American Business Financial Services to Wind Down Operations and Liquidate Assets through Chapter 11 Plan.

PHILADELPHIA -- American Business Financial Services, Inc. ("ABFS" or the "Company") ("ABFIQ") said today that it intends to wind down its operations and dispose of its assets through a Chapter 11 plan of liquidation. The Company closed its office in Texas on Friday, April 1, 2005 and is closing its other offices in California and Maryland today. Layoffs of Philadelphia based employees will begin on April 11, 2005. ABFS currently expects the wind down to be completed and the corporate headquarters in Philadelphia to be closed by the end of July.

ABFS said that the decision to discontinue operations was made after an extensive analysis of the Company's prospects and careful consideration of other options for continuing the business, including a sale of the Company. "My team and I have worked diligently with the Company's senior management team and advisors to explore various options for maximizing recoveries to ABFS' creditor constituents," said David Coles of Alvarez & Marsal, who was appointed as Chief Restructuring Officer of ABFS on March 7, 2005. "As a result of this analysis, it became clear to us that the cash requirements to create a sustainable operation were significantly greater than the Company's available funding. Therefore, the Board of Directors and I reached the conclusion that the best course of action for the Chapter 11 estate and creditors is to wind down the Company in an orderly manner.

"This was an extremely difficult decision," Mr. Coles said. "We regret the impact it will have on the Company's constituents, particularly its employees, who have been very patient, loyal and understanding during the Company's recent financial difficulties. We wish there were a viable alternative that would avoid a wind down of the Company, but we believe this option offers creditors the best prospects for recovery."

ABFS intends to ask the Bankruptcy Court for authorization to make retention and severance payments to certain employees whose services have been determined to be critical to the wind down and liquidation process via a Key Employee Retention Program.

The Company said that this announcement will not affect pending mortgage loan commitments and conditional approvals. These categories of applications will be funded in the normal course. Additionally, ABFS said that the announcement will not affect its existing loan customers. The Company's portfolio of loans currently held for sale is expected to be sold to one or more buyers as part of the liquidation process and when this occurs borrowers will receive information from their new lender.

The Company does not expect its Chapter 11 case to be converted to a Chapter 7, saying that it intends to work closely with its creditor constituencies, including the DIP Lender, Secured Noteholders and the Unsecured Creditors Committee, to develop a Chapter 11 plan of liquidation that provides recoveries for creditors at least equal to amounts projected under a Chapter 7 liquidation. Coles said that he intends to meet with representatives of both the Secured Noteholders and Unsecured Creditors Committee to outline the Company's wind down plans and seek their continued support.

ABFS also announced today that on Friday, April 1, 2005, the Bankruptcy Court approved the sale of the Company's servicing operations to Ocwen Federal Bank FSB for approximately $20 million. The sale is expected to close by May 2, 2005.

On Friday April 1, 2005, the Bankruptcy Court also granted the request by the Office of the U.S. Trustee for authority to appoint an examiner in ABFS' Chapter 11 case, a request that was supported by the Company. It is expected that an examiner will be selected in the next several days who will investigate certain specific issues and prepare and deliver a report summarizing his or her findings to the Court.

American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and in the state of California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company voluntarily filed to restructure under Chapter 11 on January 21, 2005 in Wilmington, Delaware.

Some of the information included in this press release may contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements can be identified by forward-looking words such as "may," "will," "expect," "intend," "anticipate," "believe," "estimate," "plan," "could," "should" and "continue" or similar words. These forward-looking statements may also use different phrases. These forward-looking statements are not historical in nature and include statements that reflect, when made, ABFS' views with respect to current events and financial performance. All such forward-looking statements are and will be subject to numerous risks, uncertainties and factors relating to ABFS' operations and business environment, many of which are beyond ABFS' control, that could cause actual results to differ materially from any results expressed or implied by such statements. Factors that could cause actual results to differ materially include, without limitation: the ability of ABFS to obtain bankruptcy court approval with respect to motions in the Chapter 11 proceeding filed by it from time to time; the ability of ABFS to develop, prosecute, confirm, fund and execute one or more plans of liquidation with respect to the Chapter 11 proceeding; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for ABFS to propose and confirm one or more plans of liquidation, for the appointment of a Chapter 11 trustee or to convert the Chapter 11 proceeding to a Chapter 7 proceeding; potential adverse publicity surrounding the Chapter 11 proceeding; the ability of ABFS to fund its working capital needs during the liquidation process; the ability of ABFS to retain employees to facilitate an orderly liquidation; potential actions of regulatory authorities which govern ABFS' operations; the outcome of legal proceedings to which ABFS is or may become a party and other risks described in ABFS' reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, including factors described in ABFS' Annual Report on Form 10-K for the fiscal year ended June 30, 2004 and amendments thereto. These statements speak only as of the date of this press release, and ABFS disclaims any intention or obligation to update or revise any forward-looking statements to reflect new information, future events or developments or otherwise, except as required by law. ABFS provides additional information in its filings with the SEC, which readers are encouraged to review, concerning other factors that could cause actual results to differ materially from those indicated in the forward-looking statements.

Similarly, these and other factors, including the terms of any plan of liquidation or other alternative transactions ultimately confirmed, will negatively affect the value of ABFS' existing common stock or other equity securities. As a result of the information discussed in this press release, it is unlikely that any value will be ascribed in the bankruptcy proceeding to ABFS' existing common stock or other equity securities. Accordingly, ABFS urges that the appropriate caution be exercised with respect to existing and future investments in ABFS' common stock or other equity securities.