GENERAL

1.   GENERAL INFORMATION

2.   SECURITIES ACT EXEMPTION APPLICABLE

          Delta Financial Corporation ("Delta" or the "Applicant" ) proposes to issue up to $150,000,000 aggregate principal amount of 9½% Senior Secured Notes due 2004 (the "Secured Notes"), to be issued by Delta under the indenture to be qualified hereby (the "Indenture"), and warrants (the "Warrants") to subscribe for up to an aggregate of 1,590,000 newly issued, fully paid and nonassessable shares of common stock, par value $.01 per share, of Delta ("Common Stock") in exchange for the entire aggregate principal amount of $150,000,000 of Delta’s outstanding 9½% Senior Notes due 2004 (the "Old Notes"). Subject to the terms and conditions of the Offering Circular dated November 20, 2000, (the "Offering Circular") and the related Letter of Transmittal and Consent (which, together with the Offering Circular, constitute the "Exchange Offer"), Delta will issue $1,000 principal amount of Secured Notes and 10.6 Warrants for each $1,000 principal amount of Old Notes that are properly tendered and not withdrawn pursuant to the Exchange Offer.

        As the Secured Notes and Warrants are proposed to be offered for exchange by Delta with its existing security holders exclusively and solely for outstanding securities of Delta, the transaction is exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to the provisions of Section 3(a)(9) thereof. There have not been, and there will not be, any sales of the Secured Notes, Warrants or any other securities of the same class as the Secured Notes and Warrants by Delta (other than sales pursuant to the Exchange Offer) or by or through an underwriter at or about the same time as the Exchange Offer. No consideration has been, or will be given, directly or indirectly, to any broker, dealer, salesman, or other person for soliciting exchanges of the Old Notes.

         Delta has retained The Bank of New York as the "Exchange Agent" and D.F. King & Co., Inc. as the "Information Agent" in connection with the Exchange Offer. The Information Agent and the Exchange Agent will provide to the holders of Old Notes only information otherwise contained in the Offering Circular and general information regarding the mechanics of the Exchange Offer. Delta has agreed to reimburse the Exchange Agent and the Information Agent for their reasonable out-of-pocket expenses in connection therewith and to indemnify the Exchange Agent and the Information Agent against any losses or claims incurred without negligence or bad faith on the part of the Exchange Agent and the Information Agent, respectively, in connection with their respective duties as Exchange Agent and Information Agent relating to the Exchange Offer. In addition, Delta will pay remuneration to the Exchange Agent’s and the Information Agent’s financial, legal, and accounting advisors for the provision of advisory, legal and accounting services, respectively, in connection with the Exchange Offer.

          No holder of the outstanding Old Notes has made or will be requested to make any cash payment to Delta in connection with the Exchange Offer.

AFFILIATIONS

3.   AFFILIATES

          Section 5 of this application sets forth the names and addresses of those security holders of Delta holding 10% or more of Delta’s voting securities as of November 30, 2000.

           Delta, directly or indirectly, owns 100% of the voting securities of each of the entities listed below. The names of indirectly owned entities are indented and listed under their direct parent entities.

           With respect to each of the entities listed below, Delta, directly or indirectly, owns 99% of such entity's voting securities:

           Except as set forth in Section 5 of this application, the relationship among Delta and all of its affiliates, including their respective percentage holdings of voting securities, will be unchanged upon the consummation of the Exchange Offer.

MANAGEMENT AND CONTROL

4.   DIRECTORS AND EXECUTIVE OFFICERS

           The following table lists the name and address of each director and executive officer of Delta and the office or offices held by each such person.

5  PRINCIPAL OWNERS OF VOTING SECURITIES

           The following table sets forth certain information with respect to the ownership of Delta's voting securities by persons known by Delta to own 10% or more of any class of such voting securities as of December 14, 2000:

(1)  Includes 20,000 shares of Common Stock subject to currently exercisable options or options exercisable within 60 days.

(2)  Includes (i) 3,747,231 shares of Common Stock owned by two grantor retained annuity trusts, of which Hugh Miller is a trustee and has shared voting and investment power, (ii) 12,676 shares of Common Stock over which he has sole voting and investment power for the benefit of two family members under the Uniform Gifts for Minor’s Act, and (iii) 80,000 shares of Common Stock subject to currently exercisable options or options exercisable within 60 days.

