 hereof
         (including any additional commitment delivered by FirstCity pursuant
         to Section 3.1(b) hereof) shall not be limited if the Lender is
         precluded for any reason (including, without limitation, the
         application of the automatic stay under Section 362 of the Federal
         Bankruptcy Code (11 U.S.C. Section  101 et seq., the "BANKRUPTCY
         CODE") from enforcing or exercising any right or remedy with respect
         to the Credit Agreement.

                 (d)       FirstCity hereby agrees that its obligations
         hereunder shall continue in full force and effect and may not be
         terminated or otherwise revoked until the amounts due to Lender under
         the Credit Agreement shall have been fully discharged and the Facility
         Agreements have been terminated.  In the event that FirstCity shall
         have any right under applicable law to otherwise terminate or revoke
         its obligations hereunder, which right cannot be waived, FirstCity
         agrees that such termination or revocation shall not be effective
         until a written notice of such revocation or termination, specifically
         referring hereto, signed by FirstCity, is actually received by the
         Lender.  Such notice shall not affect the right and power of the
         Lender to enforce rights arising prior to the Lender's receipt
         thereof.  If, in reliance on FirstCity's obligations, the Lender makes
         any financial accommodation, incurs any cost or expense or takes any
         action after the termination or revocation by FirstCity of its
         obligations hereunder but prior to the receipt by the Lender of said
         written notice from FirstCity, the rights of the Lender, with respect
         to such financial accommodation, cost, expense or action shall be the
         same as if such termination or revocation had not occurred.

                 (e)       FirstCity hereby assumes responsibility for keeping
         itself informed of the financial condition of the Borrower, and of all
         other circumstances bearing upon the risk of nonpayment of the amounts
         due to Lender under the Credit Agreement, and FirstCity hereby agrees
         that the Lender shall not have any duty to advise FirstCity of any
         information known to it regarding such condition or any such
         circumstances.

                 5.2       Amendments and Waivers.  This Commitment may be
amended, supplemented or modified by the parties hereto, in writing.  Any
waiver of any of the provisions hereof by the Lender and any such amendment,
supplement or modification shall be binding upon Lender and all future holders
of the Promissory Note.  In the case of any waiver, the parties hereto shall be
restored to their former position and rights hereunder; but no such waiver
shall extend to any subsequent event, or impair any right consequent thereon.





                                       9

<PAGE>   12
                 5.3       Notices.  Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto shall be in writing and shall be personally delivered or sent by
overnight courier service, or by registered, certified or express mail, postage
prepaid, return receipt requested, or by facsimile copy (accompanied by a
telephonic confirmation or receipt thereof), or telegram (with messenger
delivery specified in the case of a telegram) and shall be deemed to be
delivered for purposes of this Commitment on: (a) the second Business Day
following the day on which such notice was placed in the custody of the U.S.
Postal Service, (b) the next Business Day following the day on which such
notice was placed in the custody of any overnight courier service, including
express mail service or (c) the same Business Day on which such notice is sent
by telegram, messenger or facsimile.  Unless otherwise specified in a notice
sent or delivered in accordance with the foregoing provisions of this
subsection, notices, demands, instructions and other communications in writing
shall be given to or made upon the respective parties hereto at their
respective addresses (or to their respective facsimile numbers) indicated
below, and, in the case of telephonic instructions or notices, by calling the
telephone number or numbers indicated for such party below:

If to FirstCity:                       FirstCity Financial Corporation
                                       6400 Imperial Drive
                                       Waco, Texas 76718

                                       Attention:  James T. Sartain, President
                                       Tel. No.: 817-751-1750
                                       Telecopier No.:  817-751-1208

If to Lender:                          ContiTrade Services L.L.C.
                                       277 Park Avenue, 38th Floor
                                       New York, New York 10172

                                       Attention: Chief Counsel
                                       Tel. No.: 212-207-2822
                                       Telecopier No.: 212-207-2935

                 5.4       No Waiver; Cumulative Remedies.  No failure to
exercise and no delay in exercising, on the part of Lender; any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.

