1021848--3/16/2006--DELTA_FINANCIAL

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{loss, insurance, financial}

{financial, litigation, operation}

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{system, service, information}

{debt, indebtedness, cash}

{stock, price, operating}

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Risks Related to Our Business Operations We may operate on a negative cash flow basis and may not have sufficient capital resources to satisfy our fixed obligations and fund our operations. Our previous financial statements are not indicative of our future financial results. We depend primarily on independent mortgage brokers for the origination of our wholesale mortgage loans. Intense competition in the non-conforming mortgage loan industry may result in reduced loan production, reduced net income or in revised underwriting standards, which could harm our business. We are subject to losses due to fraudulent and negligent acts on the part of loan applicants, mortgage brokers, other vendors and our employees. We may be required to repurchase mortgage loans or indemnify investors if we breach representations and warranties in our mortgage loan sales agreements, which could harm our business. Our loan products may require payment adjustments during the term of the mortgage loan that may result in increased payment defaults by borrowers and higher losses to us. We depend on key personnel and the continued ability to attract and retain qualified employees, the loss of which could disrupt our operations and result in reduced revenues. Any disruption to our Click and Close system could disrupt our operations, expose us to litigation and require expensive investments in alternative technology. The success, growth and competitiveness of our business will depend upon our ability to adapt to and implement technological changes. Our use of Insured AVMs in lieu of appraisals could increase our losses. Our use of Insured AVMs in lieu of appraisals could increase our losses. Unpredictable delays or difficulties in the development of new loan products or loan programs can harm our business. If we make any acquisitions, we will incur a variety of costs and may never realize the anticipated benefits, which can harm our business. Differences in our actual experience compared to the assumptions we used to estimate the value of our excess cashflow certificates could result in losses. Risks Related to Our Financing Activities We depend on third party financing sources, which if unavailable to us in the future could harm our business. Our warehouse credit facilities contain covenants that restrict our operations and may inhibit our ability to grow our business and increase revenues. Our warehouse financing is subject to margin calls based on our lender s opinion of the value of our collateral. An unanticipated margin call could harm our liquidity. Our inability to realize cash proceeds from securitizations and whole-loan sales in excess of the loan acquisition costs could harm our financial position. We typically finance borrowers with lower credit ratings relative to those who would otherwise qualify for prime mortgage loans. This strategy may hinder our ability to obtain financing and to continue securitizing loans or selling loans on attractive terms in the future. We have monetized some of our excess cashflow certificates. Our inability to do so in the future could harm our business. We are exposed to contingent risks and liabilities related to all of the loans we originate. A decline in the quality of servicing could lower the value of our excess cashflow certificates and our ability to sell or securitize loans. An interruption in or breach of our information systems may result in lost business. Risks Related to Economic Factors, Market Conditions and Other Factors Beyond Our Control Interest rate fluctuations may reduce our loan origination volume, increase our prepayment, delinquency, default and foreclosure rates, and reduce the value of and income from our loans. Our hedging strategies may not be successful in mitigating our risks associated with interest rates. Potential changes in valuation of excess cashflow certificates will harm our business. Our business may be harmed by economic difficulties in the eastern United States, where we conduct a significant amount of our business. An economic slowdown or recession could cause us to experience losses, including increasing delinquencies and foreclosures on our loans. Geopolitical risks may harm our business. Natural disasters may harm our business, causing us to experience losses, and increasing delinquencies and foreclosures on our loans. Natural disasters may harm our business, causing us to experience losses, and increasing delinquencies and foreclosures on our loans. Risks Related to Laws, Regulations and Legal Actions The scope of our business exposes us to risks of noncompliance with an increasing and, in some cases, inconsistent body of complex laws, rules and regulations at the federal, state and local levels. If we do not comply with the TILA, aggrieved borrowers could have the right to rescind their loans. If we do not comply with Regulation X under the RESPA, we could be subject to substantial fees and potential limitations upon future business activities. The increasing number of federal, state and local anti-predatory lending laws may restrict our ability to originate, or increase our risk of liability with respect to, some types of mortgage loans and could increase our cost of doing business. We are no longer able to rely on the Parity Act to preempt certain state law restrictions on prepayment penalties, which could harm our business. We are a defendant in litigation relating to consumer lending practices, including class actions, and we may not prevail in these matters. Changes in the mortgage interest deduction could decrease our loan production and harm our business. The Do Not Call Registries administered by federal and state authorities, and other regulations affecting our telemarketing activities could reduce our loan production, increase our costs, or result in claims and/or penalties. The Do Not Call Registries administered by federal and state authorities, and other regulations affecting our telemarketing activities could reduce our loan production, increase our costs, or result in claims and/or penalties. We have been, and in the future may be, subject to various settlement agreements arising from legal issues, and we may be subject to substantial claims and legal expenses if we do not comply with these agreements, or if allegations are made that we are not in compliance with them. We may be subject to fines or other penalties based upon the conduct of the independent mortgage brokers who place loans with us. Regulatory actions and/or class actions against servicers who service the loans we originate could lower the value of our securitized mortgage loans, our excess cashflow certificates in pre-2004 securitizations and our ability to sell or securitize our loans. Legal actions are pending against us, including class action lawsuits, which if successful, could expose us to substantial liability. Legal actions are pending against us, including class action lawsuits, which if successful, could expose us to substantial liability. Our inability to comply with REIT qualification tests for our REIT subsidiary (Renaissance REIT Investment Corp.) may result in our securitization trusts being taxed as a taxable mortgage pool, which would reduce our earnings and cash flow and have a material adverse impact on us. Complying with the Sarbanes-Oxley Act of 2002, as well as other recently-enacted and proposed changes to applicable securities laws, are likely to increase our costs. Our inability to comply with REIT qualification tests for our REIT subsidiary (Renaissance REIT Investment Corp.) may result in our securitization trusts being taxed as a taxable mortgage pool, which would reduce our earnings and cash flow and have a material adverse impact on us. Complying with the Sarbanes-Oxley Act of 2002, as well as other recently-enacted and proposed changes to applicable securities laws, are likely to increase our costs. Risks Related to Our Capital Structure We are controlled by principal stockholders, some of whom are also members of our senior management, who may have the ability to influence fundamental corporate changes if they act in concert. Our stock price is volatile. Our financial results or condition in any period may not meet market expectations, which could adversely affect our stock price. We may need additional capital, which could dilute our stockholders or impose burdensome financial restrictions on our business. Future sales of our common stock in the public market could adversely affect our stock price. We have implemented anti-takeover provisions which could discourage or prevent a takeover, even if an acquisition would be beneficial to our stockholders.

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1021848--3/16/2006--DELTA_FINANCIAL_CORP