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

                                    FORM 10-Q

            (Mark One)

            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934
            For the quarterly period ended June 30, 1999

                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934
            For the transition period from ___________to__________

                                     1-14074

                            (Commission File Number)

                           ContiFinancial Corporation
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


       Delaware                                         13-3852588
-------------------------------                     ----------------
(State or other jurisdiction of                     (I.R.S. Employer
  incorporation or organization)                    Identification No.)

277 Park Avenue
New York, New York                                              10172
--------------------------------------------------------------------------------
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code:          (212) 207-2800
                                                       -------------------------

                                    no change
 ------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

         Indicate  by check mark  whether  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes |X|  No |_|

The Company had 46,747,370  shares of common stock  outstanding as of August 10,
1999.

<PAGE>

                           ContiFinancial Corporation

                                Table of Contents
                                -----------------

                                     PART I

                                                                           Page
                                                                           ----

 Item 1. Financial Statements (unaudited)

            Consolidated Balance Sheets ...................................    3
            Consolidated Statements of Operations .........................    4
            Condensed Consolidated Statements of Cash Flows ...............    5
            Notes to Unaudited Condensed Consolidated Financial Statements     6
 Item 2. Management's Discussion and Analysis of Financial Condition and
            Results of Operations

            Recent Developments, Financial Results and Liquidity ..........   15
            Selected Financial Data .......................................   18
            Results of Operations .........................................   20
            Liquidity and Capital Resources ...............................   23
            Year 2000 .....................................................   25
            Forward-looking Statements ....................................   26
 Item 3. Quantitative and Qualitative Disclosures About Market Risk .......   27

                                    PART II

 Item 1. Legal Proceedings ................................................   29
 Item 6. Exhibits and Reports on Form 8-K .................................   29

 Signatures ...............................................................   30


                                       2
<PAGE>

                           CONTIFINANCIAL CORPORATION
       Consolidated Balance Sheets as of June 30, 1999 and March 31, 1999
                        (in thousands, except share data)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                                                        June 30,      March 31,
                                                                                          1999          1999
                                                                                     -----------    -----------
                                     Assets
                                     ------
<S>                                                                                  <C>            <C>
 Cash and cash equivalents .......................................................   $    58,646    $   112,839
 Restricted cash .................................................................         9,728          4,072
 Receivables held for sale:
    Receivables held for sale ....................................................       377,079      1,089,410
    Allowance for loan losses ....................................................        (4,773)        (7,364)
                                                                                     -----------    -----------
 Receivables held for sale, net ..................................................       372,306      1,082,046
 Other receivables ...............................................................       129,670         95,984
 Due from affiliates .............................................................         2,349         53,680
 Interest-only and residual certificates .........................................       561,372        722,012
 Capitalized servicing rights ....................................................        94,121        105,273
 Premises and equipment, net of accumulated depreciation of  $12,002 and $13,454
    as of  June 30, 1999 and March 31, 1999, respectively ........................        21,205         23,792
 Cost in excess of equity acquired ...............................................        15,572         85,388
 Equity investments in unconsolidated subsidiaries ...............................         5,660          4,978
 Taxes receivable ................................................................          --           13,024
 Other assets ....................................................................        38,606         52,076
                                                                                     -----------    -----------
          Total assets ...........................................................   $ 1,309,235    $ 2,355,164
                                                                                     ===========    ===========
                      Liabilities and Stockholders' Equity
                      ------------------------------------

 Liabilities:
 Accounts payable ................................................................   $    74,051    $    90,412
 Receivables sold under agreements to repurchase .................................       118,620        804,524
 Due to affiliates ...............................................................           139          8,918
 Short-term debt .................................................................       420,116        512,797
 Taxes payable ...................................................................         6,794           --
 Long-term debt ..................................................................       699,221        699,225
 Other liabilities ...............................................................        17,902         31,316
                                                                                     -----------    -----------
          Total liabilities ......................................................     1,336,843      2,147,192
                                                                                     -----------    -----------
 Commitments and contingencies
 Minority interest in subsidiaries ...............................................         4,707          4,721
 Stockholders' equity (deficit):
    Preferred stock (par value $0.01 per share; 25,000,000 shares authorized; none
       issued at June 30, 1999 and March 31, 1999) ...............................          --             --
    Common stock (par value $0.01 per share;  250,000,000 shares authorized;
       47,657,539 shares issued at June 30, 1999 and March 31, 1999) .............           477            477
    Paid-in capital ..............................................................       398,209        398,209
    Accumulated deficit ..........................................................      (401,018)      (163,301)
    Treasury stock (910,169 shares of common stock, at cost, at June 30, 1999 and
       March 31, 1999) ...........................................................       (25,106)       (25,106)
    Deferred compensation ........................................................        (4,877)        (7,028)
                                                                                     -----------    -----------
          Total stockholders' equity (deficit) ...................................       (32,315)       203,251
                                                                                     -----------    -----------
          Total liabilities and stockholders' equity .............................   $ 1,309,235    $ 2,355,164
                                                                                     ===========    ===========
</TABLE>

    The accompanying notes to the unaudited condensed consolidated financial
              statements are an integral part of these statements.


                                       3
<PAGE>

                           CONTIFINANCIAL CORPORATION
                      Consolidated Statements of Operations
                for the three months ended June 30, 1999 and 1998
                        (in thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                    June 30,
                                                          ----------------------------
                                                               1999            1998
                                                          ------------    ------------
<S>                                                       <C>             <C>
Gross income (loss):
   Gain (loss) on sale of receivables .................   $   (108,951)   $     37,572
   Interest ...........................................         52,189          71,980
   Net servicing income ...............................         12,907          26,720
   Gain on sale of subsidiary (Note 5) ................         22,121            --
   Other income .......................................          3,013           5,844
                                                          ------------    ------------
         Total gross income (loss) ....................        (18,721)        142,116
                                                          ------------    ------------

Expenses:
   Compensation and benefits ..........................         51,056          43,324
   Interest ...........................................         42,666          55,382
   Provision for loan losses ..........................          1,953             722
   General and administrative .........................         43,138          32,511
   Other charges (Note 3) .............................         69,929            --
                                                          ------------    ------------
         Total expenses ...............................        208,742         131,939
                                                          ------------    ------------
Income (loss) before income taxes and minority interest       (227,463)         10,177
Provision for income taxes (Note 6) ...................         10,268           4,101
                                                          ------------    ------------
Income (loss) before minority interest ................       (237,731)          6,076
Minority interest in earnings (losses) of subsidiaries             (14)             56
                                                          ------------    ------------
         Net income (loss) ............................   $   (237,717)   $      6,020
                                                          ============    ============

Basic earnings (loss) per common share ................   $      (5.12)   $       0.13
                                                          ============    ============

Diluted earnings (loss) per common share ..............   $      (5.12)   $       0.13
                                                          ============    ============

Basic weighted average number of shares outstanding ...     46,448,688      46,685,863
                                                          ============    ============

Diluted weighted average number of shares outstanding .     46,448,688      47,226,533
                                                          ============    ============
</TABLE>

    The accompanying notes to the unaudited condensed consolidated financial
              statements are an integral part of these statements.


                                       4
<PAGE>

                           CONTIFINANCIAL CORPORATION
                 Condensed Consolidated Statements of Cash Flows
                for the three months ended June 30, 1999 and 1998
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                               Three Months Ended
                                                                                   June  30,
                                                                            ------------------------
                                                                               1999         1998
                                                                            ---------    ---------
<S>                                                                         <C>          <C>
Net cash provided by (used in) operating activities .....................   $   6,427    $(215,290)
                                                                            ---------    ---------
 Cash flows from investing activities:
       Proceeds from sale of majority-owned subsidiary, net (Note 5) ....      34,196           --
       Acquisitions of majority-owned subsidiaries (net of cash acquired)        (735)     (21,595)
       Acquisitions of minority-owned subsidiaries ......................          --         (366)
       Purchase of premises and equipment, net ..........................      (1,524)      (3,511)
       Other, net .......................................................         199           --
                                                                            ---------    ---------
          Net cash provided by (used in) investing activities ...........      32,136      (25,472)
                                                                            ---------    ---------

 Cash flows from financing activities:
       Decrease in short-term debt ......................................     (92,756)     (24,678)
       Increase in long-term debt .......................................          --      199,778
       Debt issuance costs ..............................................          --      (11,658)
       Repurchase of common stock .......................................          --      (19,632)
       Other, net .......................................................          --           55
                                                                            ---------    ---------

          Net cash provided by (used in) financing activities ...........     (92,756)     143,865
                                                                            ---------    ---------
 Net decrease in cash and cash equivalents ..............................     (54,193)     (96,897)
 Cash and cash equivalents at beginning of  period ......................     112,839      173,588
                                                                            ---------    ---------
 Cash and cash equivalents at end of period .............................   $  58,646    $  76,691
                                                                            =========    =========
</TABLE>

    The accompanying notes to the unaudited condensed consolidated financial
              statements are an integral part of these statements.


