CONTIFINANCIAL CORPORATION

                    1998 NONQUALIFIED STOCK OPTION AGREEMENT

                  THIS AGREEMENT (the "Agreement"), is made effective as of the
10th day of December, 1998, (hereinafter called the "Date of Grant"), between
ContiFinancial Corporation, a Delaware corporation (hereinafter called the
"Company"), and N A M E (hereinafter called the "Participant"):

                                R E C I T A L 5:

                  WHEREAS, the Company has adopted the ContiFinancial
Corporation 1995 Long-Term Stock Incentive Plan (the "Plan"), which Plan (i) is
incorporated herein by reference and made a part of this Agreement, and (ii)
defines the capitalized terms used but not otherwise defined herein; and

                  WHEREAS, the Committee has determined to grant the option
provided for herein (the "Option") to the Participant pursuant to the Plan and
the terms set forth herein.

                  NOW THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:

                  1. Grant of the Option. The Company hereby grants to the
Participant the right and option (the "Option") to purchase, on the terms and
conditions hereinafter set forth, all or any part of an aggregate of __________
Shares, subject to adjustment as set forth in the Plan. The purchase price of
the Shares subject to the Option shall be $6.00 per Share (the "Exercise
Price"). The Option is intended to be a non-qualified stock option, and is not
intended to be treated as an option that complies with Section 422 of the
Internal Revenue Code of 1986, as amended.

                  2. Vesting.

                  (a) Subject to the Participant's continued employment with the
Company and to the Committee's power, in its sole discretion, to accelerate the
vesting on all or part of the Option at any time, the Option shall vest and
become exercisable:
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Vesting Date                  Shares Which Vest

December 10, 1998

December 10, 1999

December 10, 2000

                  At any given time, the portion (if any) of the Option which
has become vested and exercisable as described above (or pursuant to Section
2(c) below) is hereinafter referred to as the "Vested Portion".

                  (b) If the Participant's employment with the Company is
terminated for any reason except as set forth in Section 2(d) and (e) below
prior to December 10, 2008, the Option shall, to the extent not then vested, be
canceled by the Company without consideration and the Vested Portion of the
Option shall remain exercisable for the period set forth in Section 3(a)below.

                  (c) Notwithstanding any other provision of this Agreement to
the contrary, a Change of Control (as defined in the Plan) shall not apply and
shall not accelerate the vesting period of the grant.

                  (d) If the Participant's employment with the Company is
terminated by reason of death or Disability, the option to the extent not vested
shall become fully vested and remain exercisable for the period set forth in
Section 3(a) below.

                  (e) If the Participants employment with the Company is
terminated without Cause or for Good Reason, the option to the extent not vested
shall become fully vested and remain exercisable for a period set forth in
Section 3(a) below.
<PAGE>

                  3. Exercise of Option.

                  (a) Period of Exercise. Subject to the provisions of the Plan
and this Agreement, the Participant may exercise all or any part of the Vested
Portion of the Option at any time, subject to compliance with any trading
policies of the Company which may be in effect from time to time, prior to the
earliest to occur of:

                  (i) the tenth anniversary of the Date of Grant;

                  (ii) one year following the date of the Participant's
termination of employment due to death or "Disability";

                  (iii) six months following the date of the Participant's
termination of employment by the Company without "Cause" or for "Good Reason";
and

                  (iv) the date of the Participant's termination of employment
by the Company for "Cause" or by the Participant for any reason;

                  Notwithstanding the foregoing, in the event a Participant is
unable to exercise the Option during any of the periods described in clauses
(ii) or (iii) above due to restrictions set forth in any trading policy of the
Company which is then in effect, the Option shall, subject to clause (i) above,
remain exercisable until such time as the exercise of the Option is permitted
under such policy or otherwise permitted by the Board of Directors of the
Company.

                  For purposes of this Agreement:

                  "Cause" shall mean "Cause" as defined in any employment
agreement then in effect between the Participant and the Company or if not
defined therein or, if there shall be no such agreement, (i) Participant's
engagement in misconduct which is materially injurious to the Company or its
affiliates, (ii) Participant's continued failure to substantially perform his
duties to the Company, (iii) Participant's repeated dishonesty in the
performance of his duties to the Company, (iv) Participant's commission of an
act or acts constituting any (x) fraud against, or misappropriation or
embezzlement from the Company or any of its affiliates, (y) crime involving
moral turpitude, or (z) offense that could result in a jail sentence of at least
30 days or (v) Participant's material breach of any confidentiality or
non-competition covenant entered into between the Participant and the Company.
The determination of the existence of Cause shall
<PAGE>

be made by the Committee in good faith, which determination shall be final and
conclusive for purposes of this Agreement;

                  "Good Reason" shall mean the diminution of title, position or
responsibilities or reduction in base salary; and

                  "Disability" shall mean "disability" as defined in any
employment agreement then in effect between the Participant and the Company or
if not defined therein or if there shall be no such agreement, as defined in the
Company's long-term disability plan as in effect from time to time, or if there
shall be no plan or if not defined therein, the Participant's becoming
physically or mentally incapacitated and consequent inability for a period of
six (6) months in any twelve (12) consecutive month period to perform his duties
to the Company.