(3)  Includes (i) 3,747,231 shares of Common Stock owned by two grantor retained annuity trusts, of which Marc Miller is a trustee and has shared voting and investment power; (ii) 8,814 shares of Common Stock over which he has sole voting and investment power for the benefit of two family members under the Uniform Gifts for Minor’s Act, and (iii) 20,000 shares of Common Stock subject to currently exercisable options or options exercisable within 60 days.

(4)  Includes (i) 3,747,231 shares of Common Stock owned by two grantor retained annuity trusts, of which Lee Miller is a trustee and has shared voting and investment power and (ii) 20,000 shares of Common Stock subject to currently exercisable options or options exercisable within 60 days.

UNDERWRITERS

6  UNDERWRITERS

        (a)    The name and complete mailing address of each person who, within three years prior to the date of filing this application, acted as an underwriter of any securities of the Applicant which are outstanding on the date of filing this application and the title of each class of the securities underwritten are as follows:

                  None.

          (b)    None.

CAPITAL SECURITIES

7  CAPITALIZATION

          (a)    The debt securities and capital stock of Delta as of December 14, 2000 were as follows:

     TITLE OF CLASS                AMOUNT AUTHORIZED      AMOUNT OUTSTANDING
    --------------                 -----------------      ------------------

Common Stock.....................   49,000,000               15,920,869

Preferred Stock..................   1,000,000                    0
9 1/2% Senior Notes due 2004.....   $150,000,000            $150,000,000
                                  principal amount        principal amount (1)

(1)         Does not include unpaid accrued interest in the amount of $4,750,000.00.

           (b)       Each share of Common Stock entitles its holder to one vote on all matters upon which Delta stockholders are entitled or permitted to vote, including the election of directors. There are no cumulative voting rights. The Common Stock has no preemptive rights or conversion rights nor are there any redemption or sinking fund provisions applicable to the Common Stock. There currently are no shares of Delta Preferred Stock ("Preferred Stock") outstanding. Delta’s Certificate of Incorporation provides that the Delta board of directors may authorize the issuance of one or more series of Preferred Stock having such rights, including voting, conversion and redemption rights, and such preferences, including dividend and liquidation preferences, as the Delta board of directors may determine without any further action by the stockholders of Delta.

INDENTURE SECURITIES

8.    ANALYSIS OF INDENTURE PROVISIONS

           The terms of the Secured Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Act"). The following analysis of certain provisions of the Indenture makes use of certain capitalized terms defined in the Indenture and not herein, and such terms shall have the meanings given to them in the Indenture and shall be incorporated by reference herein. The following analysis does not purport to be a complete description of the Indenture provisions discussed and is qualified in its entirety by reference to the Indenture, which provisions are incorporated herein by reference as part of such analysis. Section references are to the relevant provisions of the Indenture.

Any notice to Delta under the Indenture may be given to any or all of the Collateral Agent, the Escrow Agent, the Warrant Agent, the Owner Trustee, the Administrator and the Back-Up Servicer, provided that such notice has been previously or simultaneously given to Delta; provided, however, that notices to the Owner Trustee shall be delivered to the Collateral Agent, which in accordance with the Collateral Agreements shall furnish such notice to the Owner Trustee.

          If any Event of Default (other than an Event of Default specified in clause (viii) or (ix) above) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Secured Notes may declare all the Secured Notes to be due and payable immediately. Upon any such declaration, the Secured Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (viii) or (ix) above occurs, all outstanding Secured Notes shall be due and payable immediately without further action or notice. The Holders of a majority in aggregate principal amount of the then outstanding Secured Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived.

          If an Event of Default occurs on or after August 1, 2001, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of Delta with the intention of avoiding payment of the premium that Delta would have had to pay if Delta then had elected to redeem the Secured Notes pursuant to Section 3.07 (Optional Redemption) of the Indenture, then, upon acceleration of the Secured Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in the Indenture or in the Secured Notes to the contrary notwithstanding. If an Event of Default occurs prior to August 1, 2001, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of Delta with the intention of avoiding the prohibition on redemption of the Secured Notes prior to such date, then, upon acceleration of the Secured Notes, an additional premium shall also become and be immediately due and payable in an amount equal to 5.750% of the principal amount to the date of payment that would otherwise be due but for the provisions of this sentence.

          A Secured Note shall not be valid until two Officers, or an Officer and a Secretary or an Assistant Secretary, shall sign, or one Officer shall sign and one Officer or a Secretary or an Assistant Secretary of Delta (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall attest to, the Secured Notes for Delta by manual or facsimile signature. Each Subsidiary Guarantor shall execute a Subsidiary Guarantee in the manner set forth in Section 11.02 (Execution And Delivery of Subsidiary Guarantee) of the Indenture.