                                       5
<PAGE>

                           CONTIFINANCIAL CORPORATION
         Notes to Unaudited Condensed Consolidated Financial Statements
                                  June 30, 1999
                (in thousands, except share data and where noted)

1.  BASIS OF PRESENTATION

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
ContiFinancial  Corporation and its majority-owned  subsidiaries  (collectively,
"ContiFinancial"  or the "Company") have been prepared pursuant to the rules and
regulations  of the Securities  and Exchange  Commission  and, in the opinion of
management,  reflect all normal recurring  adjustments which are necessary for a
fair  presentation of the financial  position,  results of operations,  and cash
flows for each period shown.  The preparation of financial  statements  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and the results of  operations.  Actual  results  could
differ from these  estimates.  In addition,  results for interim periods are not
necessarily  indicative of results for the full year. These unaudited  condensed
consolidated financial statements should be read in conjunction with the audited
Consolidated  Financial  Statements and notes thereto  included in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1999 (the "Annual
Report").  All  significant  intercompany  accounts and  transactions  have been
eliminated in consolidation.

2.  RECENT DEVELOPMENTS, FINANCIAL RESULTS AND LIQUIDITY

In fiscal 1999 and  continuing  in the first  quarter of fiscal 2000 the Company
has incurred  significant losses. Over this period the Company has experienced a
significant  decline  in  liquidity.  As a  result  of  these  factors  there is
substantial doubt as to the Company's ability to continue as a going concern.

The Company's  operations were significantly and adversely affected by difficult
capital market  conditions  that commenced in the second quarter of fiscal 1999,
with the effects of these events, and their repercussions,  continuing to affect
the  Company's  results  through the first  quarter of fiscal  2000.  During the
second  quarter of fiscal  1999,  the  economic  instability  in Asia and Russia
precipitated  a global debt crisis (the "Debt Crisis") which caused a "flight to
quality" by  investors.  During this period,  fixed income  investors  purchased
large  amounts of U.S.  Treasury  securities,  causing U.S.  Treasury  yields to
decrease  significantly.   As  investor  demand  for  U.S.  Treasury  securities
increased,  the demand for other fixed income securities declined  dramatically,
causing  yields on such  other  securities  to rise  relative  to U.S.  Treasury
securities.  Since almost all of the Company's loan originations were ultimately
funded  by the  issuance  of  securities  backed  by  the  loans  it  originates
(securitization),  these  unusual  interest rate  movements  affected the market
value of all of the  Company's  originations,  causing  significant  losses  and
leading to a critical loss of liquidity.

While the Debt Crisis  abated for other  sectors of the economy in fiscal  1999,
its impact and  subsequent  repercussions  continued  to affect the  "sub-prime"
industry  in which the  Company  operates.  The sudden and  significant  loss of
liquidity experienced  throughout the industry,  occurring within the context of
increasing  market  skepticism  about the  quality of  earnings  reported  under
"gain-on-sale  accounting",   intensified  capital  market  concerns  about  the
industry and severely curtailed access to the capital markets as a source of new
liquidity.


                                       6
<PAGE>

                           CONTIFINANCIAL CORPORATION
   Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
                                  June 30, 1999
                (in thousands, except share data and where noted)

In order to  attempt  to  strengthen  the  Company's  ability to operate in this
difficult environment,  in the last quarter of fiscal 1999, the Company began to
search for an investor who could  contribute  additional  equity  capital to the
Company or a buyer who would be interested in purchasing the Company's business.

On May 14,  1999,  the Company  signed an  indication  of  interest  letter with
Residential  Funding  Corporation ("RFC") under which RFC indicated its interest
in acquiring  all of the  outstanding  common  stock of the Company.  On July 2,
1999, a second  indication of interest letter was signed with RFC, again for the
acquisition  of all of the  outstanding  common  stock  of the  Company,  but on
revised business terms.  Definitive  documentation  for the acquisition was then
negotiated with RFC. On July 14, 1999, just prior to the expected signing of the
definitive documentation, RFC informed the Company that it had determined not to
proceed with the acquisition.

In light of the failure to  consummate  the  transaction  with RFC, and with the
impending  expiration  of  certain  of  the  Company's  credit  facilities,  the
Company's  Board of Directors  hired Mr. Alan Fishman as the new Chief Executive
Officer of the Company on July 20, 1999.

Following a review of the  Company's  situation,  Mr.  Fishman and other  senior
members of the Company's  management  determined  they should pursue a plan (the
"Restructuring Plan") of focusing the Company's operations on the most promising
of its origination channels,  reducing the size of the Company,  negotiating for
the  restructuring  or extension of the  Company's  credit  facilities  and then
recommencing  the search for an equity investor in the Company or a buyer of the
Company's business.

Pursuant to the  Restructuring  Plan, in August 1999, the Company entered into a
definitive   agreement  with  Greenwich   Capital   Financial   Products,   Inc.
("Greenwich"),  a subsidiary  of Greenwich  Capital  Markets,  Inc.,  to provide
ContiFinancial  with a $500  million  revolving  servicing-released  whole  loan
purchase  facility with a maximum  aggregate  purchase  commitment of up to $1.5
billion, at ContiFinancial's option, through March 31, 2000. Greenwich also will
provide a warehouse  facility of up to $250 million on a revolving  basis.  This
facility  also  expires on March 31,  2000.  In addition to the two  facilities,
Greenwich also agreed to underwrite, by the end of August 1999, an approximately
$800  million  securitization  of  home  equity  loans  currently  funded  under
ContiFinancial's  warehouse  facilities.  It is intended that these arrangements
with Greenwich will provide the Company with the necessary  warehouse  financing
to support the reduced amount of originations  contemplated as the Restructuring
Plan is being implemented.

Also in August  1999,  the  Company  began  the  implementation  of a  workforce
reduction plan which will result in the termination of approximately  30% of the
Company's  employees  in order to achieve the  strategic  goals of focusing  the
Company's  origination on the channels with the greatest  potential and reducing
the overall size of the Company. See Note 9.


                                       7
<PAGE>

                           CONTIFINANCIAL CORPORATION
   Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
                                  June 30, 1999
                (in thousands, except share data and where noted)

On August 19,  1999,  the Company  agreed with the lenders  under its  Revolving
Credit  Facility  and  Commercial   Paper  Program   (collectively,   the  "Bank
Facilities")  to extend the maturity date of the Bank Facilities from August 20,
1999 to March 31, 2000. The Company also agreed to certain  modifications of the
Bank  Facilities  including  a  $20  million  minimum  liquidity  covenant.  The
agreement  also  includes  providing  collateral to the lenders in the form of a
lien on certain  Excess  Spread  Receivables  with a June 30, 1999 book value of
approximately $147 million.  The interest rate on each facility remains at LIBOR
plus 300 basis points.

With the  objectives  of the  Restructuring  Plan of  refocusing  the  Company's
operations, reducing the size of the Company and restructuring and extending the
Company's  credit  facilities  being well  underway,  the  Company  now plans to
recommence  its  search  for a new  equity  investor  or buyer of the  Company's
business.

During  this  upcoming  period,  the Company  expects  that it will be cash flow
negative and will operate at a loss. The Company's operations during this period
are  dependent on the  continued  availability  of the Bank  Facilities  and the
warehouse financing under the Greenwich arrangements as well as the subservicing
agreement with ContiGroup  Companies,  Inc., formerly Continental Grain Company.
In addition,  the  Company's  cash  reserves may not be  sufficient  to meet the
Company's  cash needs  during this  period.  There can be no  assurance  that an
equity  investor or buyer of the Company's  operations  can be found on a timely
basis.

As a result of these  developments  described  above, the Company has determined
that the carrying  value of Cost in excess of equity  acquired on the  Company's
balance  sheet has been  impaired  and  should be  written-down  (see Note 3 and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations).  The Company has also determined that it may not be able to achieve
the results assumed in its prior loan loss projections;  therefore,  assumptions
as  to  future  loss  severities  were  increased,  resulting  in a  fair  value
adjustment  to  interest-only   and  residual   certificates  (see  Note  4  and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations).

For the three  months ended June 30,  1999,  the Company  incurred a net loss of
$237.7 million,  primarily due to the fair value adjustment to interest-only and
residual certificates and the write-down of Cost in excess of equity acquired as
discussed  above.  As a result of this net loss,  stockholders'  equity has been
reduced to a deficit balance of $32.3 million.

The accompanying  consolidated  financial statements have been prepared assuming
the  Company  will  continue  as a going  concern.  Accordingly,  the  financial
statements do not include any  adjustments  relating to the  recoverability  and
classification  of asset carrying  amounts or the amount and  classification  of
liabilities  that might  result  should the  Company be unable to  continue as a
going concern.


                                       8
<PAGE>

                           CONTIFINANCIAL CORPORATION
   Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
                                  June 30, 1999
                (in thousands, except share data and where noted)

3.  OTHER CHARGES

Other charges  included in the Company's  Consolidated  Statements of Operations
for the three months ended June 30, 1999 consisted of the following:

                                                           Three Months
                                                              Ended
                                                           June 30, 1999
                                                           -------------

           Write-down of cost in excess of equity acquired   $59,953
           Restructuring charges .........................     7,842
           Other .........................................     2,134
                                                             -------
               Total .....................................   $69,929
                                                             =======

Based  on the  recent  developments  discussed  in  Note  2,  management  made a
determination  that the  carrying  value of Cost in excess  of  equity  acquired
related to most of the Company's  operations  had been  completely  impaired and
appropriate write-downs had to be recorded.

