Fitch Downgrades Delta Debt, Expects Default

Fitch has downgraded Delta Financial Corp.'s $150 million of 9.5% senior secured notes due Aug.1, 2004 from CCC-plus to CC, which the rating agency said indicates that "default of some kind appears likely."Fitch said Delta's ability to meet its financial obligations is "solely relianton sustained favorable business and economic developments." The rating agency cited Delta's recently announcedplans to engage Ocwen Financial Corp. to perform certain subservicing functions on Delta's subprime home equityloan portfolio. "As part of the transaction, Delta will pass through the servicing fee to Ocwen, thereby reducingthe company's operating income, although this is offset to some degree by reduced operating expenses," Fitchsaid. The rating agency said Delta's decision to exit loan servicing is based on its desire to "reduce theliquidity strain associated with making servicing and interest advances. Moreover, servicing a shrinking portfoliocoupled with declining asset quality characteristics makes the economics of servicing much less attractive."Fitch's website address is http://www.fitchratings.com.