THIRD AMENDMENT dated as of May 28, 1999
                           (this "Amendment") to the Letter of Credit and
                           Reimbursement Agreement dated as of September 9, 1997
                           (as heretofore amended, the "Reimbursement
                           Agreement"), among ContiFinancial Corporation, a
                           Delaware corporation (the "Borrower"), the
                           Participating Banks party thereto, Credit Suisse
                           First Boston, New York Branch, as Agent, and Dresdner
                           Bank AG, New York Branch, as Issuing Bank.

                  A. Pursuant to the Reimbursement Agreement, the Participating
Banks have extended and agreed to extend credit to the Borrower on the terms and
subject to the conditions set forth therein.

                  B. The Borrower has requested that certain provisions of the
Reimbursement Agreement be amended as set forth herein. The undersigned
Participating Banks are willing to amend such provisions on the terms and
subject to the conditions set forth herein.

                  Accordingly, in consideration of the mutual agreements
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows:

                  SECTION 1. Definitions. Each capitalized term used but not
defined herein shall have the meaning assigned to it in the Reimbursement
Agreement as amended hereby. The principles of construction set forth in Section
1.03 of the Reimbursement Agreement shall apply equally to this Amendment.

                  SECTION 2. Amendments of Covenants.

                  (a) Section 2.06(c). The requirement of Section 2.06(c) of the
         Reimbursement Agreement that the Borrower prepay Loans or deposit cash
         collateral to the extent necessary in order that the sum of the Loans
         outstanding plus any principal of amounts due pursuant to Section 2.03
         of the Reimbursement Agreement plus the Stated Amount will not exceed
         the Borrowing Base is deleted.

                  (b) Section 6.09. The requirement that the Borrower comply
         with the financial covenants set forth in paragraphs (a), (b) and (c)
         of Section 6.09 of the Reimbursement Agreement is deleted.
<PAGE>

                                                                               2

                  SECTION 3. Other Amendments.

                  (a) Amendment of Section 1.01. Section 1.01 of the
         Reimbursement Agreement is hereby amended by

                           (i) inserting in the appropriate alphabetical order
the following definitions:

                           "'Credit Agreement Loans' means the "Loans" under and
                  as defined in the Credit Agreement.

                           'Credit Agreement Amount' means, at any time, the
                  aggregate outstanding principal amount of the Loans under and
                  as defined in the Credit Agreement.

                           'Reimbursement Agreement Amount' means, at any time,
                  the aggregate principal amount of the Loans plus any principal
                  of amounts due under Section 2.03 plus the undrawn amount of
                  the Letter of Credit.";

                           (ii) deleting the definition of "Credit Agreement" in
                  its entirety and substituting therefor the following
                  definition:

                           "'Credit Agreement' means the Credit Agreement dated
                  as of January 7, 1997, as amended, among the Company, the
                  Lenders party thereto and Credit Suisse First Boston, New York
                  Branch, as Administrative Agent.";

                           (iii) deleting "2.375%" in the definition of
                  "Applicable Percentage" and inserting in its place "(a) prior
                  to March 31, 1999, 2.375%, (b) on or after March 31, 1999, and
                  prior to June 1, 1999, 2.750% and (c) on or after June 1,
                  1999, 3.00%", and deleting the proviso in the definition of
                  "Applicable Percentage"; and

                           (iv) deleting the words "by its terms, or in order to
                  obtain a necessary consent to such Asset Disposition, or" in
                  clause (b) of the definition of "Net Available Cash", and
                  inserting the words "and approved by the Administrative Agent"
                  immediately after the words "provided by the seller" in clause
                  (d) of such definition.

                  (b) Amendment of Section 2.06. Section 2.06 of the
         Reimbursement Agreement is hereby amended by the insertion therein of
         the following new paragraphs (f) and (g):

                           "(f) In the event the Company or any Subsidiary shall
                  receive any Net Available Cash from any Asset Disposition by
                  the Company or any Subsidiary referred to in subparagraphs (a)
                  through (e) of Section 6.04 involving Triad Financial
                  Corporation, the Company will forthwith apply or cause the
                  applicable Subsidiary to apply 75% of all such Net Available
                  Cash to prepay Loans (and, after the Loans shall have been
                  repaid in full, to cash collateralize the Letter of Credit by
                  deposit of cash in the Account) and Credit Agreement Loans
                  ratably in accordance with the aggregate amounts of the
                  Reimbursement Agreement Amount and the Credit Agreement
                  Amount.
<PAGE>
                                                                               3