The  restructuring  charges  of  $7.8  million  primarily  represent  legal  and
consulting fees related to restructuring.

4.  INTEREST-ONLY AND RESIDUAL CERTIFICATES

Interest  only and  residual  certificates  (also  referred to as excess  spread
receivables  or ESR)  represents  the present value of the  estimated  stream of
future  cash  flows  that the  Company  expects  to  receive  over the life of a
securitization, taking into consideration estimated prepayment speeds and credit
losses.  At June  30,  1999 and  March  31,1999,  the  Company's  ESR  portfolio
consisted of the following:

                                                           June 30,   March 31,
                                                            1999       1999
                                                          --------   --------
                                                             (in thousands)
   Home equity:
       ContiMortgage/ContiWest ........................   $499,101   $611,320
       Other servicers ................................     20,967     24,800
                                                          --------   --------
          Total home equity ...........................    520,068    636,120
   Home improvement ...................................     22,130      4,046
   Commercial real estate .............................      6,164      6,263
   Auto ...............................................      7,301     69,804
   Other ..............................................      5,709      5,779
                                                          --------   --------
          Total ESR portfolio .........................   $561,372   $722,012
                                                          ========   ========


                                       9
<PAGE>

                           CONTIFINANCIAL CORPORATION
   Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
                                  June 30, 1999
                (in thousands, except share data and where noted)

The changes in ESR from March 31, 1999 to June,  30, 1999 are  presented  in the
table below:

         Interest-only and residual certificates (in thousands):
         -------------------------------------------------------

         Balance as of March 31, 1999 ...................   $ 722,012
            New securitizations .........................      17,773
            ESR received in Empire asset swap ...........      17,964
            Net cash distributions from REMICs and trusts     (18,200)
            Sale of subsidiary ..........................     (61,249)
            Accruals of interest income .................      12,178
            Clean-up call on previously sold ESR ........      22,076
            Fair value adjustments ......................    (151,182)
                                                            ---------
         Balance as of June 30, 1999 ....................   $ 561,372
                                                            =========

In accordance  with SFAS No. 134,  "Accounting  for  Mortgage-Backed  Securities
Retained after the  Securitization of Mortgage Loans Held for Sale by a Mortgage
Banking  Enterprise",   the  Company  continues  to  classify  ESR  as  "trading
securities". As such, they are carried at fair value in the Consolidated Balance
Sheets. Unrealized changes in ESR fair value are included in Gain (loss) on sale
of receivables on the accompanying  Consolidated Statements of Operations in the
period of the change.

The Company has, from time to time,  completed sales of ESR as either sales with
limited recourse or Net Interest Margin Securities ("NIMS") sales. Nevertheless,
there is only a limited  market for the sale of ESR.  Consequently,  the Company
estimates  the fair value of ESR through the  application  of a discounted  cash
flow analysis, which requires the use of various assumptions.

A significant  factor  affecting the level of estimated future ESR cash flows is
the rate at which the underlying  principal of the securitized loans is reduced.
Prepayments represent principal reductions in excess of contractually  scheduled
reductions,  and  prepayment  speeds are  generally  expressed as an  annualized
Conditional (or Constant) Prepayment Rate ("CPR"). In determining the fair value
of the  ContiMortgage/ContiWest ESR portfolio as of June 30, 1999, the Company's
weighted  average  estimated  future CPR was 28.7% as compared to 28.3% at March
31, 1999.

Another  significant  factor that is considered in estimating  the fair value of
ESR is the estimate of future credit losses. As credit  enhancement,  the ESR is
subordinate to the rights of the holders of the senior pass-through  securities.
For the three  months  ended June 30,  1999,  the  Company  recorded  fair value
write-downs  of $151.2  million  on  Interest-only  and  residual  certificates,
primarily   reflecting   increased   estimates   of   credit   losses   in   the
ContiMortgage/ContiWest  portfolio. Aggregate lifetime credit losses (historical
plus  future)  as  a  percentage   of  the  original   pool   balances  for  the
ContiMortgage/ContiWest ESR portfolio was estimated to be 3.50% at June 30, 1999
as compared to 2.91% at March 31, 1999. Based on developments during the quarter
ended June 30, 1999 as discussed in Note 2, management made a determination that
the Company most likely would not be able to achieve the results  assumed in its
prior loan loss projections; therefore, assumptions as to future loss severities
were  increased,  resulting  in a fair value  adjustment  to  interest-only  and
residual certificates of $151.2 million.


                                       10
<PAGE>

                           CONTIFINANCIAL CORPORATION
   Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
                                  June 30, 1999
                (in thousands, except share data and where noted)

The  Company  determines  the  discount  rate used in  estimating  fair value by
selecting a rate that it believes is commensurate  with the risks involved.  The
Company  recognizes that the ESR discount rate when  interacting  with the other
two  assumptions,   losses  and  prepayment,   is  a  "risk-adjusted"  rate.  In
determining this rate the Company  considers many factors including a comparison
to the yields on other financial instruments with prepayment or credit risk. The
future cash flows estimated as of June 30, 1999 and March 31, 1999,  taking into
consideration  estimated  prepayment rates and credit losses, were discounted at
12%  to  arrive  at  the  fair  value  amounts  presented  in  the  accompanying
Consolidated Balance Sheets.

Assumptions  regarding  future CPR and credit  losses are subject to  volatility
that could materially  affect operating  results.  Both the amount and timing of
estimated  ESR cash flows are  dependent on the  performance  of the  underlying
loans, and actual cash flows may vary significantly from expectations. If actual
prepayment  speeds or credit losses in future periods were to be higher than the
assumptions  used in the  Company's  fair value  estimate,  or if the  estimated
market  discount rate were to increase,  the ESR carrying value would have to be
written  down  through a charge to  earnings,  which  could cause the Company to
report  losses in future  periods.  Given the size of  ContiMortgage/ContiWest's
servicing portfolio, even a modest change in ESR fair value assumptions can have
a relatively large impact on the ESR fair value. The table below illustrates the
impact of a positive or negative change in a single assumption used to determine
fair  value  for the  ContiMortgage/ContiWest  related  ESR  while  keeping  the
absolute value of the other two assumptions  constant.  The impact of changes in
these  assumptions  are  not  linear.  As of  June  30,  1999,  changes  in  the
assumptions would have approximately the following impact on fair value:

        Factor                      Change                  Fair value impact
        ------                      ------                  -----------------

        Annual CPR                  +100 basis points       $(26 million)
        Annual  CPR                 -100 basis points       $ 27 million
        Lifetime credit losses      +  10 %                 $(61 million)
        Lifetime credit losses      -  10 %                 $ 78 million
        Discount rate               +100 basis points       $(27 million)
        Discount rate               -100 basis points       $ 29 million

5.  GAIN ON SALE OF SUBSIDIARY

On June 11, 1999, the Company sold its interest in its wholly-owned  subsidiary,
Triad  Financial  Corporation  ("Triad") to Fairlane  Credit LLC, a wholly-owned
subsidiary of Ford Motor Credit Company. The sale of Triad resulted in a gain of
approximately  $22 million and provided  gross  proceeds of  approximately  $134
million through sale proceeds,  repayment of intercompany debt and net return of
intercompany warehouse financing. Of this amount,  approximately $95 million was
used to pay down the Company's Bank Facilities.


                                       11
<PAGE>

                           CONTIFINANCIAL CORPORATION
   Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
                                  June 30, 1999
                (in thousands, except share data and where noted)

6.  TAXES

SFAS No. 109  requires  that  deferred  tax  assets be  reduced  by a  valuation
allowance  if it is more likely than not that some  portion of the  deferred tax
assets will not be realized.  The Company has provided a valuation allowance for
the entire amount of the net deferred tax asset since it is more likely than not
that the net deferred tax asset will not be realized.

Due to the Company's ownership of REMIC residual  certificates,  the Federal tax
provision for the three months ended June 30, 1999 is based on excess  inclusion
generated by the ownership of these certificates.

7.  EARNINGS PER SHARE

The following  table  presents a  reconciliation  of basic and diluted  earnings
(loss) per common share.

<TABLE>
<CAPTION>
                                                            Three months ended
                                                                 June 30,
                                                            --------------------
                                                            1999            1998
                                                            ----            ----
<S>                                                     <C>             <C>
Net income (loss) ...................................   $   (237,717)   $     6,020
                                                        ============    ===========
Basic weighted average number of shares outstanding .     46,448,688     46,685,863
Adjustments for dilutive shares outstanding:
   Restricted shares ................................           --           55,235
   Options ..........................................           --          485,435
Diluted weighted average number of shares outstanding     46,448,688     47,226,533
                                                        ============    ===========
Earnings (loss) per common share:
   Basic ............................................   $      (5.12)   $      0.13
                                                        ============    ===========
   Diluted ..........................................   $      (5.12)   $      0.13
                                                        ============    ===========
</TABLE>

For the three months  ended June 30,  1999,  diluted loss per share equals basic
loss per share, as the dilutive calculation would have an antidilutive impact as
a result of the net loss  incurred in the quarter.  Options to purchase  296,000
shares  of  common  stock  at a  weighted  average  exercise  price  of  $31.78,
outstanding  during the three months  ended June 30, 1998,  were not included in
the computation of diluted earnings per share, as they were antidilutive.


                                       12
<PAGE>

                           CONTIFINANCIAL CORPORATION
   Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
                                  June 30, 1999
                (in thousands, except share data and where noted)

8.  DEBT

Short-term  and long-term  debt at June 30, 1999 and March 31, 1999 consisted of
the following:

<TABLE>
<CAPTION>
                                                              June 30,  March 31,
                                                               1999       1999
                                                             --------   --------
<S>                                                          <C>        <C>
Short-term debt:
   Commercial paper ......................................   $256,798   $312,477
   Revolving Credit Facility .............................    163,000    200,000
   Current portion of long-term debt .....................        318        320
                                                             --------   --------
Total short-term debt ....................................   $420,116   $512,797
                                                             ========   ========

Long-term debt:
   8 3/8% Senior Notes, $300 million face amount, due 2003   $299,434   $299,405
   7 1/2% Senior Notes, $200 million face amount, due 2002    199,582    199,547
   8 1/8% Senior Notes, $200 million face amount, due 2008    199,796    199,792
   Capitalized lease .....................................        409        481
                                                             --------   --------
Total long-term debt .....................................   $699,221   $699,225
                                                             ========   ========
</TABLE>

As of December 31, 1998 and  continuing  through June 30,  1999,  the  Company's
leverage  ratio  exceeded  the  leverage  ratio test under the  covenants of its
outstanding  Senior Notes.  As a result,  the Company is prevented  from issuing
additional  unsecured  debt until its leverage  ratio is below such test.  As of
December 31, 1998,  the Company and two of its lenders  agreed to amend  certain
provisions  of the  Repurchase  Agreements.  Amendments  were  received from the
Repurchase  Agreement  lenders  changing the leverage  ratio to 2.75 to 1. These
Repurchase Agreements were again amended as of March 31, 1999. One agreement was
amended to remove all financial  covenants  through  August 20, 1999,  while the
other removed the  financial  covenants to the July 1, 1999 maturity date of the
facility.  Subsequent to June 30, 1999, one Repurchase Agreement matured and was
not  extended  while the other was replaced  with a new  facility  that does not
include any financial covenants.


                                       13
<PAGE>

                           CONTIFINANCIAL CORPORATION
   Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
                                  June 30, 1999
                (in thousands, except share data and where noted)

As of December 31, 1998, amended financial covenants were also received changing
the leverage and fixed charge  ratios and the minimum net worth test in the Bank
Facilities,  and lenders  agreed to exclude  certain  charges  from the covenant
ratio  calculations.  As of March 31, 1999, the Bank  Facilities were amended to
eliminate the financial  covenants and borrowing  base  provisions,  among other
things. As part of the bank amendment,  the Company agreed to reduce commitments
under the Bank  Facilities by 75% of the total proceeds  received by the Company
for the sale of Triad.  On June 11, 1999, the sale of Triad was closed,  and the
Bank Facilities  commitments were reduced by approximately  $95 million.  If the
above  mentioned  amendments had not been  obtained,  the Company would not have
been in compliance  with the covenants.  The Company was in compliance  with the
amended covenants of the Revolving Credit Facility, the Commercial Paper Program
and the  Repurchase  Agreements  as of June 30,  1999.  As part of the  December
amendments to the Revolving  Credit  Facility,  the Company had agreed to prepay
the  Revolving  Credit  Facility on August 20,  1999,  which made the  Revolving
Credit Facility  coterminous with the Commercial  Paper Program.  As part of the
March  amendments,  the interest rates of the Revolving  Credit Facility and the
Commercial Paper Program were increased to LIBOR plus 300 basis points.

On  August  19,  1999,  the  Company  agreed  with the  lenders  under  its Bank
Facilities  to extend the maturity date of the Bank  Facilities  from August 20,
1999 to March 31, 2000. The Company also agreed to certain  modifications of the
Bank  Facilities  including  a  $20  million  minimum  liquidity  covenant.  The
agreement  also  includes  providing  collateral to the lenders in the form of a
lien on certain  Excess  Spread  Receivables  with a June 30, 1999 book value of
approximately $147 million.  The interest rate on each facility remains at LIBOR
plus 300 basis points.

9.  SUBSEQUENT EVENTS

In August 1999, the Company began the  implementation  of a workforce  reduction
plan which will result in the termination of approximately  30% of the Company's
employees in order to achieve the strategic goals of the Company's restructuring
plan as discussed in Note 2.

Effective in July 1999 and August 1999, the Company  established the CFN and CMC
1999  Retention  Bonus  Plans (the  "Plans")  for the purpose of  retaining  the
valuable services of the Company's key employees through certain dates. In order
to  guarantee  payment  under the  Plans,  the  Company  established  and funded
irrevocable Trusts in the amount of $16.1 million.

Severance  for  terminated  employees  under the  workforce  reduction  plan and
charges related to the Plans are  approximately  $7.2 million and $16.1 million,
respectively, and will be recorded in the second quarter of fiscal 2000.


                                       14
<PAGE>

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

This discussion  should be read in conjunction with the  accompanying  unaudited
Condensed  Consolidated  Financial Statements and notes thereto included herein,
and the Company's audited  Consolidated  Financial  Statements and notes thereto
included in the Company's Annual Report.  Certain  statements under this caption
constitute  "forward-looking  statements"  under federal  securities  laws.  See
"Forward-looking Statements."

Recent Developments, Financial Results and Liquidity

In fiscal 1999 and  continuing  in the first  quarter of fiscal 2000 the Company
has incurred  significant losses. Over this period the Company has experienced a
significant  decline  in  liquidity.  As a  result  of  these  factors  there is
substantial  doubt as to the  Company's  ability to continue as a going  concern
(see Note 2 to the Consolidated Financial Statements).

The Company's  operations were significantly and adversely affected by difficult
capital market  conditions  that commenced in the second quarter of fiscal 1999,
with the effects of these events, and their repercussions,  continuing to affect
the  Company's  results  through the first  quarter of fiscal  2000.  During the
second  quarter of fiscal  1999,  the  economic  instability  in Asia and Russia
precipitated  a global debt crisis (the "Debt Crisis") which caused a "flight to
quality" by  investors.  During this period,  fixed income  investors  purchased
large  amounts of U.S.  Treasury  securities,  causing U.S.  Treasury  yields to
decrease  significantly.   As  investor  demand  for  U.S.  Treasury  securities
increased,  the demand for other fixed income securities declined  dramatically,
causing  yields on such  other  securities  to rise  relative  to U.S.  Treasury
securities.  Since almost all of the Company's loan originations were ultimately
funded  by the  issuance  of  securities  backed  by  the  loans  it  originates
(securitization),  these  unusual  interest rate  movements  affected the market
value of all of the  Company's  originations,  causing  significant  losses  and
leading to a critical loss of liquidity.

While the Debt Crisis  abated for other  sectors of the economy in fiscal  1999,
its impact and  subsequent  repercussions  continued  to affect the  "sub-prime"
industry  in which the  Company  operates.  The sudden and  significant  loss of
liquidity experienced  throughout the industry,  occurring within the context of
increasing  market  skepticism  about the  quality of  earnings  reported  under
"gain-on-sale  accounting",   intensified  capital  market  concerns  about  the
industry and severely curtailed access to the capital markets as a source of new
liquidity.

In order to  attempt  to  strengthen  the  Company's  ability to operate in this
difficult environment,  in the last quarter of fiscal 1999, the Company began to
search for an investor who could  contribute  additional  equity  capital to the
Company or a buyer who would be interested in purchasing the Company's business.

On May 14,  1999,  the Company  signed an  indication  of  interest  letter with
Residential  Funding  Corporation ("RFC") under which RFC indicated its interest
in acquiring  all of the  outstanding  common  stock of the Company.  On July 2,
1999, a second  indication of interest letter was signed with RFC, again for the
acquisition  of all of the  outstanding  common  stock  of the  Company,  but on
revised business terms.  Definitive  documentation  for the acquisition was then
negotiated with RFC. On July 14, 1999, just prior to the expected signing of the
definitive documentation, RFC informed the Company that it had determined not to
proceed with the acquisition.


                                       15
<PAGE>

In light of the failure to  consummate  the  transaction  with RFC, and with the
impending  expiration  of  certain  of  the  Company's  credit  facilities,  the
Company's  Board of Directors  hired Mr. Alan Fishman as the new Chief Executive
Officer of the Company on July 20, 1999.

Following a review of the  Company's  situation,  Mr.  Fishman and other  senior
members of the Company's  management  determined  they should pursue a plan (the
"Restructuring Plan") of focusing the Company's operations on the most promising
of its origination channels,  reducing the size of the Company,  negotiating for
the  restructuring  or extension of the  Company's  credit  facilities  and then
recommencing  the search for an equity investor in the Company or a buyer of the
Company's business.

