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                          [ERNST & YOUNG LETTERHEAD]





                        Report of Independent Auditors

Arcadia Financial Ltd.
Board of Directors

We have audited, in accordance with generally accepted auditing standards, the 
consolidated balance sheet of Arcadia Financial Ltd. (the "Company") as of 
December 31, 1998 and the related consolidated statements of operations and 
comprehensive income, shareholders' equity, and cash flows for the year then 
ended and have issued our report thereon dated January 25, 1999.

Our audit, referred to in the preceding paragraph, included procedures 
applied to the documents and records relating to the servicing of automobile 
installment contracts under certain pooling and servicing agreements and sale 
and servicing agreements, and procedures applied to the delinquency and loss 
statistics relating to the Company's portfolio of automobile installment 
contracts. These procedures were determined on the basis of our objective to 
issue an opinion on the financial statements referred to above taken as a 
whole. Because the procedures referred to in this paragraph and described 
below do not constitute an audit of the documents and records relating to the 
servicing of automobile installment contracts or the delinquency and loss 
statistics relating to the Company's portfolio of automobile installment 
contracts, we do not express an opinion on those documents, records or 
statistics.

Our procedures were as follows:

 DOCUMENTS AND RECORDS RELATING TO THE SERVICING OR AUTOMOBILE INSTALLMENT 
 CONTRACTS UNDER POOLING AND SERVICING AGREEMENTS AND SALE AND SERVICING 
 AGREEMENTS.

     1.  Obtained the Static Pool Analysis and traced items on a test basis to 
         the Finance Income Receivable valuation.

     2.  Recalculated the weighted average original term and weighted average 
         annual percentage rate for existing securitization trusts at 
         December 31, 1998.

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     3.  For a sample of 50 automobile installment contracts, we obtained from 
         the Company the payment history and compared the amount of the most 
         recent payment to the corresponding amount in the Company's cash 
         receipt records. Also, we recalculated the allocation of the payment 
         to principal, interest, and other charges, if applicable. No 
         exceptions were noted.

     4.  Obtained the reconciliation of automobile installment contracts 
         suspense accounts for a five day period subsequent to December 31, 
         1998 and observed that suspense items cleared in a timely manner.

     5.  Recalculated the yield earned on automobile installment contracts 
         based on the average loans held for sale balance during 1998.  
         Compared the recalculated yield to the weighted average annual 
         percentage yield of loans held for sale stated in the respective 
         prospectuses for Arcadia Automobile Receivable Trusts 1998-A, 
         1998-B, 1998-C, 1997-D, and 1998-E.

     6.  Determined the reasonableness of the annual service fee income by 
         obtaining servicer's certificates and recalculating the reported 
         amounts of service fees.

 DELINQUENCY AND LOSS STATISTICS RELATING TO THE COMPANY'S PORTFOLIO OF 
 AUTOMOBILE INSTALLMENT CONTRACTS.

     1.  Reviewed the methodology for constructing the cumulative default 
         curves and compared the cumulative default curves at December 31, 
         1998 to historical default performance for reasonableness. Validated 
         the dollar amount of the Company's loss for 30 loans used in 
         developing the cumulative default curves to the Company's loan 
         accounting system.

     2.  Traced the recovery rates from the Detailed Sales Report for 1998 
         for six months to supporting detailed schedules of repossessed 
         vehicle recovery amounts.

     3.  For a sample of ten repossessed automobiles, we vouched vehicle 
         sales to original documentation (original invoices or actual 
         proceeds) judgmentally selected from detailed schedules of 
         repossessed vehicle recovery amounts.

     4.  Compared to current period's charge-offs, recoveries and allowance 
         for credit losses (including the amount incorporated in the finance 
         income receivable) as a percentage of automobile installment 
         contracts serviced to the Company's historical experience.

     5.  Assessed the reasonableness of recovery rate assumptions used by the 
         Company at June 30, 1998 and December 31, 1998 based on the 
         valuation of the remaining repossessed vehicle inventory as obtained 
         from external sources.

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     6.  Assessed the reasonableness of the methodology and criteria for 
         determining the allowance for credit losses (including the amount 
         incorporated in the finance income receivable).

The results provided satisfactory evidential matter for the purpose of our 
audit of the financial statements, referred to in the introductory paragraph 
of this letter, taken as a whole.

We also performed certain agreed-upon procedures applied to the documents and 
records relating to the servicing of automobile installment contracts under 
certain pooling and servicing agreements, and sale and servicing agreements, 
and procedures applied to the delinquency and loss statistics relating to 
the Company's portfolio of automobile installment contracts in connection 
with agreed-upon procedures related to the securitization of automobile 
installment contracts during 1998.