          If an Officer whose signature is on a Secured Note was an Officer at the time of such execution but no longer holds that office at the time the Trustee authenticates the Secured Note, the Secured Note shall be valid nevertheless.

           A Secured Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Secured Note. The signature shall be conclusive evidence that the Secured Note has been authenticated under the Indenture.

        The Trustee shall authenticate Secured Notes for original issue in the aggregate principal amount of up to $150,000,000 upon a written order of Delta in the form of an Officers’ Certificate. The Officers’ Certificate shall specify the amount of Secured Notes to be authenticated and the date on which the Secured Notes are to be authenticated. The aggregate principal amount of Secured Notes outstanding at any time may not exceed $150,000,000, except as provided in Section 2.07 (Replacement Secured Notes) of the Indenture. Upon the written order of Delta in the form of an Officers’ Certificate, the Trustee shall authenticate Secured Notes in substitution of Secured Notes originally issued to reflect any name change of Delta.

        The Trustee may appoint an authenticating agent reasonably acceptable to Delta to authenticate Secured Notes. Unless otherwise provided in the appointment, an authenticating agent may authenticate Secured Notes whenever the Trustee may do so. Each reference in the Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Delta and Affiliates of Delta.

           The Secured Notes shall be issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof.

           There will be no proceeds from the issuance of the Secured Notes.

          Subject to the two succeeding paragraphs below, with the consent of the holders of a majority in aggregate principal amount of outstanding Secured Notes, Collateral may be released from the Lien and security interest created by the Collateral Agreements. Such consent shall not be required with respect to the release of the Remaining Earnings in accordance with the terms of the Escrow Agreement.

           At any time when a Default or Event of Default shall have occurred and be continuing and the maturity of the Secured Notes shall have been accelerated (whether by declaration or otherwise) and the Trustee shall have delivered a notice of acceleration to the Collateral Agent, no release of Collateral pursuant to the provisions of the Collateral Agreement shall be effective as against the Holders of Secured Notes.

          The release of the Remaining Earnings under the Escrow Agreement shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Remaining Earnings are released pursuant to the terms of the Escrow Agreement. The release of any Collateral from the terms of this Indenture and the Collateral Agreements shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Collateral is released pursuant to the terms of such Collateral Agreements. To the extent applicable, Delta shall cause Section 314(d) of the Act relating to the release of property or securities from the Liens and security interest of the Collateral Agreements and relating to the substitution therefor of any property or securities to be subjected to the Liens and security interest of the Collateral Agreements to be complied with. Any certificate or opinion required by Section 314(d) of the Act may be made by an Officer of Delta except in cases where Section 314(d) of the Act requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser or other expert selected or approved by the Trustee and the Collateral Agent in the exercise of reasonable care.

          (i)    When (1) Delta delivers to the Trustee all outstanding Secured Notes (other than Secured Notes replaced pursuant to Section 2.08 of the Indenture) for cancellation or (2) all outstanding Secured Notes have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article 3 of the Indenture and Delta irrevocably deposits with the Trustee funds sufficient to pay at maturity or upon redemption all outstanding Secured Notes, including interest thereon to maturity or such redemption date (other than Secured Notes replaced pursuant to Section 2.08 of the Indenture), and if in either case Delta pays all other sums payable under the Indenture by Delta, then the Indenture shall, subject to Section 8.04 (Conditions to Legal or Covenant Defeasance) of the Indenture cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of the Indenture on demand of Delta accompanied by an Officers Certificate and an opinion of Counsel and at the cost and expense of Delta.

          (ii)    Option to Effect Legal Defeasance or Covenant Defeasance.

           Delta may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either clause (iii) or (iv) below be applied to all outstanding Secured Notes upon compliance with the conditions set forth below.

          (iii)    Legal Defeasance and Discharge.