                           (g) In the event the Company or any Subsidiary shall
                  receive any cash representing the proceeds of any repayment or
                  prepayment, whether before or after maturity, of loans or
                  advances made or other credit extended by the Company or any
                  Subsidiary to Triad Financial Corporation, the Company will
                  forthwith apply or cause the applicable Subsidiary to apply
                  75% of all such cash to prepay Loans (and, after the Loans
                  shall have been repaid in full, to cash collateralize the
                  Letter of Credit by deposit of cash in the Account) and Credit
                  Agreement Loans ratably in accordance with the aggregate
                  amounts of the Reimbursement Agreement Amount and the Credit
                  Agreement Amount."

                  (c) Amendment of Section 6.02. Section 6.02 of the
         Reimbursement Agreement is hereby amended by the insertion at the end
         thereof of the following new paragraph:

                           "The Company will not, and will not permit any
                  Subsidiary to, enter into any agreement other than as to a
                  Warehouse Facility (including any amendment of an existing
                  agreement) that contains any "negative pledge" or similar
                  provision limiting its ability or the ability of any
                  Subsidiary to grant, incur or permit to exist Liens on its
                  properties or assets."

                  (d) Amendment of Section 6.04. Section 6.04 of the
         Reimbursement Agreement is hereby amended by

                           (i) deleting subclause (B) of clause (ii) of the
                  paragraph immediately following subsection (e) thereof and
                  inserting in its place "(B) an amount equal to 100% of the Net
                  Available Cash from such Asset Disposition is applied by the
                  Company to prepay Loans pursuant to Section 2.06"; and

                           (ii) deleting the first sentence of the last
                  paragraph of such Section only as it applies to any amounts
                  payable under Section 3(b) of this Amendment.
<PAGE>
                                                                               4

The amendment effected by paragraph (a) (ii) above shall apply retroactively to
March 31, 1999, and shall be taken into account in computing all interest
accrued or accruing under the Reimbursement Agreement after such date. All such
retroactive payments shall be due no later than June 30, 1999.

                  SECTION 4. Payment upon Sale of Borrower. The Borrower hereby
irrevocably agrees that the Letter of Credit will be terminated or cash
collateralized in full and all outstanding Loans and amounts due under Section
2.03 paid in full (together with all applicable fees, interest and other amounts
due under the Reimbursement Agreement) upon the purchase by any Person or group
of Persons acting in concert, pursuant to any agreement with the Borrower or any
holders of the Borrower's capital stock, of the Borrower or any controlling
equity interest therein (including pursuant to any merger, consolidation or
similar transaction), and that no cash or other proceeds of any such purchase,
and no assets of the Borrower, will be received by any holder of the Borrower's
capital stock in respect of such capital stock prior to such termination or cash
collateralization and payment; provided that the foregoing provisions shall not
apply if the Borrower's obligations under the Reimbursement Agreement shall have
been unconditionally and irrevocably guaranteed on terms approved by the
Required Banks by Residential Funding Corporation, a subsidiary of General
Motors Acceptance Corporation, or any other corporation of established
reputation, rated at least investment grade by at least two nationally
recognized rating agencies, that in either case shall have entered into a
definitive agreement with the Borrower to acquire (by purchase, merger or
otherwise) 100% of the equity interests in the Borrower, subject only to the
approval of the purchaser's board of directors and any necessary regulatory
approvals.

                  SECTION 5. Representations and Warranties. The Borrower
represents and warrants to the Administrative Agent and each Participating Bank
that:

                  (a) The representations and warranties set forth in the
         Reimbursement Agreement are true and correct in all material respects
         as of and with the same effect as if made on the date hereof (except to
         the extent such representations and warranties expressly relate to an
         earlier date) after giving effect to this Amendment, and with all
         references in such representations to (i) the "Transactions" being
         deemed to include the execution, delivery and performance by the
         Borrower of this Amendment and (ii) "this Agreement" being deemed to
         include this Amendment.

                  (b) After giving effect to this Amendment, the Borrower is in
         compliance in all material respects with all the terms and provisions
         contained in the Reimbursement Agreement required to be observed or
         performed by it.

                  (c) After giving effect to this Amendment, no Default has
         occurred and is continuing to the best of the Borrower's knowledge.
<PAGE>
                                                                               5

The foregoing representations and warranties shall survive the execution and
delivery of this Amendment.

                  SECTION 6. Effectiveness. This Amendment shall become
effective when the Administrative Agent has received counterparts hereof that,
when taken together, bear the signatures of the Borrower and the Required Banks;
provided that the amendments set forth in Section 2 above shall become effective
only when each of the following conditions shall have been satisfied:

         (a) the Administrative Agent shall have received the Amendment Fee (as
defined below) and any fees, expenses or other amounts payable by the Borrower
under Section 8 below for which invoices shall have been submitted to the
Borrower;

         (b) the Administrative Agent shall have received an opinion of Dewey
Ballantine LLP, in form reasonably satisfactory to the Administrative Agent and
covering such matters relating to this Amendment as the Administrative Agent
shall reasonably request;

         (c) the Administrative Agent shall have received such documents and
certificates as the Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrower or the authorization
of this Amendment and any other legal matters relating to the Borrower or this
Amendment, all in form and substance reasonably satisfactory to the
Administrative Agent and its counsel; and

         (d) an amendment under the Credit Agreement, substantially in the form
of this Amendment, shall have been executed and delivered by the Borrower and
the "Required Lenders" (as defined in the Credit Agreement), and the amendments
set forth therein shall have become effective (or shall become effective
concurrently with the effectiveness of the amendments set forth in Section 2).

                  SECTION 7. Amendment Fee. The Borrower agrees to pay to the
Administrative Agent an amendment fee (the "Amendment Fee") the amount of
$793,750.00 to be distributed to each Participating Bank that executes and
delivers a copy of this Amendment to the Administrative Agent (or its counsel)
on or prior to May 28, 1999, pro rata based on such Participating Bank's
Commitment and the total Commitments of all Participating Banks entitled to
share in the Amendment Fee pursuant to this Section 7; provided that the
Borrower shall have no liability for the Amendment Fee if this Amendment does
not become effective.

                  SECTION 8. Fees and Expenses. Without limiting the Borrower's
obligations under Section 9.03 of the Credit Agreement, the Borrower agrees to
pay all reasonable out-of-pocket expenses incurred by the Agent, the Issuing
Bank, the Co-Arrangers identified on the cover page of the Reimbursement
Agreement and their respective Affiliates, including the reasonable fees and
disbursements of all counsel for such parties, in connection with the
preparation, negotiation, execution and delivery of this Amendment and the
evaluation by such parties of their rights and the rights of the Participating
Banks under the Reimbursement Agreement or any related documentation.
<PAGE>
                                                                               6

                  SECTION 9. Miscellaneous. (a) Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of or otherwise affect the rights and remedies of the
Participating Banks, the Agent or the Issuing Bank under the Reimbursement
Agreement, and shall not alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the
Reimbursement Agreement, all of which are ratified and affirmed in all respects
and shall continue in full force and effect. Nothing herein shall be deemed to
entitle the Borrower or any Subsidiary to a consent to, or a waiver, amendment,
modification or other change of, any of the terms, conditions, obligations,
covenants or agreements contained in the Reimbursement Agreement in similar or
different circumstances. This Amendment shall apply and be effective only with
respect to the provisions of the Reimbursement Agreement specifically referred
to herein. The Borrower hereby ratifies, affirms, acknowledges and agrees that
the Reimbursement Agreement and the Loans and reimbursement obligations
thereunder represent the valid, enforceable and collectible obligations of the
Borrower, and acknowledges that there are no existing claims, defenses, personal
or otherwise, or rights of setoff whatsoever with respect to the Reimbursement
Agreement or the Loans or reimbursement obligations thereunder.

                  (b) As used in the Reimbursement Agreement, the terms
"Agreement", "herein", "hereinafter", "hereunder", "hereto", and words of
similar import shall mean, from and after the date hereof, the Reimbursement
Agreement as amended by this Amendment.

                  (c) Section headings used herein are for convenience of
reference only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Amendment.

                  (d) THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

                  (e) This Amendment may be executed in any number of
counterparts, each of which shall be an original but all of which, when taken
together, shall constitute but one instrument.
<PAGE>
                                                                               7

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective duly authorized
officers as of the date first above written.

