Delta Funding Sells $400 Million of Asset-Backed Securities.

WOODBURY, NY--(BUSINESS WIRE)--December 4, 1998--Delta Funding Corporation, a wholly owned subsidiary of Delta Financial Corporation (NYSE: DFC), sold $400 million of closed-end home equity loan-backed securities through underwriters led by Lehman Brothers and co-managed by NationsBank Montgomery Securities LLC, Prudential Securities Incorporated, First Union Capital Markets, Inc. and First Chicago Capital Markets, Inc. The Company utilized a hybrid structure for its securitization, which included a subordinate BBB security and a surety wrap credit enhancement by MBIA Insurance Corporation on the AAA securities. The securities were rated by Standard & Poor's and Moody's Investors Service, Inc.

Commenting on the securitization, Hugh Miller, President and Chief Executive Officer, stated, "In what has been a tumultuous asset-backed market over the past four months where many companies have been unable to access the securitizations markets, Delta has successfully continued to securitize its loan originations. In fact, for this quarter's securitization, we were in a favorable position of having the option to select from a variety of structures to utilize. We decided to use a hybrid structure, which was the most optimal for the Company from an overall economic and cash flow perspective."

Mr. Miller continued, "We believe that our ability to access the securitization market, and especially having the ability to sell a subordinate BBB security, shows tremendous confidence from investors in Delta's business fundamentals, our long-term prospects in the home equity industry and the sound credit quality of our collateral. Our long-term operating history, our conservative approach to this business and our unwillingness to sacrifice credit quality for the sake of growth have been instrumental in differentiating Delta among other companies in the industry and helping us maintain our strong industry position."

Founded in 1982, Delta Financial Corporation is a Woodbury, NY-based specialty consumer finance company engaged in originating, acquiring, selling and servicing non-conforming home equity loans. Delta's loans are primarily secured by first mortgages on one-to-four-family residential properties. The Company originates home equity loans primarily in 22 states through a network of approximately 1,150 brokers and correspondents as well as through 15 Fidelity Mortgage retail offices in nine states. Since 1991, Delta Financial has sold over $4.2 billion of its mortgages through 21 AAA rated securitizations. As of September 30, 1998, the Company's servicing portfolio was approximately $2.7 billion.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Certain statements contained in this press release, which are not historical fact, may be deemed to be "forward-looking" statements under federal securities laws that involve risk and uncertainties. There are many important factors that could cause Delta Financial Corporation and its subsidiaries' actual results to differ materially from those indicated in the forward-looking statements. Such factors include, but are not limited to, general economic conditions, including interest rate risk, future residential real estate values, regulatory changes (legislative or otherwise) affecting the real estate market and mortgage lending activities, competition, demand for Delta Financial Corporation and its subsidiaries' services, availability of funding, loan prepayment rates, delinquency and default rates, changes in factors influencing the asset-backed securitization market, including the Company's ability to access such market and fluctuations in the spread between treasuries and the rates demanded by asset-backed securities investors, and other risks identified in Delta Financial Corporation's Securities and Exchange Commission filings

This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities law of any such state.