                  (b) Method of Exercise.

                  (i) Subject to Section 3(a), the Vested Portion of the Option
may be exercised by delivering to the Company at its principal office written
notice of intent to so exercise; provided that, the Option may be exercised with
respect to whole Shares only. Such notice shall specify the number of Shares for
which the Option is being exercised and shall be accompanied by payment in full
of the Exercise Price. The payment of the Exercise Price shall be made in cash
or its equivalent, or, if and to the extent permitted by the Committee, by
exchanging Shares owned by the Participant (which are not the subject of any
pledge or other security interest and which have been owned by the Participant
for at least 6 months), or by a combination of the foregoing, provided that the
combined value of all cash and cash equivalents and the Fair Market Value of any
such Shares so tendered to the Company as of the date of such tender is at least
equal to the aggregate Exercise Price.

                  (ii) Notwithstanding any other provision of the Plan or this
Agreement to the contrary, the Option may not be exercised prior to the
completion of any registration or qualification of the Option or the Shares
under applicable state and federal securities or other laws, or under any ruling
or regulation of any governmental body or national securities exchange that the
Committee shall in its sole discretion determine to be necessary or advisable.

                  (iii) Upon the Company's determination that the Option has
been validly exercised as to any of the Shares, the Company shall issue
certificates in the Participant's name for such Shares. However, the Company
shall not be liable to the Participant for damages relating to any delays in
issuing the certificates to him, any loss of the certificates, or any mistakes
or errors in the issuance of the certificates or in the certificates themselves.
<PAGE>

                  (iv) In the event of the Participant's death, the Vested
Portion of the Option shall remain exercisable by the Participant's executor or
administrator, or the person or persons to whom the Participant's rights under
this Agreement shall pass by will or by the laws of descent and distribution as
the case may be, to the extent set forth in Section 3 (a). Any heir or legatee
of the Participant shall take rights herein granted subject to the terms and
conditions hereof.

            4. No Right to Continued Employment. Neither the Plan nor this
Agreement shall be construed as giving the Participant the right to be retained
in the employ of, or in any consulting relationship to, the Company or any
Affiliate. Further, the Company or an Affiliate may at any time dismiss the
Participant or discontinue any consulting relationship, free from any liability
or any claim under the Plan or this Agreement, except as otherwise expressly
provided herein.

            5. Legend on Certificates. The certificates representing the Shares
purchased by exercise of the Option shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the Plan
or the rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares are listed, and any
applicable Federal or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.

            6. Transferability. The Option may not be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by the
Participant otherwise than by will or by the laws of descent and distribution or
pursuant to a QDRO, and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate; provided that the designation of a
beneficiary shall not constitute an assignment, alienation, pledge, attachment,
sale, transfer or encumbrance. No such permitted transfer of the Option to heirs
or legatees of the Participant shall be effective to bind the Company unless the
Committee shall have been furnished with written notice thereof and a copy of
such evidence as the Committee may deem necessary to establish the validity of
the transfer and the acceptance by the transferee or transferees of the terms
and conditions hereof. During the Participant's lifetime, the Option is
exercisable only by the Participant.

                  7. Withholding. The Participant agrees to make appropriate
arrangements with the Company for satisfaction of any applicable
<PAGE>

federal, state or local income tax, withholding requirements or like
requirements, including the payment to the Company at the time of exercise of,
or other settlement in respect of, the Option of all such taxes and requirements
and the Company shall be authorized to take such action as may be necessary in
the opinion of the Company's counsel (including, without limitation, withholding
Shares otherwise deliverable to the Participant hereunder and/or withholding
amounts from any compensation or other amount owing from the Company to the
Participant) to satisfy all obligations for the payment of such taxes.

            8. Securities Laws. Upon the acquisition of any Shares pursuant to
the exercise of the Option, Participant will make or enter into such written
representations, warranties and agreements as the Committee may reasonably
request in order to comply with applicable securities laws or with this
Agreement.

            9. Notices. Any notice necessary under this Agreement shall be
addressed to the Company in care of its Secretary at the principal executive
office of the Company and to the Participant at the address appearing in the
personnel records of the Company for such Participant or to either party at such
other address as either party hereto may hereafter designate in writing to the
other. Any such notice shall be deemed effective upon receipt thereof by the
addressee.

            10.Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

            11.Option Subject to Plan. By entering into this Agreement the
Participant agrees and acknowledges that the Participant has received and read a
copy of the Plan. The Option is subject to the Plan. The terms and provisions of
the Plan as it may be amended from time to time are hereby incorporated herein
by reference. In the event of a conflict between any term or provision contained
herein and a term or provision of the Plan, the applicable terms and provisions
of the Plan will govern and prevail.

            12.Signature in Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.

                                        CONTIFINANCIAL CORPORATION


                                        By:_____________________________________


                                           NAME

                                           _____________________________________