                           CONTIFINANCIAL CORPORATION,

                           By: /s/ Frank W. Baier
                              -----------------------------------
                           Name: Frank W. Baier
                           Title: VP & Treasurer

                           By: /s/ Daniel J. Willett
                              -----------------------------------
                           Name: Daniel J. Willett
                           Title: SVP & CFO

                           CREDIT SUISSE FIRST BOSTON,
                           NEW YORK BRANCH, Individually,
                           and as Agent,

                           By: /s/ Jay Chall
                              -----------------------------------
                           Name: Jay Chall
                           Title: Director

                           By: /s/ Andrea E. Shkane
                              -----------------------------------
                           Name: Andrea E. Shkane
                           Title: Vice President

                           DRESDNER BANK AG, NEW YORK
                           AND GRAND CAYMAN BRANCHES,

                           By: /s/ J. Curtin Beaudouin
                              -----------------------------------
                           Name: J. Curtin Beaudouin
                           Title: First Vice President

                           By: /s/ Anthony C. Valencourt
                              -----------------------------------
                           Name: Anthony C. Valencourt
                           Title: Senior Vice President
<PAGE>
                                                                               8

                           THE BANK OF NEW YORK,

                           By: /s/ Robert A. Tweed
                              -----------------------------------
                           Name: Robert A. Tweed
                           Title: Vice President

                           CREDIT AGRICOLE INDOSUEZ,

                           By: /s/ Whakyung Lee
                              -----------------------------------
                           Name: Whakyung Lee
                           Title: Vice President

                           By: B. Lespinasse
                              -----------------------------------
                           Name: B. Lespinasse
                           Title: SVP

                           THE BANK OF NOVA SCOTIA,

                           By: /s/ A.T.D. Clarke
                              -----------------------------------
                           Name: A.T.D. Clarke
                           Title: Senior Manager

                           THE CHASE MANHATTAN BANK,

                           By: /s/ Gary L. Spevack
                              -----------------------------------
                           Name: Gary L. Spevack
                           Title: Vice President

                           NATIONSBANK, N.A.,

                           By: /s/ Garrett Dolt
                              -----------------------------------
                           Name: Garrett Dolt
                           Title: Vice President

                           CREDIT LYONNAIS NEW YORK
                           BRANCH,

                           By: /s/ Vladimir Labun
                              -----------------------------------
                           Name: Vladimir Labun
                           Title: First Vice President - Manager
<PAGE>
                                                                               9

                                    SOCIETE GENERALE,

                                    By: /s/ Jay Sands
                                       -----------------------------------
                                    Name: Jay Sands
                                    Title: Managing Director

                                    COMERICA BANK,

                                    By: /s/ Von L. Ringger
                                       -----------------------------------
                                    Name: Von L. Ringger
                                    Title: First Vice President

                                    UBS AG, NEW YORK BRANCH,

                                    By: /s/ Roger Liechti
                                       -----------------------------------
                                    Name: Roger Liechti
                                    Title: AD

                                    By: /s/ Marian McBride
                                       -----------------------------------
                                    Name: Marian McBride
                                    Title: AD

                                    THE SUMITOMO BANK, LIMITED,
                                    NEW YORK BRANCH,

                                    By: /s/ John C. Kissinger
                                       -----------------------------------
                                    Name: John C. Kissinger
                                    Title: Joint General Manager

                                    BW CAPITAL MARKETS, INC.,

                                    By: /s/ Robert B. Herber
                                       -----------------------------------
                                    Name: Robert B. Herber
                                    Title: Managing Director

                                    By: /s/ Thomas A. Lowe
                                       -----------------------------------
                                    Name: Thomas A. Lowe
                                    Title: Vice President
<PAGE>
                                                                              10

                                    SOUTHTRUST BANK, NATIONAL
                                    ASSOCIATION

                                    By: /s/ Andy Raine
                                       -----------------------------------
                                    Name: Andy Raine
                                    Title: AVP

                                    MANUFACTURERS AND TRADERS
                                    TRUST COMPANY

                                    By: /s/ Kevin B. Quinn
                                       -----------------------------------
                                    Name: Kevin B. Quinn
                                    Title: Assistant Vice President