                 5.5       Survival of Representations, Warranties and
Indemnities.  All representations, warranties and indemnities made hereunder
and in any document, certificate





                                       10

<PAGE>   13
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Commitment and the other Facility
Agreements.

                 5.6       Payment of Expenses and Taxes.  FirstCity agrees, on
demand, to (a) pay or reimburse Conti for all out-of-pocket costs and expenses
incurred in connection with the preparation, execution and enforcement of this
Commitment, as well as the preparation of any amendments hereto, and (b) pay,
indemnify, and hold Conti, its directors, members, officers, employees and
agents, harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Commitment (all
the foregoing, collectively, the "indemnified liabilities"); provided that
FirstCity has no obligation hereunder to Conti with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of Conti.

                 5.7       Successors and Assigns; Participations.   (a)
This Commitment shall be binding upon and inure to the benefit of FirstCity,
Lender, ContiFinancial Services Corporation and all future holders of the
Promissory Note and their respective successors and assigns, except that
FirstCity may not assign or transfer any of its obligations under this
Commitment, and, except as set forth in paragraph (b) below, Lender may not
assign or transfer any of its obligations under this Commitment without the
prior consent of the other party, which consent shall not unreasonably be
withheld.

                 (b)       Any hypothecation or participation granted by Lender
pursuant to Section 9.6 of the Credit Agreement shall constitute a grant of a
hypothecation or participation in FirstCity's obligations under Section 3.1
hereof (including any additional commitment delivered by FirstCity pursuant to
Section 3.1(b) hereof); FirstCity hereby acknowledges and consents to any such
grant of a hypothecation or participation.  In the event of any such grant by
Lender of a hypothecating or participating interest, Lender's obligations under
this Commitment to FirstCity shall remain unchanged, Lender shall remain solely
responsible for the performance thereof, Lender shall remain the holder of the
Promissory Note for all purposes under this Commitment and the other Facility
Agreements, and FirstCity shall continue to deal solely and directly with
Lender in connection with Lender's rights and obligations under this and the
other Facility Agreements.  FirstCity agrees that if amounts outstanding under
this Commitment are due and unpaid, or shall have been declared or shall have
become due and payable, each person acquiring such a hypothecation or
participation interest (a "Participant") shall be deemed to have the right of
setoff in respect of its hypothecating or participating interest in amounts
owing under this Commitment to the same extent as if the amount of its
hypothecating or participating interest were owing directly to it under this
Commitment.

                 (c)       FirstCity authorizes Lender to disclose to any
Participant and any prospective Participant any and all financial information
in its possession concerning FirstCity and its Affiliates which has been
delivered to it by or on behalf of such Person





                                       11

<PAGE>   14
pursuant to this Commitment or which has been delivered to it by or on behalf
of such Person in connection with its credit evaluation of FirstCity and its
Affiliates prior to becoming a party to this Commitment; provided such
Participant agrees to keep such financial information confidential unless
required to be disclosed by applicable Requirements of Law.

                 (d)       If, pursuant to this subsection 5.6, any interest in
this Commitment is transferred or assigned to any Participant or assignee which
is organized under the laws of any jurisdiction other than the United States or
any state thereof, Lender shall cause such Participant or assignee, as a
condition to the effectiveness of such transfer, (i) to represent to Lender and
FirstCity that under applicable law and treaties then in effect no taxes will
be required to be withheld by FirstCity or Lender with respect to any payments
to be made to such Participant or assignee, in respect of terms of this
Commitment, (ii) to furnish to FirstCity either U.S. Internal Revenue Service
Form 4224 (or any successor form) or U.S. Internal Revenue Service Form 1001
(or any successor form) (wherein such Participant or assignee claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) to agree (for the benefit of Lender and
FirstCity) timely to provide Lender and FirstCity a new Form 4224 (or any
successor form) or Form 1001 (or any successor form) upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with and if permitted under applicable U.S. laws and regulations and
amendments then in effect duly executed and completed by such Participant or
assignee, and to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.

                 (e)       Lender shall not grant to any Participant the right
to consent to any amendment or waiver entered into in accordance with
subsection 5.1 except for any such amendment or waiver which would increase the
Lender Commitment under the Credit Agreement, or reduce the amount or extend
the due date of any principal of or interest on the Promissory Note.

                 5.8       Termination.  The obligations of FirstCity under
Section 3.1(a) hereof shall terminate upon the receipt by Lender of all amounts
owed to it under the Credit Agreement and the termination of the Credit
Agreement; the obligations of FirstCity under Section 3.1(b) hereof shall
terminate upon the termination of the Investment Banking Services Agreement;
all other obligations of FirstCity hereunder shall terminate on the later of
the dates described in the two foregoing clauses.

                 5.9       Counterparts.  This Commitment may be executed by
one or more of the parties to this Commitment on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

                 5.10      Severability.  Any provision of this Commitment
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,





                                       12

<PAGE>   15
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

                 5.11      Integration; Construction.  This Commitment
represents the agreement of the parties hereto with respect to the subject
matter hereof, and there are no promises, undertakings, representations or
warranties by the parties hereto relative to the subject matter hereof not
expressly set forth or referred to herein or in the other Facility Agreements.

                 5.12      Limited Liability.  No recourse hereunder or under
any other Facility Agreement shall be had against, and no personal liability
shall attach to, any officer, employee, director, member, affiliate, beneficial
owner, trustee or shareholder of any party hereto, as such, by the enforcement
of any assessment or by any legal or equitable proceeding, by virtue of any
statute or otherwise in respect of any of the Facility Agreements, it being
expressly agreed and understood that each Facility Agreement is solely a
corporate or trust obligation of each party hereto, and that any and all
personal liability, either at common law or in equity, or by statute or
constitution, of every such officer, employee, director, member, affiliate,
beneficial owner, trustee or shareholder for breaches by any party hereto of
any obligations under any Facility Agreement is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this
Commitment.

                 5.13      GOVERNING LAW.  THIS COMMITMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS COMMITMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

                 5.14      SUBMISSION TO JURISDICTION; WAIVERS.  EACH PARTY
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:

                 (a)       SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS FUNDING COMMITMENT AND THE OTHER FACILITY
AGREEMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS
FROM ANY THEREOF;

                 (b)       CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT
SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT
TO PLEAD OR CLAIM THE SAME;





                                       13

<PAGE>   16
                 (c)       AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH IN SUBSECTION 5.5 OR AT SUCH OTHER ADDRESS OF WHICH ALL OF
THE OTHER PARTIES HERETO SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;

                 (d)       AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND

                 (e)       WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING
REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.

                 5.15      Acknowledgements.  FirstCity hereby acknowledges
that:

                 (a)       it has been advised by counsel in the negotiation,
execution and delivery of this Commitment and the other Facility Agreements;

                 (b)       the Lender has no fiduciary relationship to 
FirstCity; and

                 (c)       no joint venture exists between FirstCity and
Lender.

                 5.16      WAIVER OF JURY TRIAL.  EACH PARTY HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS COMMITMENT OR ANY OTHER FACILITY AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.

                 IN WITNESS WHEREOF, the parties hereto have caused this
Commitment to be duly executed and delivered in New York, New York by their
proper and duly authorized officers, members or trustees as of the day and year
first above written.

                                          FIRSTCITY FINANCIAL CORPORATION 
                                                                          
                                                                          
                                          By /s/ MATT LANDRY, JR.           
                                             ------------------------------- 
                                             Name:  Matt Landry, Jr.    
                                             Title: Executive Vice President    



                                      14

<PAGE>   17
                                              CONTITRADE SERVICES L.L.C.


                                              By  /s/ JEROME PEARLSON
                                                ----------------------------
                                                Name: Jerome Pearlson
                                                Authorized Signatory

                                                  /s/ SUSAN O'DONOVAN 
                                                ----------------------------
                                                Name: Susan O'Donovan
                                                Authorized Signatory