<PAGE>

                               CONTINUING GUARANTY

         THIS CONTINUING GUARANTY ("Guaranty") dated effective as of December
22, 2000, is executed and delivered by AMERICAN BUSINESS FINANCIAL SERVICES,
INC. (the "Guarantor"), a Delaware corporation and owner of all of the capital
stock of ABC which owns all of the capital stock of each of the other Companies,
to THE CHASE MANHATTAN BANK ("Chase"), a New York banking corporation, in its
capacity as agent and representative of the Lenders under the Credit Agreement,
as those capitalized terms are defined below (in that capacity, "Agent"), and to
the Lenders themselves, recites and provides as follows:

                                    Recitals

         As a condition to lending under the Credit Agreement, Agent and the
Lenders have required Guarantor to unconditionally and irrevocably guarantee to
the Agent and the Lenders the payment and performance when due of the Companies'
Obligations, and Guarantor hereby does so.

                                   Agreements

                                   ARTICLE 1

         Section 1.1 Definitions. All capitalized terms that are defined in the
Current Credit Agreement and are used but not defined differently in this
Guaranty have the same meanings here as there. In this Guaranty, these terms
have these respective meanings:

         "Credit Agreements" means all present and future agreements (written or
oral) among the Companies (or any of them) and Chase, whether as agent and
representative of any or all of the Lenders or individually, contemplating or
providing for the extension of credit or any other financial accommodation by or
for the account of the Agent and to or for the account, use or benefit of the
Company and includes, without limitation, the following credit agreement (to
which reference is here made for all purposes):

                  The 12/00 Senior Secured Credit Agreement dated as of December
                  22, 2000 among the Companies, the Parent, the Agent and the
                  Lenders (as it may hereafter be supplemented, further amended
                  or again restated from time to time, the "Current Credit
                  Agreement").

         "Credit Papers" means and includes the Facilities Papers and all other
credit agreements, promissory notes, guaranties, security agreements, mortgages,
deeds of trust, financing statements, custody agreements and other assignment,
agreements and other papers evidencing, securing or otherwise relating to any of
the Credit Agreements.

         "Guaranteed Debt" means all Obligations, including, but not limited to,
all present and future Debt of the Companies, or any of them (including
principal, interest and any and all lawful premiums and fees), to any Lender or
to the Agent incurred under any of the Credit Papers, including, but not limited
to, all Debt now or hereafter evidenced by the Senior Secured Notes evidencing
<PAGE>

Debt under the Current Credit Agreement, including the Swing Line Note, or by
any renewal, extension, rearrangement, modification, increase or replacement of
any such note. Guaranteed Debt also includes debt for payment of which a Company
has limited corporate liability and even debt for payment of which a court
determines a Company has no corporate liability (and Guarantor shall be liable
hereunder for payment thereof even if a court determines that the Companies are
not liable therefor.) Guaranteed Debt includes interest and other obligations
accruing or arising after (a) commencement of any case under any bankruptcy or
similar laws by or against any Obligor or (b) the obligations of any Obligor
shall cease to exist by operation of law or for any other reason. Guaranteed
Debt also includes all reasonable attorneys' fees and any other expenses
incurred by the Agent or any Lender in enforcing any of the Credit Papers.

         "Dollars" and $ means lawful money of the United States of America.

         "Debt" means, with respect to any Person and on any day, the sum
(without duplication) on that day of (a) all of that Person's debt (1) for
borrowed money, (2) for the deferred purchase price of Property or services, or
(3) that is evidenced by a bond, debenture, note or other instrument plus (b)
any debt secured by any Lien existing on any interest of that Person in Property
owned subject to such Lien whether or not that Person is liable for the debt
secured thereby, plus (c) all of that Person's obligations under all capitalized
leases, plus (d) all of that Person's reimbursement obligations in respect of
letters of credit issued to others for such Person's account, plus (e) all debt
of each partnership of which that Person is a general partner, plus (f) all of
that Person's obligations under all guaranties, endorsements and other
contingent obligations in respect of, or any obligations to purchase or
otherwise acquire, debt of others (other than Mortgage Loans).

         "Obligor" means any Person now or hereafter primarily or secondarily
obligated to pay all or any part of the Guaranteed Debt, including each of the
Companies and Guarantor.

         "Subordinated Debt" means Debt of any Company to any Person (i) that is
wholly unsecured by any Company's property, (i) the papers evidencing, securing,
governing or otherwise related to which Debt impose covenants and conditions on
the debtor under them that are no more restrictive or onerous than the covenants
and conditions imposed on the Companies by this Agreement and (iii) that is
subordinated to the Obligations pursuant to a currently effective and
irrevocable Subordination Agreement including standstill and blockage provisions
approved by the Agent.

                                   ARTICLE 2

         Section 2.1 Execution of Credit Papers. The Companies have executed and
delivered the Current Credit Agreement and all other concurrent Facilities
Papers to the Agent and they are secured by the liens, security interests,
collateral assignments and other security devices created, evidenced or carried
forward by the Facilities Papers.

         Section 2.2 Consideration. In consideration of the credit and financial
accommodations contemplated to be extended to the Company by the Agent pursuant
to the Credit Papers or otherwise, which Guarantor has determined will
substantially benefit Guarantor directly or indirectly, and for other good and
valuable consideration, the receipt and sufficiency of which Guarantor hereby
acknowledges, Guarantor executes and delivers this Guaranty to the Agent with
the intention of being presently and legally bound by its terms.

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                                   ARTICLE 3

         Section 3.1 Payment Guaranty. Guarantor, as primary obligor and not as
a surety, guarantees to the Lenders and the Agent the full, prompt and punctual
payment of the Guaranteed Debt when due (whether at its stated maturity, by
acceleration or otherwise) in accordance with the Credit Papers. This Guaranty
is irrevocable, unconditional and absolute, and if for any reason all or any
portion of the Guaranteed Debt shall not be paid when due, Guarantor will
immediately pay the Guaranteed Debt to the Agent or other Person entitled to it,
in Dollars, regardless of (a) any defense, right of set-off or counterclaim
which any Obligor may have or assert, (b) whether the Agent or any other Person
shall have taken any steps to enforce any rights against any Obligor or any
other Person to collect any of the Guaranteed Debt or to realize on any
Collateral and (c) any other circumstance, condition or contingency. Guarantor
agrees that the Agent shall have the nonexclusive right to enforce and collect
this Guaranty without making proof of its authority to do so.

         Section 3.2 Performance Guaranty. Guarantor, as primary obligor and not
as a surety, irrevocably, unconditionally and absolutely guarantees to the
Lenders and the Agent the full and complete performance of all of the
obligations of the Company under the Credit Papers, and upon the occurrence of
any default in the complete performance of any such obligation, Guarantor will
promptly perform such obligation, or cause it to be performed. If Guarantor
fails, within eight (8) Business Days after demand by the Agent made at any time
after the occurrence of such a default, to commence performing the defaulted
obligation, or thereafter fails to diligently pursue performance of the
defaulted obligation to completion, the Agent shall have the right -- but not
the obligation -- exercisable then or at any time thereafter, to perform such
defaulted obligation, and all incidental acts, whether before or after
commencement of foreclosure proceedings, and either before or after the exercise
of any of the Agent's other rights, benefits or privileges under any of the
Credit Papers against any Obligor or any other Person or his, her or its
property, and the Agent shall be entitled to expend such sums therefor as in its
reasonable discretion it shall deem to be proper in order to fully and
completely perform such defaulted obligation. The amount of any and all such
expenditures when made by the Agent or any Lender shall be immediately due and
payable to the Agent by Guarantor, in Dollars, without duplication and upon
notice or demand. Guarantor further agrees to hold the Agent harmless from, and
to indemnify and defend it against, any and all losses, claims, damages, costs,
penalties, liabilities and expenses, including court costs and reasonable
attorneys' fees, arising or incurred because of or with respect to any failure
or refusal by Guarantor to perform any of Guarantor's obligations hereunder with
respect to a default in performance of any of the Company's obligations under
any of the Credit Papers, with interest on any amounts owing from the date of
expenditure until paid at the Past Due Rate. Guarantor hereby agrees that (i) it
does not and will not own, hold or acquire any Liens on any Property or assets
of the Company as security for any loans, advances or costs in connection with
the performance of any such obligations or for any other reason and any such
Lien which has been or is taken by or granted to Guarantor, whether by contract
or by operation of Law


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or the principles of equity, shall be subordinate and inferior to any Lien of
Agent or Lenders without any further action being taken by any parties hereto or
the Credit Papers and shall be voidable at the election of the Agent, and (ii)
without notice to Guarantor and/or any co-guarantor in respect of the Guaranteed
Debt or any of the Company's other obligations under the Credit Papers, upon the
occurrence of any Default, or similar event (however denominated) under any of
the Credit Papers, the Agent shall be entitled to enter upon the Company's
Property (a) in the Agent's case, for the purpose of exercising any right,
benefit or privilege under any of the Credit Papers and (b) in the case of any
such co-guarantor, for the purpose of performing any obligations which he, she
or it may have under any such guaranty; provided that the Agent's rights and
privileges under this provision as well as under the rest of this Guaranty shall
be and remain senior, superior and paramount to the rights of Guarantor and any
such co-guarantor. The obligations of Guarantor under this Section are
cumulative of the provisions of Section 3.1.

         Section 3.3 Obligations Not Affected. Guarantor's covenants, agreements
and obligations under this Guaranty shall in no way be released, diminished,
reduced, impaired or otherwise affected by reason of the happening from time to
time of any of the following things, for any reason, whether by voluntary act,
operation of Law or order of any competent Governmental Authority and whether or
not Guarantor is given any notice or is asked for or gives any further consent
(all requirements for which, however arising, Guarantor as to Agent and Lenders,
their successors and assigns and all future holders of any part of the
Guaranteed Debt, hereby WAIVES):

         (a) release or waiver of any obligation or duty to perform or observe
any express or implied agreement, covenant, term or condition imposed in any of
the Credit Papers or by applicable Law on any Obligor or any party to the Credit
Papers.

         (b) extension of the time for payment of any part of the Guaranteed
Debt or any other sums payable under the Credit Papers, extension of the time
for performance of any other obligation under or arising out of or in connection
with the Credit Papers or change in the manner, place or other terms of such
payment or performance.

         (c) settlement or compromise of any or all of the Guaranteed Debt.

         (d) renewal, supplementing, modification, rearrangement, amendment,
restatement, replacement, cancellation, rescission, revocation or reinstatement
(whether or not material) of any part of any of the Credit Papers or any
obligations under the Credit Papers of any Obligor or any other party to the
Credit Papers (without limiting the number of times any of such things may
occur).

         (e) acceleration of the time for payment or performance of any
Guaranteed Debt or other obligation under any of the Credit Papers or exercise
of any other right, privilege or remedy under or in regard to any of the Credit
Papers.


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         (f) failure, omission, delay, neglect, refusal or lack of diligence by
any Lender, the Agent or any other Person to assert, enforce, give notice of
intent to exercise -- or any other notice with respect to -- or exercise any
right, privilege, power or remedy conferred on the any Lender, the Agent or any
other Person in any of the Credit Papers or by Law or action on the part of any
Lender, the Agent or any other Person granting indulgence, grace, adjustment,
forbearance or extension of any kind to any Obligor or any other Person.

         (g) release, surrender, exchange, impairment, subordination or loss of
any Lien priority under any of the Credit Papers or in connection with the
Guaranteed Debt.

         (h) release, modification or waiver of, or failure, omission, delay,
neglect, refusal or lack of diligence to enforce, any guaranty, pledge,
mortgage, deed of trust, security agreement, Lien, charge, insurance agreement,
bond, letter of credit or other security device, guaranty, surety or indemnity
agreement whatsoever.

         (i) taking or acceptance of any other security or guaranty for the
payment or performance of any or all of the Guaranteed Debt or the obligations
of any Obligor.

         (j) release, modification or waiver of, or failure, omission, delay,
neglect, refusal or lack of diligence to enforce, any right, benefit, privilege
or interest under any contract or agreement, under which the rights of any
Obligor have been collaterally or absolutely assigned, or in which a security
interest has been granted, to the Lenders or the Agent as direct or indirect
security for payment of the Guaranteed Debt or performance of any other
obligations to -- or at any time held by -- the Lenders or the Agent.

         (k) death, incapacity, voluntary or involuntary liquidation,
dissolution, sale of any collateral, marshaling of assets and liabilities,
change in corporate or organizational status, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt or other similar proceedings of
or affecting any Obligor or any of the assets of any Obligor, even if any of the
Guaranteed Debt is thereby rendered void, unenforceable or uncollectible against
any Person other than Guarantor.

         (l) occurrence or discovery of any irregularity, invalidity or
unenforceability of any of the Guaranteed Debt or Credit Papers or any defect or
deficiency in any of the Guaranteed Debt or Credit Papers, including the
unenforceability of any provisions of any of the Credit Papers because entering
into any such Credit Papers was ultra vires or because anyone who executed them
exceeded his or her authority.

         (m) failure to acquire, protect or perfect any Lien in any collateral
intended to secure any part of the Guaranteed Debt or any other obligations
under the Credit Papers or failure to maintain perfection.

         (n) failure by the Agent or any other Person to notify -- or timely
notify -- Guarantor of any Default, Potential Default or similar event (however
denominated) under any of the Credit Papers, any renewal, extension,
supplementing, modification, rearrangement, amendment, restatement, replacement,
cancellation, rescission, revocation or reinstatement (whether or not material)
or assignment of any part of the Guaranteed Debt, release or exchange of any
security, any other action taken or not taken by the Agent against any Obligor

                                       5
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or any other Person or any direct or indirect security for any part of the
Guaranteed Debt or other obligation of the Company, any new agreement between
the Agent and any Obligor or any other Person or any other event or
circumstance. Neither the Agent nor any Lender has any duty or obligation to
give Guarantor any notice of any kind under any circumstances whatsoever with
respect to or in connection with the Guaranteed Debt or the Credit Papers except
notices that are required by any applicable Law that also prohibits (or would
sanction the Agent or the Lenders for) their waiver.

         (o) occurrence of any event or circumstances which might otherwise
constitute a defense available to, or a discharge of, any Obligor, including
failure of consideration, fraud by or affecting any Person, usury, forgery,
breach of warranty, failure to satisfy any requirement of the statute of frauds,
running of any statute of limitations, accord and satisfaction and any defense
based on election of remedies of any type.

         (p) receipt and/or application of any proceeds, credits or recoveries
from any source, including any proceeds, credits, or amounts realized from
exercise of any of the Agent's rights, remedies, powers or privileges under the
Credit Papers, by Law or otherwise available to the Agent.

         (q) occurrence of any act, error or omission of the Agent or any
Lender, except behavior which is proven to be in bad faith to the extent (but no
further) that Guarantor cannot effectively waive the right to complain.

         Section 3.4 Waiver of Certain Rights and Notices. Guarantor hereby
WAIVES and RELEASES all right to require marshaling of assets and liabilities,
sale in inverse order of alienation, notice of acceptance of this Guaranty and
of any liability to which it applies or may apply, notice of the creation,
accrual, renewal, increase, extension, modification, amendment or rearrangement
of any part of the Guaranteed Debt, presentment, demand for payment, protest,
notice of nonpayment, notice of dishonor, notice of intent to accelerate, notice
of acceleration and all other notices and demands, collection, suit and the
taking of any other action by the Agent, and Lender or any other Person.

         Section 3.5 Not a Collection Guaranty. This is an absolute,
unconditional, irrevocable and continuing guaranty of payment, and not of
collection, and an absolute, unconditional, irrevocable and continuing guaranty
of performance of all of the obligations of the Companies under the Credit
Papers, and Guarantor WAIVES any right to require that any action be brought
against any other Obligor or any other Person, or that the Agent, any Lender or
any other Person be required to enforce, attempt to enforce or exhaust any of
its or their rights, benefits or privileges under any of the Credit Papers, by
law or otherwise; provided that nothing herein shall be construed to prevent the
Agent or any Lender from exercising and enforcing at any time any right, benefit
or privilege which it may have under any Credit Papers or by Law from time to
time, and at any time, and Guarantor agrees that Guarantor's obligations
hereunder are -- and shall be -- absolute, independent and unconditional under
any and all circumstances. Should the Agent or any Lender seek to enforce
Guarantor's obligations by action in any court, Guarantor WAIVES any
requirement, substantive or procedural, that (a) the Agent pursue any
foreclosure action, realize or attempt to realize on any security or preserve or
enforce any deficiency claim against any other Obligor or any other Person after
any such realization, (b) a judgment first be sought or rendered against any

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other Obligor or any other Person, (c) any other Obligor or any other Person be
joined in such action or (d) a separate action be brought against any other
Obligor or any other Person. Guarantor's obligations under this Guaranty are
several from those of any other Obligor or any other Person, and are primary
obligations concerning which Guarantor is the principal obligor. All waivers in
this Guaranty or any of the Credit Papers shall be without prejudice to the
Agent at its option to proceed against any other Obligor or any other Person,
whether by separate action or by joinder. Guarantor agrees that this Guaranty
shall not be discharged except (subject to reinstatement pursuant to Section
3.10) by payment of the Guaranteed Debt in full, complete performance of all
obligations of the Obligors under the Credit Papers (or their written waiver and
release) and termination of any Agent's obligation -- if any -- to make any
further advances under the Credit Papers or extend other financial
accommodations to any Obligor relating to the Guaranteed Debt.

         Section 3.6 Subrogation. Notwithstanding any payment or payments made
by Guarantor hereunder or any set-off or application of Guarantor's funds by the
Agent, Guarantor shall never be subrogated to any of the Agent's rights against
any other Obligor or any other Person or any collateral or offset rights held by
the Agent for payment of the Guaranteed Debt, nor shall Guarantor have any right
of indemnity, reimbursement or contribution against any other Obligor or any
other Person for Guarantor's payment of any part of the Guaranteed Debt.

         Section 3.7 Reliance on Guaranty. All extensions of credit and
financial accommodations heretofore or hereafter made by the Agent under or in
respect of the Credit Papers shall be conclusively presumed to have been made in
acceptance of this Guaranty.

         Section 3.8 Demands are Conclusive. Any demand by the Agent under this
Guaranty shall be conclusive, absent manifest error, as to the matters therein
stated, including the amount due.

         Section 3.9 Joint and Several. If any Person makes any guaranty of any
of the obligations guaranteed hereby or gives any security for them, Guarantor's
obligations hereunder shall be joint and several with the obligations of such
other Person pursuant to such agreement or other papers making the guaranty or
giving the security.

         Section 3.10 Payments Returned. Guarantor agrees that, if at any time
all or any part of any payment previously applied by the Agent to the Guaranteed
Debt is or must be returned by the Agent -- or recovered from the Agent -- for
any reason (including the order of any bankruptcy court), this Guaranty shall
automatically be reinstated to the same effect as if the prior application had
not been made, and, in addition (although without duplication of any recovery or
other remedy), Guarantor hereby agrees to indemnify the Agent against, and to
save and hold it harmless from any required return by the Agent -- or recovery
from it -- of any such payment because of its being deemed preferential under
applicable bankruptcy, receivership or insolvency Laws, or for any other reason.


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                                   ARTICLE 4

         Section 4.1 Reasonably Equivalent Value. Guarantor warrants and
represents that the value of the consideration received and to be received by
Guarantor is reasonably worth at least as much as the liability and obligation
of Guarantor incurred or arising under this Guaranty and all related papers and
arrangements.

         Section 4.2 Substantial Benefit. Guarantor's board of directors has
determined that such liability and obligation may reasonably be expected to
substantially benefit Guarantor directly or indirectly.

         Section 4.3 Guarantor Understands Papers and Risks. Guarantor has had
full and complete access to the underlying papers relating to the Guaranteed
Debt and all other papers executed by any other Obligor or any other Person in
connection with the Guaranteed Debt, has reviewed them and is fully aware of the
meaning and effect of their contents. Guarantor is fully informed of all
circumstances which bear upon the risks of executing this Guaranty and which a
diligent inquiry would reveal. Guarantor warrants and represents that Guarantor
has received and reviewed or caused its legal counsel to review and advise
Guarantor concerning the content and meaning of all of the Credit Papers now in
existence and of this Guaranty, and that Guarantor's board of directors has
approved such Credit Papers and this Guaranty and has determined that the making
of this Guaranty will substantially benefit Guarantor, directly or indirectly.
Guarantor has adequate means to obtain from the Company on a continuing basis
information concerning the Company's financial condition, and is not depending
on the Agent to provide such information, now or in the future. Guarantor agrees
that the Agent shall have no obligation to advise or notify Guarantor or to
provide Guarantor with any data or information.

         Section 4.4 Guaranty Not a Condition to Credit for Guarantor. The
execution and delivery of this Guaranty is not a condition precedent (and the
Agent has not in any way implied that the execution of this Guaranty is a
condition precedent) to the Agent's making, extending or modifying any loan to
Guarantor or to any other financial accommodation to or for Guarantor.

                                   ARTICLE 5

         Section 5.1 Covenants for the Benefit of the Agent. Guarantor covenants
and agrees that, until payment in full of the Guaranteed Debt, complete
performance of all of the obligations of the Obligors under the Credit Papers
and final termination of the Agent's obligation -- if any -- to make any further
advances under the Credit Papers or provide any other financial accommodations
to any Obligor, Guarantor will comply with all of its covenants under this
Guaranty and under any of the other Credit Papers.

         Section 5.2 No Other Debt. Guarantor shall not incur Debt except as
permitted under or pursuant to Section 11.6 of the Current Credit Agreement,
Guarantor shall not incur any additional Debt.

         Section 5.3 No Subsidiary Guaranties. Without first obtaining the
Agent's specific written consent, the Guarantor agrees to neither directly or
indirectly guarantee any debt of any of its direct or indirect Subsidiaries or
any debt of any other Affiliate except for this Guaranty.

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                                   ARTICLE 6

         Section 6.1 Term. Subject to the automatic reinstatement provisions of
Section 3.10, this Guaranty shall terminate and be of no further force or effect
upon full payment of the Guaranteed Debt, complete performance of all of the
obligations of the Obligors under the Credit Papers and final termination of the
Lenders' and the Agent's obligation to make any further advances under the
Credit Papers or to provide any other financial accommodations to any Obligor
relating to the Guaranteed Debt.

                                   ARTICLE 7

         Section 7.1 Default. If any principal, interest or premium (if any) on
any of the Credit Papers is not paid when due or if any Default or similar event
(however denominated) occurs under any of the Credit Papers, then that shall
automatically constitute default under this Guaranty.

                                   ARTICLE 8

         Section 8.1 Binding on Successors; No Assignment by Guarantor. All
guaranties, warranties, representations, covenants and agreements in this
Guaranty shall bind the trustees, beneficiaries, conservators, receivers,
successors and assigns of Guarantor and shall benefit the Lenders, the Agent and
their successors and assigns, and any holder of any part of the Guaranteed Debt.
Guarantor shall not assign or delegate any of its rights or obligations under
this Guaranty or any of the Credit Papers without the Agent's express prior
written consent.

         Section 8.2 Subordination of the Companies' Obligations to Guarantor.
Guarantor agrees that if, for any reason whatsoever, any Company now or
hereafter becomes liable, obligated or indebted to Guarantor, all such
liabilities, obligations and debt, together with all interest thereon and fees
and other charges in connection therewith, and all Liens shall at all times and
automatically be and remain second, subordinate and inferior in right of
payment, in Lien priority and in all other respects to the Guaranteed Debt and
all Liens securing the Guaranteed Debt. This provision is cumulative of any
separate subordination agreement, and any apparent conflict with it shall be
resolved in favor of the provision most favorable to the Agent and the Lenders.

         Section 8.3 Waiver of Suretyship Rights. By signing this Guaranty,
Guarantor WAIVES each and every right to which it may be entitled by virtue of
any suretyship law, including any rights it may have pursuant to Rule 31 of the
Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice and
Remedies Code and Chapter 34 of the Texas Business and Commerce Code, as the
same may be amended from time to time.

         Section 8.4 Amendments in Writing. This Guaranty shall not be changed
orally but shall be changed only by agreement in writing signed by Guarantor and
the Agent. Any waiver or consent with respect to this Guaranty shall be
effective only in the specific instance and for the specific purpose for which
given. No course of dealing between the parties, no usage of trade and no parole
or extrinsic evidence of any nature shall be used to supplement or modify any of
the terms or provisions of this Guaranty.

                                       9
<PAGE>


         Section 8.5 Notices. All notices, demands, consents, requests and other
communications required or permitted to be given or made hereunder
(collectively, "Notices"), except as otherwise specifically provided in this
Guaranty, shall be in writing and shall be either (a) delivered in person, or
(b) mailed, by certified, registered or express mail, postage prepaid, addressed
to the respective parties hereto at their respective addresses specified below,
or (c) sent in a prepaid overnight delivery envelope via a nationally-recognized
courier service (such as Federal Express, Airborne Express, United Parcel
Service, Purolator, DHL Worldwide Express, NextJet or Network Courier Service)
that provides weekday next-day delivery service to the addressee's location, or
(d) telecopied to their respective telecopy numbers (with a paper copy mailed
the same day as aforesaid) as hereinafter set forth, provided that any party may
change its address for notice by designating such party's new address in a
Notice to the sending party given at least five (5) Business Days before it
shall become effective. All Notices shall be conclusively deemed to have been
properly given or served when received in person, regardless of how sent.
Regardless of when received, all Notices shall be conclusively deemed to have
been properly given or served if addressed in accordance with this Section and
(1) if mailed, on the second (2nd) Business Day after being deposited in the
mails, or (2) if sent by nationally-recognized courier service, on the next
Business Day or (3) if faxed before the close of business at the recipient's
location on a Business Day, when faxed -- or if faxed after the close of
business at the recipient's location or on a day that is not a Business Day, on
the next Business Day thereafter -- to the telecopy number set forth or referred
to below (provided that a paper copy is mailed on the same Business Day as
aforesaid):

If to the Guarantor:

American Business Financial Services, Inc.
BalaPointe Office Centre
111 Presidential Boulevard, Suite 127
Bala Cynwyd, Pennsylvania 19004
Attention: Jeffrey M. Ruben, EVP
Phone: (610) 617-5562
Fax: (610) 668-4164
email: none


If to the Agent:

Chase Bank of Texas, National Association
707 Travis, 6th Floor North
Houston, Texas 77002
Attention: Mr. Michael W. Nicholson
Phone: (713) 216-5335
Fax: (713) 216-1567
email: michael.nicholson@chase.com


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with a copy to:

The Chase Manhattan Bank
1111 Fannin, 12th Floor
Houston, Texas 77002
Attention:  Ms. Bea Delgado, Mortgage Banking
Warehouse Services
Phone: (713) 427-6455
Fax:  (713) 427-6449
email: bea.r.delgado@chase.com

If to the Lenders, to their respective addresses for notices provided on
Schedule 15 of the Current Credit Agreement.

         Section 8.6 Gender; "Including" is Not Limiting; Section Headings. The
masculine and neuter genders used in this Guaranty each includes the masculine,
feminine and neuter genders, and the singular number includes the plural where
appropriate, and vice versa. Wherever the term "including" or a similar term is
used in this Guaranty, unless the context clearly requires otherwise -- for
example, if preceded by "not" -- it shall be read as if it were written
"including by way of example only and without in any way limiting the generality
of the clause or concept referred to." The headings used in this Guaranty are
included for reference only and shall not be considered in interpreting,
applying or enforcing this Guaranty.

         Section 8.7 Agent's Offset Rights. After an Event of Default has
occurred, the Agent is hereby authorized at any time and from time to time,
without notice to any Person (and Guarantor hereby WAIVES any such notice) to
the fullest extent permitted by Law, to set off and apply any and all monies,
securities and other properties of Guarantor now or in the future in the
possession, custody or control of the Agent or such Lender or on deposit with or
otherwise owed to Guarantor by the Agent or such Lender -- including all such
monies, securities and other Properties held in general, special, time, demand,
provisional or final accounts or for safekeeping or as collateral or otherwise,
but excluding those accounts clearly designated as escrow or trust accounts held
by Guarantor for others unaffiliated with Guarantor -- against any and all of
Guarantor's obligations to the Agent and the Lenders, or any of them, now or
hereafter existing under this Guaranty, irrespective of whether the Agent shall
have made any demand under this Guaranty. The Agent agrees to use reasonable
efforts to promptly notify Guarantor after executing, any such set-off and
application, provided that failure to give -- or delay in giving -- any such
notice shall not affect the validity of such set-off and application or impose
any liability on the Agent or any Lender. The Agent's rights under this Section
are in addition to other rights and remedies (including other rights of set-off)
which it or they may have.

         Section 8.8 Venue. This Guaranty is performable in Harris County,
Texas, which shall be a proper place of venue for suit on or in respect of this
Guaranty. Guarantor irrevocably agrees that any legal proceeding in respect of
this Guaranty shall be brought in the district courts of Harris County, Texas or
the United States District Court for the Southern District of Texas, Houston
Division (collectively, the "Specified Courts"). Guarantor hereby irrevocably

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submits to the nonexclusive jurisdiction of the state and federal courts of the
State of Texas. Guarantor hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to any
Credit Papers brought in any Specified Court, and hereby further irrevocably
waives any claims that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Guarantor further (1) agrees to
designate and maintain an agent for service of process in the City of Houston in
connection with any such suit, action or proceeding and to deliver to the Agent
evidence thereof and (2) irrevocably consents to the service of process out of
any of the aforementioned courts in any such suit, action or proceeding by the
mailing of copies thereof by certified mail, return receipt requested, postage
prepaid, to Guarantor at its address as provided in this Guaranty or as
otherwise provided by Texas law. Nothing herein shall affect the right of the
Agent to commence legal proceedings or otherwise proceed against Guarantor in
any jurisdiction or to serve process in any manner permitted by applicable Law.
Guarantor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by Law. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE
UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT.

         Section 8.9 Survival. The representations, covenants and agreements set
forth in this Guaranty and in the Credit Papers shall continue and survive until
final termination of this Guaranty and the provisions of Sections 3.10 and 8.12
shall survive termination of this Guaranty.

         Section 8.10 Rights Cumulative; Delay Not Waiver. The Agent's or any
Lenders' exercise of any right, benefit or privilege under any of the Credit
Papers or any other papers or at law or in equity shall not preclude the
concurrent or subsequent exercise of any of its other present or future rights,
benefits or privileges. The remedies provided in this Guaranty are cumulative
and not exclusive of any remedies provided by Law, the Credit Papers or any
other papers. No failure by the Agent or any Lender to exercise, and no delay in
exercising, any right under any Credit Papers or any other papers shall operate
as a waiver thereof.

         Section 8.11 Severability. If any provision of this Guaranty is held to
be illegal, invalid or unenforceable under present or future laws, the legality,
validity and enforceability of the remaining provisions of this Guaranty shall
not be affected thereby, and this Guaranty shall be liberally construed so as to
carry out the intent of the parties to it. Each waiver in this Guaranty is
subject to the overriding and controlling rule that it shall be effective only
if and to the extent that (a) it is not prohibited by applicable law and (b)
applicable law neither provides for nor allows any material sanctions to be
imposed against the Agent for having bargained for and obtained it.

         Section 8.12 Indemnification. The Guarantor agrees to indemnify, defend
and hold harmless the Agent, each Lender, its participants and future holders of
the Guaranteed Debt and each of their respective officers, agents, directors,
employees and counsel (the "Indemnitees") from and against any and all Claims
(including interest both before and after any bankruptcy, court costs,
penalties, attorneys' fees and disbursements and amounts paid in settlement) to

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which any Indemnitee may become subject arising out of or by reason of any
investigation, litigation or other proceedings brought or threatened, arising
out of or based on this Guaranty, any of the other Credit Papers or the
transactions contemplated thereby; provided, that, for any portion of such
Claims resulting from the gross negligence, willful misconduct or fraudulent
conduct of any Indemnitee, the Guarantor shall not be liable to that Indemnitee.
(The Guarantor agrees, however, that it expressly intends under this Section to
indemnify each Indemnitee for all Claims arising out of or resulting from the
sole or contributory ordinary negligence of any Indemnitee, including such
Indemnitee's own such ordinary negligence.) All of the Guarantor's indemnity
obligations under this Guaranty and the other Credit Papers shall survive its
and their termination or expiration.

         Section 8.13 Jury Trial Waiver The Guarantor and the Agent (for itself
and as agent and representative on behalf of each Lender) each hereby (i)
covenants and agrees not to elect a trial by jury of any issue triable of right
by a jury, and (ii) waives any right to trial by jury fully to the extent that
any such right shall now or hereafter exist. This waiver of right to trial by
jury is separately given, knowingly and voluntarily, by the Guarantor and the
Agent (for itself and the Lenders), and this waiver is intended to encompass
individually each instance and each issue as to which the right of a jury trial
would otherwise accrue. The Agent is hereby authorized and requested to submit
this Guaranty to any court having jurisdiction over the subject matter and the
parties hereto, so as to serve as conclusive evidence of the foregoing waiver of
the right to jury trial. Further, the Guarantor hereby certifies that no
representative or agent of the Agent or any Lender has represented, expressly or
otherwise, to any shareholder, director, officer, agent or representative of it
that the Agent will not seek to enforce this waiver of right to jury trial
provision.

         Section 8.14 Entire Agreement. This Guaranty embodies the entire
agreement and understanding between Guarantor and the Agent with respect to its
subject matter and supersedes all prior conflicting or inconsistent agreements,
consents and understandings relating to such subject matter. Guarantor
acknowledges and agrees that there is no oral agreement between Guarantor and
the Agent or any Lender which has not been incorporated in this Guaranty.

         Section 8.15 Usury Not Intended; Savings Provisions. Notwithstanding
any provision to the contrary contained in any Credit Papers, it is expressly
provided that in no case or event shall the aggregate of any amounts accrued or
paid pursuant to this Guaranty which under applicable Laws are or may be deemed
to constitute interest ever exceed the maximum nonusurious interest rate
permitted by applicable Texas or federal Laws, whichever permit the higher rate.
In this connection, Guarantor and the Agent stipulate and agree that it is their
common and overriding intent to contract in strict compliance with applicable
usury Laws. In furtherance thereof, none of the terms of this Guaranty shall
ever be construed to create a contract to pay, as consideration for the use,
forbearance or detention of money, interest at a rate in excess of the maximum
rate permitted by applicable Laws. Guarantor shall never be liable for interest
in excess of the maximum rate permitted by applicable Laws. If, for any reason
whatever, such interest paid or received during the full term of the applicable
indebtedness produces a rate which exceeds the maximum rate permitted by
applicable Laws, the Agent shall credit against the principal of such
indebtedness (or, if such indebtedness shall have been paid in full, shall


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refund to the payor of such interest) such portion of said interest as shall be
necessary to cause the interest paid to produce a rate equal to the maximum rate
permitted by applicable Laws. All sums paid or agreed to be paid to any or all
Lenders or the Agent for the use, forbearance or detention of money shall, to
the extent permitted by applicable Law, be amortized, prorated, allocated and
spread in equal parts throughout the full term of the applicable indebtedness,
so that the interest rate is uniform throughout the full term of such
indebtedness. The provisions of this Section shall control all agreements,
whether now or hereafter existing and whether written or oral, between Guarantor
and the Agent.



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follows.)




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         THIS GUARANTY is executed as of the date first above written.



                                     AMERICAN BUSINESS FINANCIAL
                                              SERVICES, INC.



                                     By:
                                        ----------------------------------------
                                              Anthony J. Santilli, Chairman