The procedures we performed in connection with the issuance of agreed-upon 
procedures letters described in Attachment I were as follows:

 DOCUMENTS AND RECORDS RELATING TO THE SERVICING OF AUTOMOBILE INSTALLMENT 
 CONTRACTS UNDER POOLING AND SERVICING AGREEMENTS AND SALE AND SERVICING 
 AGREEMENTS.

 1.  During 1998, we utilized an audit software application to analyze the 
     following characteristics of loans in the Arcadia Automobile Receivable 
     Trusts 1998-A, 1998-B, 1998-C, 1998-D, and 1998-E securitization.

     a.  Recalculated the number of loans, total amount financed, aging of 
         automobile installment contracts and compared the number and amount 
         of delinquent loans to the Company's delinquency reports.

     b.  Recalculated the weighted average interest rates on automobile 
         contracts for each securitization pool.

     We refer to our letters issued in 1998, as detailed in Attachment I, 
     that describe the additional procedures performed at that time.

 2.  Relating to automobile installment contracts included in Arcadia 
     Automobile Receivables Trusts 1998-A, 1998-B, 1998-C, 1998-D, and 1998-E 
     and/or serving as collateral for warehouse facilities during 1998, we 
     performed the following:

     a.  Attempted to verbally confirm the original contract amount and 
         monthly payment amount with the primary obligor for a sample of 
         1,084 automobile installment loans (related to automobile 
         installment contracts included in Arcadia Receivables Trusts 1998-A, 
         the preliminary receivables in 1998-B and collateral for warehouse 
         facilities). Following is a summary of the confirmation results:

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           -  Confirmed without exception - 524 loans or 48%
           -  Confirmed vehicle purchase, unsure of original contract amount 
              or monthly payment amount - 63 loans or 6%
           -  Unable to contact borrower, confirmed propriety of phone number 
              through discussion with person answering telephone or directory 
              assistance - 178 loans or 17%
           -  Unable to contact borrower or confirm propriety of phone number 
              through directory assistance - 319 loans or 29%

     b.  Mailed positive confirmation letters in an attempt to confirm the 
         primary obligor's original contract amount and monthly payment 
         amount for the primary obligor for a sample of 550 loans that were 
         booked during the months of February through December 1998.

           -  Confirmation returned without exception - 356 loans or 65%
           -  Confirmation returned with an exception - 20 loans or 3%
           -  Confirmation not returned - 174 loans or 32%

     c.  For the automobile installment contracts identified in  2.b. above, 
         where a confirmation was returned with an exception, we investigated 
         the nature of the exception by vouching most recent payments 
         received and by comparing the original contract amount and monthly 
         payment amount to original documents. Three exceptions, relating to 
         monthly payment amounts, were not resolved. All other exceptions 
         were resolved.

 3.  For a sample of 50 automobile installment contracts, we obtained from 
     the Company the payment history and compared the amount of the most 
     recent payment to the corresponding amount in the Company's cash receipt 
     records. Also, we recalculated the allocation of the payment to 
     principal, interest, and other charges, if applicable. No exceptions 
     were noted.

 4.  For a sample of 732 automobile installment contracts included in Arcadia 
     Automobile Receivables Trusts 1998-A, 1998-B, 1998-C, 1998-D, and 
     1998-E, as referred to in 2.a. above, we obtained the loan files from 
     the Company and noted documentation of approval, title and insurance. We 
     noted 17 automobile installment contracts where there was a discrepancy 
     between the loan file documentation and the information per the Random 
     Loan List, 68 automobile installment contracts were not approved by the 
     appropriate level of management based on the Company's approval matrix, 
     one automobile installment contract did not have a title or application 
     for title listing the Company as first lienholder, 17 automobile 
     installment contracts did not have evidence of physical damage insurance 
     listing the Company as loss payee and six automobile installment 
     contracts where the description (new or used) of the financed vehicle 
     contained in the signed note did not agree with the automobile 
     description code per the Random Loan List.

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This report is intended solely for the use of specified users listed above 
and should not be used by those who have not agreed to the procedures and 
taken responsibility for the sufficiency of the procedures for their purposes.

                                                 /s/ Ernst & Young LLP

January 25, 1999

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                                ATTACHMENT I


The following are the agreed-upon procedures letters issued in conjunction 
with the securitization of automobile installment contracts by Arcadia 
during 1998.

<TABLE>
<CAPTION>

           SECURITIZATION           DATED OF LETTERS
           --------------           ----------------
           <S>                      <C>
               1998-A               March 11, 1998
                                    April 8, 1998
                                    April 22,1998
               1998-B               June 10, 1998
                                    July 9, 1998
                                    July 17, 1998
               1998-C               September 11, 1998
                                    October 9, 1998
                                    October 22, 1998
               1998-D               November 12, 1998
                                    December 1, 1998
               1998-E               December 11, 1998
                                    January 11, 1999
</TABLE>