Pursuant to the  Restructuring  Plan, in August 1999, the Company entered into a
definitive   agreement  with  Greenwich   Capital   Financial   Products,   Inc.
("Greenwich"),  a subsidiary  of Greenwich  Capital  Markets,  Inc.,  to provide
ContiFinancial  with a $500  million  revolving  servicing-released  whole  loan
purchase  facility with a maximum  aggregate  purchase  commitment of up to $1.5
billion, at ContiFinancial's option, through March 31, 2000. Greenwich also will
provide a warehouse  facility of up to $250 million on a revolving  basis.  This
facility  also  expires on March 31,  2000.  In addition to the two  facilities,
Greenwich also agreed to underwrite, by the end of August 1999, an approximately
$800  million  securitization  of  home  equity  loans  currently  funded  under
ContiFinancial's  warehouse  facilities.  It is intended that these arrangements
with Greenwich will provide the Company with the necessary  warehouse  financing
to support the reduced amount of originations  contemplated as the Restructuring
Plan is being implemented.

Also in August  1999,  the  Company  began  the  implementation  of a  workforce
reduction plan which will result in the termination of approximately  30% of the
Company's  employees  in order to achieve the  strategic  goals of focusing  the
Company's  origination on the channels with the greatest  potential and reducing
the  overall  size of the  Company.  See  Note 9 to the  Consolidated  Financial
Statements.

On August 19,  1999,  the Company  agreed with the lenders  under its  Revolving
Credit  Facility  and  Commercial   Paper  Program   (collectively,   the  "Bank
Facilities")  to extend the maturity date of the Bank Facilities from August 20,
1999 to March 31, 2000. The Company also agreed to certain  modifications of the
Bank  Facilities  including  a  $20  million  minimum  liquidity  covenant.  The
agreement  also  includes  providing  collateral to the lenders in the form of a
lien on certain  Excess  Spread  Receivables  with a June 30, 1999 book value of
approximately $147 million.  The interest rate on each facility remains at LIBOR
plus 300 basis points.

With the  objectives  of the  Restructuring  Plan of  refocusing  the  Company's
operations, reducing the size of the Company and restructuring and extending the
Company's  credit  facilities  being well  underway,  the  Company  now plans to
recommence  its  search  for a new  equity  investor  or buyer of the  Company's
business.

During  this  upcoming  period,  the Company  expects  that it will be cash flow
negative and will operate at a loss. The Company's operations during this period
are  dependent on the  continued  availability  of the Bank  Facilities  and the
warehouse financing under the Greenwich arrangements as well as the subservicing
agreement with ContiGroup  Companies,  Inc., formerly Continental Grain Company.
In addition,  the  Company's  cash  reserves may not be  sufficient  to meet the
Company's  cash needs  during this  period.  There can be no  assurance  that an
equity  investor or buyer of the Company's  operations  can be found on a timely
basis.

As a result of these  developments  described  above, the Company has determined
that the carrying  value of Cost in excess of equity  acquired on the  Company's
balance  sheet has been impaired and should be  written-down  (see Note 3 to the
Consolidated Financial Statements).  The Company has also determined that it may
not be able to achieve the results  assumed in its prior loan loss  projections;
therefore, assumptions as to future loss severities were increased, resulting in
a fair value adjustment to interest-only  and residual  certificates (see Note 4
to the Consolidated Financial Statements).


                                       16
<PAGE>

For the three  months ended June 30,  1999,  the Company  incurred a net loss of
$237.7 million,  primarily due to the fair value adjustment to interest-only and
residual certificates and the write-down of Cost in excess of equity acquired as
discussed  above.  As a result of this net loss,  stockholders'  equity has been
reduced to a deficit balance of $32.3 million.


                                       17
<PAGE>

Selected Financial Data

                           ContiFinancial Corporation
                  Loan Originations, Securitizations and Sales
                             (dollars in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                    For the three months ended
                                                                             June 30,            %
                                                                    --------------------------  Incr.
                                                                        1999         1998      (Decr.)
<S>                                                                 <C>          <C>           <C>
Loan Originations
Home equity, home improvement
   and other residential mortgage loans:
   Brokers ......................................................   $  416,058   $  308,188    35.00%
   Correspondents ...............................................      558,212    1,349,429   (58.63)%
   Direct retail ................................................      502,141      533,632    (5.90)%
                                                                    ----------   ----------
Total home equity, home improvement
and other residential mortgage loans ............................    1,476,411    2,191,249   (32.62)%
                                                                    ----------   ----------
Commercial real estate mortgage loans:
   Conduit (ContiMAP and affiliates) ............................           --      718,783   (100.00)%
   Keystone .....................................................      319,325      217,952    46.51%
                                                                    ----------   ----------
Total commercial real estate loans ..............................      319,325      936,735   (65.91)%
Triad auto loans ................................................       88,675       70,546    25.70%
                                                                    ----------   ----------
      Total loan originations ...................................   $1,884,411   $3,198,530   (41.09)%
                                                                    ==========   ==========

Securitizations and Sales
ContiMortgage/ContiWest
   securitizations ..............................................   $  800,000   $1,750,000   (54.29)%
Other home equity, home improvement and
   other residential mortgage sales .............................      584,365      196,183   197.87%
                                                                    ----------   ----------
Total home equity, home improvement
and other residential mortgage sales ............................    1,384,365    1,946,183   (28.87)%
                                                                    ----------   ----------
Commercial real estate mortgage loans:

   Whole loan sales .............................................      380,652           --      n/a
   Keystone .....................................................      319,325      217,952    46.51%
                                                                    ----------   ----------
Total commercial real estate mortgage
   loans ........................................................      699,977      217,952   221.16%
Triad auto loans ................................................           --       57,667   (100.00)%
Strategic alliances .............................................       12,783      100,249   (87.25)%
                                                                    ----------   ----------

      Total securitizations and sales ...........................   $2,097,125   $2,322,051    (9.69)%
                                                                    ==========   ==========
</TABLE>

n/a - not applicable


                                       18
<PAGE>

                            ContiMortgage Corporation
                       Delinquencies, Defaults and Losses
                             (dollars in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
ContiMortgage                                June 30,      March 31,      June 30,
Servicing Portfolio                           1999           1999           1998
-------------------                        -----------    -----------   ------------
<S>                                        <C>            <C>            <C>
Number of loans serviced (at period end)       192,634        194,032        170,425
Serviced loan portfolio (at period end)    $12,902,516    $12,966,131    $11,154,731
                                           ===========    ===========    ===========
Delinquencies:
   30 - 59 days ........................          1.60%          1.39%          2.57%
   60 - 89 days ........................          0.52%          0.51%          0.85%
   90 days and over ....................          0.05%          0.44%          0.49%
                                           -----------    -----------    -----------
Total delinquencies (%) ................          2.17%          2.34%          3.91%
                                           ===========    ===========    ===========
Total delinquencies ($) ................   $   279,651    $   303,802    $   435,927
                                           ===========    ===========    ===========
Defaults:

   Foreclosure .........................          2.57%          2.29%          2.14%
   Bankruptcy ..........................          1.76%          1.65%          1.54%
   Real estate owned ...................          1.09%          1.04%          0.92%
   Loss mitigation and legal (1) .......          1.26%          1.24%          0.76%
                                           -----------    -----------    -----------
Total defaults (%) .....................          6.68%          6.22%          5.36%
                                           ===========    ===========    ===========
Total defaults ($) .....................   $   861,613    $   806,656    $   598,226
                                           ===========    ===========    ===========
</TABLE>

(1) This category includes  non-performing  accounts specifically identified for
accelerated  resolution under the Company's loss mitigation program.  Resolution
strategies include  refinances,  reinstatements,  and full payoffs;  forbearance
plans;  pre-foreclosure sales for less than full payoff; third party foreclosure
sales; deed-in-lieu (or "cash for keys"); and charge-offs.

<TABLE>
<CAPTION>
                                                       For the three   For the twelve
 ContiMortgage                                         months ended    months ended
 Loan Loss Experience                                  June 30, 1999   June 30, 1999
 --------------------                                  -------------   -------------
<S>                                                     <C>            <C>
Average serviced loan portfolio .....................   $12,886,579    $12,608,710
                                                        ===========    ===========
Net losses:
   REMICs and loans held pending securitization .....        50,415        156,201
   Loans and properties purchased out of REMICs .....           739          4,848
                                                        -----------    -----------
      Total net losses ..............................   $    51,154    $   161,049
                                                        ===========    ===========
Realized net losses as a percentage of average amount
outstanding (2):
   REMICs and loans held pending securitization .....          1.57%          1.24%
   Loans and properties purchased out of REMICs .....          0.02%          0.04%
                                                        -----------    -----------
Total realized net losses as a percentage of average
   amount outstanding ...............................          1.59%          1.28%
                                                        ===========    ===========
(2)  Amounts for the three months ended June 30, 1999 are annualized.
</TABLE>


                                       19
<PAGE>

Results of Operations

Three Months Ended June 30, 1999  Compared  with the Three Months Ended June 30,
1998

The Company  incurred a net loss of $237.7  million for the three  months  ended
June 30, 1999  compared to net income of $6.0 million for the three months ended
June 30, 1998, a decrease of $243.7 million. Total gross income (loss) decreased
by $160.8  million,  to a loss of $18.7  million for the three months ended June
30, 1999  compared to income of $142.1  million for the three  months ended June
30, 1998. Total expenses  increased by $76.8 million,  to $208.7 million for the
three months ended June 30, 1999 compared to $131.9 million for the three months
ended June 30, 1998.

Gain (Loss) on Sale of Receivables:

The  following  table  sets  forth  the  components  of gain  (loss)  on sale of
receivables for the three months ended June 30, 1999 and 1998:

                                                          Three Months Ended
                                                                June 30,
                                                       -------------------------
 (dollars in thousands)                                   1999            1998
                                                       ---------      ---------
Home equity/home improvement .....................     $  40,407      $  86,825
Commercial real estate ...........................         1,824          1,262
Auto and Other ...................................            --          8,337
                                                       ---------      ---------
       Gain before fair value adjustments ........        42,231         96,424

Fair value adjustments ...........................      (151,182)       (58,852)
                                                       ---------      ---------
       Gain (loss) after fair value adjustments ..     $(108,951)     $  37,572
                                                       =========      =========

Gain  before fair value  adjustments  decreased  $54.2  million or 56.2% for the
three  months ended June 30, 1999 as compared to the same three months of fiscal
1999, whereas total  securitizations  and sales decreased 10%, from $2.3 billion
to $2.1 billion for the same  respective  periods.  For  ContiMortgage/ContiWest
transactions,  gains before fair value adjustments  expressed as a percentage of
total securitizations and sales decreased to 2.92% from 4.46% for the respective
three month periods ended June 30, 1999 and 1998. This decrease in profitability
between the two periods  reflects higher loss assumptions (see below) and higher
investor spread requirements due to the Company's impaired financial condition.

For the three  months  ended June 30,  1999,  the  Company  recorded  fair value
write-downs  of $151.2  million  on  Interest-only  and  residual  certificates,
primarily   reflecting   increased   estimates   of   credit   losses   in   the
ContiMortgage/ContiWest  portfolio. In response to events occurring in the first
fiscal quarter, as more fully described in Note 2 to the Consolidated  Financial
Statements,  management made a determination  that the Company most likely would
not be able to achieve the results  assumed in its prior loan loss  projections;
therefore,  assumptions as to future loss  severities  were  increased.  For the
three months ended June 30, 1998,  the fair value  adjustments  of $58.9 million
resulted  primarily due to increased  estimates of future  prepayment speeds and
losses in the ContiMortgage/ContiWest portfolio.


                                       20
<PAGE>

Interest Income and Expense:

In the normal course of its activities, the Company carries inventories of loans
pending sale or securitization  and earns a positive spread between the interest
income  earned on those loans and the cost of  financing  such  loans.  Interest
income also  includes  accrued  imputed  interest on Excess  Spread  Receivables
("ESR").   In  addition  to  the  cost  of  financing   loans  pending  sale  or
securitization,  interest  expense  includes the cost of financing the Company's
longer term capital requirements, including the cost of strategic acquisitions.

Interest  income  during the three  months  ended June 30, 1999  declined  $19.8
million or 27.5%  compared to the three  months  ended June 30,  1998.  Interest
expense  fell $12.7  million or 23.0% for the three  months  ended June 30, 1999
compared to the three months ended June 30, 1998.  These  decreases  reflect the
decline in loan  originations  that began in the second  half of fiscal 1999 and
continued   during  the  first  quarter  of  fiscal  2000,  the  elimination  of
substantially all financing  commitments to strategic alliance clients,  and the
reduction in the balance of ESR.

Net servicing Income:

Net  servicing  income  consists  of  servicing  fees and  prepayment  penalties
collected from borrowers,  and  capitalized  servicing  activity.  Net servicing
income  declined  $13.8 million or 51.7% in the three months ended June 30, 1999
compared to the three months ended June 30, 1998.  The following  table presents
the components of servicing income for the two periods:

<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                                June 30,
                                                      ----------------------------
 (in thousands)                                           1999             1998
                                                      ------------    ------------
<S>                                                   <C>             <C>
Capitalized servicing created .....................   $      7,052    $     21,002
Premiums paid for capitalized prepayment penalties          (1,736)         (4,667)
Amortization of capitalized servicing .............        (15,819)         (8,085)
Fees and prepayment penalty collections ...........         28,910          18,470

Impairment of capitalized servicing ...............         (5,500)             --
                                                      ------------    ------------
Net servicing income ..............................   $     12,907    $     26,720
                                                      ============    ============
Total ContiMortgage/ContiWest securitization volume   $    800,000    $  1,750,000
Average ContiMortgage servicing portfolio
   (excluding warehouse) ..........................   $ 11,510,233    $  9,155,299
</TABLE>

The  decrease of $14.0  million in  capitalized  servicing  created in the three
months  ended June 30,  1999  compared  to the first  quarter of fiscal 1999 was
primarily  related  to  the  decline  in  securitization   volume  and  a  lower
capitalization  rate applied to prepayment  penalties in  anticipation of slower
future prepayment speeds. The increase in amortization of capitalized  servicing
of $7.7 million in the three  months  ended June 30, 1999  compared to the three
months  ended June 30,  1998 was partly due to a 20%  increase  in the amount of
capitalized  servicing  created  during fiscal 1999,  which affects the level of
amortization  in the first  quarter of fiscal 2000, as compared to the amount of
capitalized  servicing created in fiscal 1998, such balances being $76.6 million
and $63.6 million,  respectively.  In addition, the prepayment penalty component
of capitalized servicing created was higher in fiscal 1999 than fiscal 1998, and
since prepayment penalties have set expiration dates that may be as short as six
months,  capitalized prepayment penalties are, on average, amortized over a much
shorter period than normal servicing fees.


                                       21
<PAGE>

The Company  recorded an  estimated  impairment  reserve of $5.5  million in the
first quarter of fiscal 1999 because certain securitized portfolios have reached
delinquency  levels that may trigger the loss of the servicing rights related to
those pools.

Fees and prepayment  penalties collected in the three months ended June 30, 1999
increased  by $10.4  million  compared to the three  months  ended June 30, 1998
primarily    due   to   an   increase   in   the   average    balance   of   the
ContiMortgage/ContiWest  portfolio  of loans  serviced  for  others and a higher
level of ancillary income such as prepayment penalties and late fees.

The  following  table  presents  an  analysis of  capitalized  servicing  rights
activity during the three months ended June 30, 1999:

  (in thousands)
  Balance as of March 31, 1999                                     $  105,273
     New securitization                                                 7,052
     Capitalized servicing received in Empire asset swap                3,115
     Amortization of capitalized servicing rights                    (15,819)
     Impairment of capitalized servicing                              (5,500)
                                                                  -----------
  Balance as of June 30, 1999                                      $   94,121
                                                                  ===========

Compensation and Benefits and General and Administrative Expenses:

                                                  Three Months Ended
                                                        June 30,
 (dollars in thousands)                           1999            1998
                                               ----------      ----------
 Compensation and benefits                     $   51,056      $   43,324
                                               ==========      ==========
 General and administrative expenses           $   43,138      $   32,511
                                               ==========      ==========
 Quarter-end head count                             3,093           3,109
 Average head count for the quarter                 3,329           3,000

In the three months ended June 30, 1999,  compensation and benefits increased by
$7.7  million  or 17.8%  compared  to the  three  months  ended  June 30,  1998,
primarily  reflecting  an increase in average head count of 11.0% and  increased
accruals for medical claims. The reduction in quarter-end head count at June 30,
1999 as  compared  to  average  head count for the same  quarter is  principally
attributable to the sale of Triad on June 11, 1999.

General and administrative expense ("G&A Expense") increased by $10.6 million or
32.7% in the three  months  ended June 30, 1999  compared to the same  quarter a
year ago.  The  increase  primarily  reflects  the  expansion  of the  Company's
direct-to-consumer retail operations during fiscal 1999 and the expansion of the
Company's servicing  operations due to the increase in the size of the servicing
portfolio.  Direct-to-consumer  retail operations  require a higher level of G&A
Expense than non-retail operations that are conducted through correspondents and
brokers.


                                       22
<PAGE>

Liquidity and Capital Resources

The following  discussion of Liquidity and Capital  Resources  should be read in
conjunction with "Recent  Developments,  Financial Results and Liquidity" at the
beginning  of this Item 2.  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations".

Funding Requirements

The Company requires continued access to short- and long-term sources of funding
for its operations.  The Company's primary cash requirements include the funding
of (i) mortgage, loan and lease originations and purchases pending their pooling
and sale, (ii) premiums paid in connection with the acquisition of correspondent
loans,  (iii) fees and expenses  incurred in connection with its  securitization
program, (iv) ongoing  administrative and other operating expenses, (v) payments
related to tax obligations, (vi) interest and principal payments relating to the
Company's long-term debt and short-term borrowed funds, (vii) the costs of sales
under the  Company's  Purchase and Sale  Facilities  and  Repurchase  Agreements
(collectively,   the  "Warehouse  Facilities"),  and  (viii)  the  cost  of  any
subsequent contingent purchase price payments on prior acquisitions.

The  Company has taken  steps to improve  the cash flow  characteristics  of its
business  activities by shedding  businesses that required  significant  capital
outlays and focusing its financial  resources on its core home equity  business.
Within the home equity  business,  the Company took further  steps to reduce the
capital  requirements  by  implementing  a whole  loan  strategy  to  accelerate
recapture of origination costs. Furthermore, development of the Company's retail
home  equity  origination  platform  provides  a source of cash  income  through
origination  points and fees. The reduction in correspondent  origination volume
has significantly reduced the total amount of premiums paid to originate a loan.
Market events have also contributed to the improved cash flow characteristics of
the Company. As competition has decreased, the cost of originating correspondent
loans has also  dropped  significantly,  benefiting  the Company  through  lower
purchase premiums.

Sources of Liquidity and Capital

During the  quarter  ended  June 30,  1999,  the  Company's  primary  sources of
liquidity are sales of loans and other assets through  securitization  and whole
loan  sales  and the  sale  of  loans  and  other  assets  under  the  Warehouse
Facilities.

As of June 30, 1999,  the Company had $638 million of committed and $1.3 billion
of uncommitted capacity under the Warehouse Facilities. As of June 30, 1999, the
Company  had  utilized  $882.6  million  of the  capacity  under  the  Warehouse
Facilities.  The Purchase and Sale  Facilities  allow the Company to sell,  with
limited recourse,  interests in designated pools of loans and other assets.  The
Repurchase  Agreements  allow the Company to sell receivables held for sale to a
financial institution under an agreement to repurchase the receivables.

On August 12,  1999,  the  Company  entered  into a  definitive  agreement  with
Greenwich  Capital  Financial  Products,  Inc.  ("Greenwich"),  a subsidiary  of
Greenwich  Capital  Markets,  Inc.,  to provide the Company  with a $500 million
revolving servicing-released whole loan purchase facility of up to $1.5 billion,
at ContiFinancial's  option, through March 31, 2000. Greenwich will also provide
a warehouse facility of up to $250 million on a revolving basis. Both facilities
("Greenwich  Facilities")  expire  on March 31,  2000.  In  addition  to the two
facilities,   Greenwich  will  also  underwrite  an  approximate   $800  million
securitization  of home equity loans funded by the Company's  current  warehouse
facilities.  Once this  securitization  is  complete,  the  Company  expects all
warehouse  facilities  except the  Greenwich  Facilities  to  terminate  ongoing
funding and the Greenwich  Facilities to be the sole  warehouse  source  through
March 31, 2000.


                                       23
<PAGE>

The Company is operating  on a negative  cash flow basis and is dependent on the
Greenwich  Facilities for its continued  operations.  In order to fund new loans
and asset originations and purchases, the Company is dependent on its ability to
fund loans under the  Greenwich  Facilities.  The Company is also  dependent  on
continued  access to the Bank  Facilities  or obtaining  new bank  facilities in
order to meet its cash needs.

The Company is required to comply with  various  financial  covenants  under its
outstanding  Senior  Notes,  Revolving  Credit  Facility  and  Commercial  Paper
Program,  as  well  as  under  certain  provisions  of  two  of  the  Repurchase
Agreements,  including,  among other things,  leverage ratios, minimum net worth
tests and  interest  coverage  ratios.  As of December  31, 1998 and  continuing
through June 30, 1999, the Company's  leverage ratio exceeded the leverage ratio
test under the  covenants of its  outstanding  Senior  Notes.  As a result,  the
Company is prevented from issuing  additional  unsecured debt until its leverage
ratio is below such test.  As of December 31,  1998,  the Company and two of its
lenders  agreed  to  amend  certain  provisions  of the  Repurchase  Agreements.
Amendments  were received from the  Repurchase  Agreement  lenders  changing the
leverage ratio to 2.75 to 1. These  Repurchase  Agreements were again amended as
of March 31, 1999.  One agreement was amended to remove all financial  covenants
through August 20, 1999, while the other removed the financial  covenants to the
July 1, 1999  maturity date of the  facility.  Subsequent to June 30, 1999,  one
Repurchase  Agreement  matured and was not extended while the other was replaced
with a new facility that does not include any financial covenants.

As of December 31, 1998, amended financial covenants were also received changing
the leverage and fixed charge  ratios and the minimum net worth test in the Bank
Facilities,  and lenders  agreed to exclude  certain  charges  from the covenant
ratio  calculations.  As of March 31, 1999, the Bank  Facilities were amended to
eliminate the financial  covenants and borrowing  base  provisions,  among other
things. As part of the bank amendment,  the Company agreed to reduce commitments
under the Bank  Facilities by 75% of the total proceeds  received by the Company
for the sale of Triad  Financial  Corporation  ("Triad").  On June 11, 1999, the
sale of Triad was closed,  and the Bank Facilities  commitments  were reduced by
approximately  $95  million.  If the  above  mentioned  amendments  had not been
obtained, the Company would not have been in compliance with the covenants.  The
Company was in compliance  with the amended  covenants of the  Revolving  Credit
Facility,  the Commercial Paper Program and the Repurchase Agreements as of June
30, 1999. As part of the December  amendments to the Revolving  Credit Facility,
the Company  had agreed to prepay the  Revolving  Credit  Facility on August 20,
1999, which made the Revolving  Credit Facility  coterminous with the Commercial
Paper  Program.  As part  of the  March  amendments,  the  interest  rate of the
Revolving  Credit  Facility and the  Commercial  Paper Program were increased to
LIBOR plus 300 basis points.

On  August  19,  1999,  the  Company  agreed  with the  lenders  under  its Bank
Facilities  to extend the maturity date of the Bank  Facilities  from August 20,
1999 to March 31, 2000. The Company also agreed to certain  modifications of the
Bank  Facilities  including  a  $20  million  minimum  liquidity  covenant.  The
agreement  also  includes  providing  collateral to the lenders in the form of a
lien on certain  Excess  Spread  Receivables  with a June 30, 1999 book value of
approximately $147 million.  The interest rate on each facility remains at LIBOR
plus 300 basis points.

The Company has taken steps to reduce its financing needs and provide  continued
access  to  liquidity.  ContiGroup  Companies,  Inc.  ("ContiGroup"),   formerly
Continental  Grain  Company,  which  owns  approximately  78% of  the  Company's
outstanding common stock, provides monthly servicer advances, up to an aggregate
outstanding  of $85  million,  to  certain  REMICs  for which  ContiMortgage,  a
wholly-owned  subsidiary,  is the servicer.  ContiGroup has agreed to make these
advances,  for a fee, through October 15, 1999.  Although the advances have been
made to, and repaid by, the  REMICs,  and not by the  Company or  ContiMortgage,
ContiGroup's  advances  improve the  liquidity of the Company by relieving it of
the significant portion of its obligation to make these advances itself.


                                       24
<PAGE>

In May 1999,  ContiGroup  extended a short-term  warehouse financing facility to
the  Company  for a maximum  amount  of $60.0  million.  Availability  under the
facility  was  subject  to a  combined  maximum  amount of $85  million  of this
facility and the servicer  advances  facility.  This facility was  terminated on
August 3, 1999.

On June 11, 1999, the Company sold its interest in Triad to Fairlane Credit LLC,
a  wholly-owned  subsidiary  of Ford  Motor  Credit  Company.  The sale of Triad
resulted in a gain to the  Company of  approximately  $22  million and  provided
gross proceeds of approximately $134 million through sale proceeds, repayment of
intercompany debt and net return of intercompany  warehouse  financing.  Of this
amount,  approximately  $95  million  was used to pay down  the  Company's  Bank
Facilities,  thereby  reducing the commitments  under the Bank Facilities by the
pay down amount.

On July 15,  1999,  Standard  & Poor's  lowered  its senior  unsecured  debt and
long-term debt credit ratings to CC, Moody's  Investors  Service  downgraded the
Company's  long-term  debt ratings to Caa2 and Fitch IBCA reduced the  Company's
long-term debt rating to C.

At June 30, 1999, the Company had  outstanding  $256.8 million of its Commercial
Paper Program and $163.0 million of its $200 million unsecured  Revolving Credit
Facility.

Year 2000

The "Year 2000"  issue,  the  ability of systems to  identify  dates in the 21st
century,  is a critical  business and  operational  issue being addressed by the
Company.  During the three  months ended June 30, 1999 the  Company's  Year 2000
Task Force  continued to monitor and implement  changes to upgrade the Company's
facilities and computer systems and  applications for Year 2000 compliance.  The
chart below summarizes the Company's progress to date.

<TABLE>
<CAPTION>
  -------------------------------------------------- ----------------- ------------------ ----------------------------
                                                          TARGET
                        PHASE                              DATE             STATUS                 COMMENTS
  -------------------------------------------------- ----------------- ------------------ ----------------------------
  <S>                                                   <C>              <C>              <C>
  Awareness and Project Definition -                    March, 15,       Complete
  Heighten awareness  of the  Company's                   1998
  Year 2000 issues and formulate plans to
  address them.
  -------------------------------------------------- ----------------- ------------------ ----------------------------
  Systems Inventory and Assessment - Inventory all                                        Completed
  hardware, software and computerized systems and       April 15,          Complete       July 31, 1999.
  identify those requiring Year 2000 remediation.         1998
  -------------------------------------------------- ----------------- ------------------ ----------------------------
  Remediation - Modify or replace all hardware,                                           Awaiting Year 2000
  software and computerized  systems  that are not      August 31,       Substantially    compliant software
  Year 2000 compliant.                                     1998            Complete*      upgrades from some vendors.
  -------------------------------------------------- ----------------- ------------------ ----------------------------
  Testing - Test modifications to and replacements                                        Awaiting Year 2000
  of all hardware, software and computerized           December 31,      Substantially    compliant software
  systems for Year 2000 compliance.                        1998            Complete*      upgrades from some vendors.
  -------------------------------------------------- ----------------- ------------------ ----------------------------
  Implementation - Integrate the remediated and                                           Anticipated completion
  tested hardware, software and computerized              March 31,      Substantially    date:
  systems into the Company's operations.                    1999           Complete*      September 30, 1999.
  -------------------------------------------------- ----------------- ------------------ ----------------------------
</TABLE>

* The  systems  and  applications  which  have not been  remediated,  tested and
implemented are not mission  critical and the Company does not expect a material
adverse effect as a result of not meeting these targets.


                                       25
<PAGE>

The Company did not meet its March 31,  1999 target date for  completion  of its
Year 2000 project due to the  unavailability of Year 2000 compliant systems from
some  vendors.   The  Company   expected  these  systems  to  be  available  for
remediation,   testing  and  implementation  by  July  31,  1999.  In  addition,
remediation, testing and implementation of the Company's facilities, systems and
applications  was not  completed by July 31, 1999,  as  previously  anticipated.
However, the facilities, systems and applications which have not been remediated
and tested are not mission critical.  The Company's mission critical facilities,
systems  and  applications  have  been  remediated  and  tested  for  Year  2000
compliance.

The  Company  estimates  that  the  direct  cost of its Year  2000  remediation,
including  contingency  planning,  will be approximately $2.5 million,  which is
about half the amount originally estimated for the Year 2000 issue. To date, the
Company has spent approximately $1.7 million on the Year 2000 issue. The Company
presently  believes,  based  on the  information  obtained  during  the  systems
inventory  and  assessment  phase,  that the  Year  2000  issue  will not have a
material  adverse  impact on its computer  systems or operations.  However,  the
interdependent nature of the Company's operations, in particular its substantial
reliance on third party vendors,  makes it impossible to say with certainty that
the Year 2000 issue will not have a material  adverse  impact on those  computer
systems and  operations.  The Company will reassess the final cost of compliance
and the risk that the Year 2000 issue will have a material adverse impact during
the remediation,  testing and implementation  phases of its Year 2000 conversion
effort which are scheduled for completion by September 30, 1999.

Forward-looking Statements

Certain statements  contained in this Quarterly Report on Form 10-Q,  including,
but not limited to, statements relating to the Company's  strategic  objectives,
raising additional equity and future performance, which are not historical fact,
may be deemed to be  forward-looking  statements  under the  federal  securities
laws.  There are many  important  factors that could cause the Company's  actual
results  to  differ  materially  from  those  indicated  in the  forward-looking
statements,  including  the  ability of the Company to  successfully  complete a
transaction with a buyer or equity investor.  Such factors also include, but are
not limited to,  general  economic  conditions;  interest rate risk;  prepayment
speeds;  delinquency and default rates; credit losses;  changes (legislative and
otherwise)  in the  asset  securitization  industry;  demand  for the  Company's
services;  residential  and commercial  real estate  values;  the ability of the
Company  to  negotiate  agreements  to sell whole  loans;  the impact of certain
covenants in debt agreements of the Company;  the degree to which the Company is
leveraged;  its needs for financing; the continued availability of the Company's
credit  facilities;  the risk of margin calls on the Company's credit facilities
and hedge  positions;  capital  markets  conditions,  including  the markets for
asset-backed  securities and commercial  mortgage loans;  the performance of the
Company's subsidiaries and affiliates; the Company's Year 2000 issues; and other
risks identified in the Company's Securities and Exchange Commission filings. In
addition, it should be noted that past financial and operational  performance of
the Company is not  necessarily  indicative of future  financial and operational
performance.


                                       26
<PAGE>

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The primary  market risk  exposure that the Company faces is interest rate risk.
The Company is most vulnerable to changes in U.S. Treasury yields, LIBOR yields,
and the  yield  spread  requirements  of the  investors  who  buy the  Company's
securities  and  loans.  The  Company's  material  exposures  of  interest  rate
sensitive financial  instruments,  which are entered into for other than trading
purposes,  are its committed pipeline of loans, its loan inventories  (including
off-balance-sheet  exposures), its interest-only and residual certificates,  its
capitalized  servicing rights, and the various derivative financial  instruments
that  the  Company  uses  to  manage  the  interest  rate  risk  related  to the
aforementioned  other  financial  instruments.  The  overall  objective  of  the
Company's  interest rate risk  management  policies is to mitigate the effect of
changing interest rates on the fair value of its other financial instruments.

The Company does not have an ongoing  hedging  program to manage  interest  rate
risk  associated  with  its  interest-only  and  residual  certificates  and its
capitalized  servicing  rights.  The primary risk  involved is that a decline in
interest rates could result in an acceleration  of prepayment  speeds that would
adversely  impact  the fair  value  of these  assets.  However,  because  of the
relatively  short average lives of the Company's  home equity loans,  prepayment
speeds related to the Company's portfolios are not as interest rate sensitive as
those of traditional mortgage products; therefore, the Company believes it would
require a substantial and sustained  decline in interest rates,  beyond what the
Company would consider to be a "reasonably possible near-term change," to impact
prepayment  speeds to a material  extent.  The Company is also  exposed to basis
risk in its  portfolio  of  interest-only  and residual  certificates  in that a
portion of the Company's securities have interest rates that adjust on a monthly
basis, whereas the interest rates on the loans that collateralize the securities
may be fixed or have  adjustment  intervals and indices that are different  than
those of the underlying securities.

As part of its  interest  rate risk  management  process,  the Company  performs
various  sensitivity  analyses  that  attempt to quantify the net change in fair
value of its interest  rate  sensitive  financial  instruments.  These  analyses
assume hypothetical  scenarios of instantaneous and permanent shifts in the U.S.
Treasury and/or LIBOR yield curves.  The Company employs various discounted cash
flow models to determine the fair value of its interest rate sensitive financial
instruments  under  these  scenarios.   The  primary  assumptions  used  in  the
discounted cash flow models are prepayment rates, credit losses,  discount rates
and investor yield spread requirements. See Note 4 to the Consolidated Financial
Statements.

Using the sensitivity analysis described above, as of June 30, 1999, the Company
estimates  that a parallel,  instantaneous  and  permanent  increase in the U.S.
Treasury yield curve of 50 basis points (.50%),  all else being constant,  would
result in an aggregate decrease in the fair value of its interest rate sensitive
financial  instruments  (derivative and other) of approximately $18 million;  an
instantaneous and permanent increase in the LIBOR yield curve of 50 basis points
(.50%),  all else being constant,  would result in an aggregate  decrease in the
fair value of its interest rate sensitive financial instruments  (derivative and
other) of approximately $2.0 million; an instantaneous and permanent increase in
the discount rate of 120 basis points (1.20%),  all else being  constant,  would
result in an aggregate decrease in the fair value of its interest rate sensitive
financial  instruments  (derivative and other) of approximately $36 million; and
an instantaneous and permanent increase in the investor yield spread requirement
of 50 basis points (.50%), all else being constant, would result in an aggregate
decrease in the fair value of its interest rate sensitive financial  instruments
(derivative and other) of approximately $17 million.

The Company assumed there would be no material change in prepayment speeds under
the interest rate change scenarios presented above. The Company estimates that a
100 basis points (1.0%)  increase in prepayment  speeds would  decrease the fair
value of the  interest-only  and  residual  certificates  by  approximately  $26
million and would decrease the fair value of the capitalized servicing rights by
$0.2 million (net of the estimated


                                       27
<PAGE>

benefit  from  increased   prepayment  penalty  income).   See  Note  4  to  the
Consolidated Financial Statements for the effect of changes in prepayment speeds
and other assumptions on the interest-only and residual certificates.

These sensitivity  analyses are limited by the fact that that they are performed
at a  particular  point in time and do not  incorporate  other  factors that may
impact  the fair  value  of the  Company's  interest  rate  sensitive  financial
instruments in each scenario.  The above  scenarios do not reflect the Company's
expectations  regarding future movements in interest rates or prepayment speeds.
Consequently, the preceding estimates should not be viewed as a forecast.


                                       28
<PAGE>

                            PART II OTHER INFORMATION

Item 1.   Legal Proceedings

          The  Company has been named as a defendant  in various  legal  actions
          arising from the conduct of its normal business  activities.  Although
          the amount of any  liability  that could  arise with  respect to these
          actions cannot be accurately predicted, in the opinion of the Company,
          any such  liability  will not have a  material  adverse  effect on the
          consolidated  financial  position  or  results  of  operations  of the
          Company.

Item 6.   Exhibits and Reports on Form 8-K.

          (a) Exhibits

          Exhibit
            No.                   Description
            ---                   -----------

          11.1    Computation of the Company's Earnings Per Common Share

          12.1    Ratio of Earnings to Fixed Charges

          27.1    Financial Data Schedule

          (b)  Reports on Form 8-K.

                  None.


                                       29
<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                           ContiFinancial Corporation

 Signature             Title                                     Date
 ---------             -----                                     ----

 /s/ Alan H. Fishman   President, Chief Executive Officer and    August 23, 1999
 --------------------   Director (Principal Executive Officer)   ---------------
 Alan H. Fishman


 /s/ Frank W. Baier    Senior Vice President and Chief Financial August 23, 1999
 --------------------   Officer (Principal Financial Officer)    ---------------
 Frank W. Baier


                                       30