          Upon Delta’s exercise under clause (ii) above of the option applicable to this clause (iii), Delta shall, subject to the satisfaction of the conditions set forth in clause (v) below, be deemed to have been discharged from its obligations with respect to all outstanding Secured Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that Delta shall be deemed to have paid and discharged the entire indebtedness represented by the outstanding Secured Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of clause (vi) below and the other Sections of the Indenture referred to in (1) through (4) of this clause (iii) below, and to have satisfied all its other obligations under such Secured Notes and the Indenture (and the Trustee, on demand of and at the expense of Delta, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of such outstanding Secured Notes to receive, solely from the trust fund described in clause (vi) below, payments in respect of the principal of, premium, if any, and interest on such Secured Notes when such payments are due, (2) Delta’s obligations with respect to the Secured Notes under Article Two and Section 4.02 of the Indenture, (3) the rights, powers, trust, duties and immunities of the Trustee, and Delta’s obligations in connection therewith and (4) clauses (ii) through (viii) of this section. Subject to compliance with clauses (ii) through (viii) of this section, Delta may exercise its option under this paragraph notwithstanding the prior exercise of its option hereof.

          (iv)    Covenant Defeasance.

          Upon Delta’s exercise under clause (ii) above of the option applicable to this paragraph, Delta shall, subject to the satisfaction of the conditions set forth in clause (v) below, be released from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.17, 4.18, 4.19, 4.20, 4.21, 4.22, 4.23, 4.24, 4.25, 4.26, 4.27 and Article Five of the Indenture with respect to the outstanding Secured Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Secured Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Secured Notes shall not be deemed outstanding for accounting purposes). For this purpose, such Covenant Defeasance means that, with respect to the outstanding Secured Notes, Delta may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 of the Indenture, but, except as specified above, the remainder of this Indenture and such Secured Notes shall be unaffected thereby. In addition, upon Delta’s exercise under clause (ii) above of the option applicable to this clause (iv), subject to the satisfaction of the conditions set forth in clause (v) below, Sections 6.01(f) and 6.01(g) of the Indenture shall not constitute Events of Default.

          (v)    Conditions to Legal or Covenant Defeasance.

           The following shall be the conditions to the application of either clause (iii) or (iv) above to the outstanding Secured Notes:

           In order to exercise either Legal Defeasance or Covenant Defeasance:

          Any U.S. Legal Tender or U.S. Government Obligations deposited with the Trustee or any Paying Agent, in trust for the payment of the principal of, premium, if any, or interest on any Secured Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to Delta on its request or shall be discharged from such trust; and the Holder of such Secured Note shall thereafter, as an unsecured general creditor, look only to Delta for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of Delta as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of Delta cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to Delta.

          If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or U.S. Government Obligations in accordance with clause (v)(1) or (vi)(1) above, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then Delta’s obligations under the Indenture and the Secured Notes shall be revived and reinstated as though no deposit had occurred pursuant to clause (v)(1) or (vi)(1) above until such time as the Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender and U.S. Government Obligations in accordance with clause (v)(1) or (vi)(1) above hereof, as the case may be; provided, however, that, if Delta makes any payment of principal of, premium, if any, or interest on any Secured Note following the reinstatement of its obligations, Delta shall be subrogated to the rights of the Holders of such Secured Notes to receive such payment from the U.S. Legal Tender and U.S. Government Obligations held by the Trustee or Paying Agent.

          (i) Delta shall deliver to the Trustee, within 90 days after the end of each fiscal year of Delta (which ends on December 31 of each year), commencing December 31, 2000, an Officers’ Certificate stating that a review of the activities of Delta and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether Delta and its Subsidiaries have kept, observed, performed and fulfilled their obligations under the Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge Delta and each of its Subsidiaries has kept, observed, performed and fulfilled each and every covenant contained in the Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he may have knowledge and what action Delta is taking or proposes to take with respect thereto) and that, to the best of his knowledge, no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Secured Notes are prohibited or if such event has occurred, a description of the event and what action Delta is taking or proposes to take with respect thereto.

          The information set forth in the section of the Offering Circular captioned "Description of Secured Notes" is incorporated herein by reference in response to this item. A copy of the Offering Circular is attached hereto as Exhibit T3E(1).

9.    OTHER OBLIGORS

           Give the name and complete mailing address of any person, other than the Applicant, who is an obligor upon the indenture securities.

          The full performance of the Secured Notes and the indenture to be qualified hereunder by the Applicant will be jointly and severally guaranteed by the entities set forth below (collectively, the "Subsidiary Guarantors"), each of which is a wholly owned direct or indirect operating subsidiary of the Applicant. The complete mailing address of the Subsidiary Guarantors is c/o Delta Financial Corporation, 1000 Woodbury Road, Woodbury, New York 11797.

CONTENTS OF APPLICATION FOR QUALIFICATION. This application for qualification comprises: