UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.)*

DELTA FINANCIAL CORPORATION

(Name of Issuer)

Common Stock, $0.01 par value per share

(Title of Class of Securities)

247918105

(CUSIP Number)

August 13, 2007

(Date of Event which Requires Filing

of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ].

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule §240.13d-7 for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Continued on following page(s)

Page 1 of 10 Pages

CUSIP No. 247918105

Page 2 of 10 Pages

1	Names of Reporting Persons

I.R.S. Identification Nos. of above persons (entities only)

ANGELO, GORDON & CO., L.P.

2	Check the Appropriate Box If a Member of a Group (See Instructions)

3	SEC Use Only

4	Citizenship or Place of Organization

DELAWARE

	5	Sole Voting Power
Number of Shares		10,262,700
Beneficially Owned By Each	6	Shared Voting Power 0
Reporting Person With	7	Sole Dispositive Power 10,262,700
	8	Shared Dispositive Power
		0

9	Aggregate Amount Beneficially Owned by Each Reporting Person

10,262,700

10	Check Box If the Aggregate Amount in Row (9) Excludes Certain

Shares (See Instructions)

[

]

11	Percent of Class Represented By Amount in Row (9)

30.5%

12	Type of Reporting Person (See Instructions)

IA; PN

CUSIP No. 247918105

Page 3 of 10 Pages

1 Names of Reporting Persons

I.R.S. Identification Nos. of above persons (entities only)

JOHN M. ANGELO

2	Check the Appropriate Box If a Member of a Group (See Instructions)

3	SEC Use Only

4	Citizenship or Place of Organization

UNITED STATES

	5	Sole Voting Power
Number of Shares		0
Beneficially Owned By Each	6	Shared Voting Power 10,262,700
Reporting Person With	7	Sole Dispositive Power 0
	8	Shared Dispositive Power
		10,262,700

9	Aggregate Amount Beneficially Owned by Each Reporting Person

10,262,700

10	Check Box If the Aggregate Amount in Row (9) Excludes Certain

Shares (See Instructions)

[

]

11	Percent of Class Represented By Amount in Row (9)

30.5%

12	Type of Reporting Person (See Instructions)

IN; HC

CUSIP No. 247918105

Page 4 of 10 Pages

1 Names of Reporting Persons

I.R.S. Identification Nos. of above persons (entities only)

MICHAEL L. GORDON

2	Check the Appropriate Box If a Member of a Group (See Instructions)

3	SEC Use Only

4	Citizenship or Place of Organization

UNITED STATES

	5	Sole Voting Power
Number of Shares		0
Beneficially Owned By Each	6	Shared Voting Power 10,262,700
Reporting Person With	7	Sole Dispositive Power 0
	8	Shared Dispositive Power
		10,262,700

9	Aggregate Amount Beneficially Owned by Each Reporting Person

10,262,700

10	Check Box If the Aggregate Amount in Row (9) Excludes Certain

Shares (See Instructions)

[

]

11	Percent of Class Represented By Amount in Row (9)

30.5%

12	Type of Reporting Person (See Instructions)

IN; HC

CUSIP No. 247918105

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Item 1.

Security and Issuer.

This Statement on Schedule 13D relates to shares of common stock, par value $0.01 per of Delta Financial Corporation, a Delaware corporation (the “Issuer”)(the “Shares”). The address of the principal executive office of the Issuer is 1000 Woodbury Road, Suite 200, Woodbury, NY 11797.

Item 2.

Identity and Background.

This statement is filed on behalf of each of the following persons (collectively, the “Reporting Persons”): Angelo, Gordon & Co., L.P., a Delaware limited partnership (“Angelo Gordon”), John M. Angelo, a United States citizen (“Mr. Angelo”), and Michael L. Gordon, a United States citizen (“Mr. Gordon”).

The Shares which are the subject of this Schedule 13D are held for the account of private investment funds and accounts for which Angelo Gordon acts as investment adviser (the “AG Funds”). Mr. Angelo is a managing member of JAMG LLC, which is the sole general partner of AG Partners, L.P., which is the sole general partner of Angelo Gordon. Mr. Angelo serves as the chief executive officer of Angelo Gordon. Mr. Gordon is the other managing member of JAMG LLC and is the chief operating officer of Angelo Gordon. The principal business address of each of the Reporting Persons is 245 Park Avenue, New York, New York 10167.

During the last five years, none of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws of finding any violation with respect to such laws.

Item 3.

Source and Amount of Funds or Other Consideration.

The Shares were acquired by the AG Funds. The source of funds for the purchase of the Shares was the working capital of the AG Funds. The Warrants, as defined below, were issued as part of the consideration for the Repurchase Facility, as defined below, without any separately stated issue price.

Item 4.

Purpose of Transaction.

The 262,700 Shares held directly by the AG Funds were acquired in the ordinary course of business and were not acquired with the purpose or intent of changing or influencing the control of the Issuer.

On August 13, 2007 (the “Date of Event”), the Issuer entered into agreements providing for an aggregate of $70.0 million in capital, consisting of a $60.0 million repurchase financing facility provided by an affiliate of Angelo Gordon beneficially owned by certain AG Funds (the “AG Investor”) and the issuance of $10.0 million in principal amount of convertible notes to an unrelated investor. In one of these transactions, two subsidiaries of the Issuer, Renaissance REIT Investment Corp. and Delta Funding Corporation (collectively the “Sellers”), and the Issuer entered into a repurchase financing facility (the “Repurchase Facility”) with the AG Investor, in the principal mount of $60.0 million. The Repurchase Facility bears interest at the rate of 600 basis points over one-month LIBOR. The Repurchase Facility is collateralized by the Issuer’s securitization Class P, Class BIO and owner trust certificates (the “securitization related certificates”), which entitle the holder to receive the prepayment penalties and excess cash flows remaining after payments are made to the related asset-backed investors (less the

CUSIP No. 247918105

Page 6 of 10 Pages

contractual servicing fee and other fees, costs and expenses of administering the securitization trust). Under the terms of the Repurchase Facility, the cash flows from these securitization related certificates are expected to be used to pay down the principal under the Repurchase Facility. The Sellers are obligated to make monthly interest payments on the then-existing principal balance of the Repurchase Facility. The Issuer has irrevocably and unconditionally guaranteed the Sellers' payment obligations under the Repurchase Facility. The Repurchase Facility matures in 12 months, if not sooner repaid.

In connection with this transaction, the Issuer issued to the AG Investor warrants (the “Warrants”) to purchase an aggregate of 10.0 million shares of the Issuer’s Shares (the “Warrant Shares”). The initial exercise price of the Warrants is $5.00 per share. The Warrants expire in February 2009, subject to extension if the Issuer does not obtain stockholder approval for the issuance of the Warrant Shares within 90 days of the August 14, 2007 closing date.

The Warrants are currently exercisable for an aggregate of 4.7 million shares of common stock. In order to comply with the Marketplace Rule of the Nasdaq Global Market, the remaining shares issuable upon exercise of the Warrants may only be issued following stockholder approval.

In connection with the financing transactions, under the terms of a voting and support agreement, the holders of more than one half of the Issuer’s outstanding common stock, including all of the Issuer’s directors and executive officers, have agreed to vote their shares in favor of the issuance of the Warrant Shares. If certain convertible notes issued in the transaction are redeemed, the principal amount of the repurchase financing facility provided by the AG Investor will be reduced from $60 million to $50 million.

If the Warrants are exercised for at least 5.0 million shares of the Issuer's common stock, and thereafter, the holdings of the AG Investor do not decrease beneath that amount, the AG Investor will be entitled to appoint up to two members of the Issuer's Board of Directors. In addition, for so long as the AG Investor own 5.0 million shares of the Issuer's common stock (or Warrants to purchase those shares), the AG Investor will have preemptive rights to purchase up to one-half of the Issuer's equity securities that may be offered in certain types of offerings. Under the terms of the Warrants, the exercise price will be reduced if the Issuer issues shares of its common stock (or certain convertible securities) at a price that is less than the exercise price of the Warrants. The exercise price of the Warrants may also be paid by reducing an equal portion of the principal amount of the Repurchase Facility.

The AG Investor has been granted rights under which the Issuer will register all or a portion of the shares of common stock issuable upon exercise of the Warrants. The Issuer has also granted certain ongoing information and consultation rights to AG Funds that own interests in the AG Investor.

The Reporting Persons may make, or cause to be made, further acquisitions of Shares from time to time and may dispose of, or cause to be disposed of, any or all of the Shares held by the Reporting Persons at any time. The Reporting Persons intend to evaluate on an ongoing basis the investment in the Issuer and their options with respect to such investment.

CUSIP No. 247918105

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The information set forth in this Item 4 is qualified in its entirety by reference to the following documents incorporated by reference to the Issuer’s Form 8-K filed on August 16, 2007: (i) Securities Repurchase Agreement, dated August 13, 2007, by and between Renaissance REIT Investment Corp. and Delta Funding Corporation, as Sellers, the Issuer, as Guarantor, and AG Delta Holdings, LLC, as Buyer; (ii) Warrant Acquisition Agreement, dated August 13, 2007, between the Issuer and AG Delta Holdings, LLC; (iii) Form of Warrant issued to Affiliates of Angelo, Gordon & Co.; (iv) Form of Investor Rights Agreement, dated August 13, 2007, between the Issuer and AG Delta Holdings, LLC; and (v) Form of Voting and Support Agreement, dated August 13, 2007, by and among AG Delta Holdings, LLC, the PIF Investors, and certain stockholders of the Issuer.

Item 5.

Interest in Securities of the Issuer.

(a) As of the Date of Event, the Reporting Persons are the indirect beneficial owners 10,262,700 Shares. This number consists of (i) 262,700 Shares held for the account of certain AG Funds and (ii) 10,000,000 Shares issuable upon exercise of the Warrants held by the AG Investor. According to the Issuer’s most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, the number of Shares outstanding as of August 6, 2007 was 23,604,761. Assuming the full conversion of the Warrants, each of the Reporting Persons may be deemed to be the beneficial owner of approximately 30.5% of the total number of Shares outstanding.

(b)(i) Angelo Gordon may be deemed to have sole power to direct the voting and disposition of the 10,262,700 Shares currently held and issuable upon exercise of the Warrants.

(ii) Mr. Angelo may be deemed to have shared power to direct the voting and disposition of the 10,262,700 Shares currently held and issuable upon exercise of the Warrants.

(iii) Mr. Gordon may be deemed to have shared power to direct the voting and disposition of the 10,262,700 Shares currently held and issuable upon exercise of the Warrants.

(c) Except as described in response to Item 4, there have been no transactions with respect to the Shares by any of the Reporting Persons during the 60-day period preceding the Date of Event.

(d) The limited partners of (or investors in) each of the AG Funds participating in the investments described herein have the right to participate in the receipt of dividends from, or proceeds from the sale of, the Shares held for the accounts of their respective funds in accordance with their respective limited partnership interests (or investment percentages) in their respective funds.

(e)

Not applicable.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to

Securities of the Issuer.

Except for the arrangements described in Items 4 and 5(d) above, to the best knowledge of the Reporting Persons there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the persons enumerated in Item 2 and any other person with respect to any securities of the Issuer, including but not limited to, transfer or voting of any of the Shares, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies.

CUSIP No. 247918105

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Item 7.

Material to be Filed as Exhibits.

Exhibit A – Joint Filing Agreement, dated as of June 13, 2007, by and among Angelo, Gordon & Co., L.P., John M. Angelo and Michael L. Gordon.

Exhibit B – Securities Repurchase Agreement, dated August 13, 2007, by and between Renaissance REIT Investment Corp. and Delta Funding Corporation, as Sellers, the Issuer, as Guarantor, and AG Delta Holdings, LLC, as Buyer (incorporated by reference to Exhibit 10.1 to Issuer’s Form 8-K filed on August 16, 2007).

Exhibit C – Warrant Acquisition Agreement, dated August 13, 2007, between the Issuer and AG Delta Holdings, LLC (incorporated by reference to Exhibit 10.2 to Issuer’s Form 8-K filed on August 16, 2007).

Exhibit D – Form of Warrant issued to Affiliates of Angelo, Gordon & Co. (incorporated by reference to Exhibit 10.3 to Issuer’s Form 8-K filed on August 16, 2007).

Exhibit E – Form of Investor Rights Agreement, dated August 13, 2007, between the Issuer and AG Delta Holdings, LLC (incorporated by reference to Exhibit 10.4 to Issuer’s Form 8-K filed on August 16, 2007).

Exhibit F – Form of Voting and Support Agreement, dated August 13, 2007, by and among AG Delta Holdings, LLC, the PIF Investors, and certain stockholders of the Issuer (incorporated by reference to Exhibit 10.5 to Issuer’s Form 8-K filed on August 16, 2007).

Exhibit G – Management Rights Agreement, dated as of August 13, 2007, among the Issuer, AG Realty Fund VII, L.P. and AG Realty Fund VII (TE), L.P. (filed as Exhibit 99.1).

CUSIP No. 247918105

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SIGNATURES

After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.

Date: August 23, 2007	ANGELO, GORDON & CO., L.P.


	By: /s/ Michael L. Gordon________
	Name: Michael L. Gordon
	Title: Chief Operating Officer

Date: August 23, 2007	JOHN M. ANGELO


	/s/ John M. Angelo_____________

Date: August 23, 2007	MICHAEL L. GORDON


	/s/ Michael L. Gordon___________

CUSIP No. 247918105

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EXHIBIT A

JOINT FILING AGREEMENT

The undersigned hereby agree that the statement on Schedule 13D with respect to the common stock, $0.01 par value per share, of Delta Financial Corporation, dated as of August 23, 2007, is, and any amendments thereto (including amendments on Schedule 13D) signed by each of the undersigned shall be, filed on behalf of each of us pursuant to and in accordance with the provisions of Rule 13d-1(k) under the Securities Exchange Act of 1934.

Date: August 23, 2007	ANGELO, GORDON & CO., L.P.


	By: /s/ Michael L. Gordon_________
	Name: Michael L. Gordon
	Title: Chief Operating Officer

Date: August 23, 2007	JOHN M. ANGELO


	/s/ John M. Angelo_______________

Date: August 23, 2007	MICHAEL L. GORDON


	/s/ Michael L. Gordon_____________

Delta Financial Corporation

August 13, 2007

AG Realty Fund VII, L.P.

AG Realty Fund VII (TE), L.P.

c/o Angelo, Gordon & Co.

245 Park Avenue

New York, New York 10167

Dear Sir or Madam:

Reference is made to (i) the Warrant Acquisition Agreement, dated as of the date hereof (the “Warrant Agreement;” capitalized terms used but not defined herein shall have the meanings given to such terms in the Warrant Agreement) by and between Delta Financial Corporation, a Delaware corporation (the “Company”), and AG Delta Holdings, LLC, a Delaware limited liability company (the “Purchaser”), pursuant to which the Purchaser will be issued Warrants to purchase up to 10,000,000 shares (the “Warrant Shares”) of the Company’s common stock, par value $.01 per share (the “Common Stock”) and (ii) the Securities Repurchase Agreement, dated as of the date hereof (the “Financing Agreement”), by and among Renaissance REIT Investment Corp., a Maryland corporation, Delta Funding Corporation, a New York corporation, the Company and the Purchaser pursuant to which the Purchaser has made available certain debt financing (the “Debt”) to the Company and its subsidiaries.

This letter constitutes the agreement of the Company to provide certain management rights to AG Realty Fund VII, L.P. and AG Realty Fund VII (TE), L.P. (together, “Investor”), each of which have equity interests in the Purchaser and/or affiliates of the Purchaser that will hold Warrants and/or Warrant Shares. Execution and delivery of this letter is a condition precedent to the obligations of the Purchaser under the Warrant Agreement and the Financing Agreement. The Company hereby agrees that, for so long as (i) the Investor continues, directly or indirectly through one or more intermediary subsidiaries, to own an interest in the Purchaser and/or its affiliates that hold Warrants and/or Warrant Shares and (ii) the Purchaser or any of its affiliates continue to hold, directly or indirectly, any Warrants, Warrant Shares and/or Debt (or other securities of the Company into which the Debt may be converted or for which the Debt may be exchanged or exercised), without limiting or prejudicing any of the rights provided to the Purchaser under the Warrant Agreement, the Financing Agreement or any the other agreements entered into with the Company with respect thereto, it shall, and shall cause each of its subsidiaries, to:

(a) Provide or grant (as the case may be) the Investor or its designated representatives with:

(i) the right to visit and inspect any of the offices and properties of the Company and its subsidiaries and inspect and copy the books and records of the Company and its subsidiaries as the Investor or its designated representatives shall reasonably request, in each case, during normal business hours, with reasonable prior

notice and without unreasonable disruption of the business of the Company and its subsidiaries;

(ii) as soon as practicable and in any event within 30 days after the end of each month following the Closing Date (in each case, including the last month of the Company’ fiscal year), a consolidated and consolidating balance sheet of the Company and its subsidiaries as at the end of such month, the related consolidated and consolidating statements of operations and cash flows for such month and for the period commencing at the end of the immediately preceding fiscal year and ending with the end of such month, setting forth in each case in comparative form the figures for the corresponding date or period of the immediately preceding fiscal year and corresponding figures from the most recent projections for the current fiscal year, in all such cases, in reasonable detail and certified by a senior officer of the Company as fairly presenting the financial condition and results of operations of the Company and its consolidated subsidiaries and as having been prepared in accordance with generally accepted accounting principles applied on a basis consistent with the audited financial statements of the Company, subject to changes resulting from audit and normal year-end adjustments and the absence of footnote disclosures;

(iii) as soon as available and in any event within 150 days after the end of each fiscal year following the Closing Date, a consolidated and consolidating balance sheet of the Company and its consolidated subsidiaries as of the end of such fiscal year, the related consolidated and consolidating statements of operations, stockholders’ equity and cash flows for such fiscal year, a consolidated and consolidating balance sheet of the Company and its consolidated subsidiaries as of the end of such fiscal year and the related consolidated and consolidating statements of operations, stockholders’ equity and cash flows for such fiscal year setting forth, in each case, in comparative form the figures for the previous fiscal year and corresponding figures from the most recent projections for the current fiscal year, certified (solely with respect to all such consolidated statements) without qualification (including with respect to the scope of audit) or exception by BDO Siedman, LLP or any other independent public accountants of nationally recognized standing in addition to drafts of the audited financials as and when received by the Company’s Board of Directors;

(iv) within 20 days prior to the conclusion of each fiscal year, the Company’s annual operating plan, operating and capital expenditure budgets, and financial forecasts, including cash flow projections covering proposed fundings, repayments, additional advances, investments and other cash receipts and disbursements, each for the following 3 fiscal years presented on a monthly basis for the next fiscal year and annually for the 2 subsequent fiscal years, all of which shall be in a format reasonably consistent with projections, budgets and forecasts theretofore provided to the Investor, and promptly following the preparation thereof, updates to any of the foregoing from time to time prepared by management of the Company;

(v) simultaneously with the delivery of the financial statements of the Company and its consolidated subsidiaries required by subsection (ii) above for the months of March, June, September and December, a management report prepared in reasonable detail, signed by a senior officer of the Company, describing the operations and financial condition of the Company and its consolidated subsidiaries for the portion

of the fiscal year then ended and discussing the reasons for any significant variations from the most recent projections (including the budget) for such fiscal year;

(vi) promptly after the filing thereof, copies of all statements, reports and other information of the Company or any of its consolidated subsidiaries files with the Commission or any national (domestic or foreign) securities exchange; and

(vii) concurrent with being sent or made available to board members, copies of all information packages and other materials provided to all of the members of the Board of Directors (or similar governing body) of the Company or any of its subsidiaries.

(b) Make appropriate officers and managers of the Company and its subsidiaries available at such times as reasonably requested (with reasonable prior notice and without unreasonable disruption to the Company’s business) by the Investor for consultation with the Investor or its designated representatives with respect to matters relating to the business and affairs of the Company and its subsidiaries, including significant changes in management personnel and compensation of employees, introduction of new products or new lines of business, material acquisitions or dispositions of plants and equipment, significant research and development programs, the purchasing or selling of important trademarks, licenses or concessions or the proposed commencement or compromise of significant litigation;

(c) Grant the Investor the right to designate two non-voting board observers who will be entitled to attend all meetings of the Board of Directors (or similar governing body, and each committee and subcommittee thereof) of the Company and each of its subsidiaries, participate in all deliberations of such Boards of Directors (or similar governing bodies, and each committee and subcommittee thereof) at any such meeting where the Investor’s observers are in attendance and receive copies of all materials provided to such boards of directors (or similar governing bodies, and each committee and subcommittee thereof); provided, that such observers shall have no voting rights with respect to actions taken or elected not to be taken by either such board of directors (or similar governing body, or any committee or subcommittee thereof) but shall have the full right to participate in all discussions of such proposed actions; provided, further, that the observers and the Investor shall treat all such information as proprietary and confidential in accordance with subsection (g) hereof. The Board of Directors of the Company may meet in executive sessions as it deems appropriate without such observers present to discuss, among other things, matters that may involve actual or perceived conflicts of interest with the Investor. The foregoing notwithstanding, the Investor shall only be entitled to appoint one observer if and to the extent that the Purchaser has one or more representatives serving on the Company’s Board of Directors pursuant to the terms of the Investor Rights Agreement entered into between the Purchaser and the Company.

(d) Reimburse the Investor for the reasonable and documented out-of-pocket expenses incurred by the two board observers in connection with attending all meetings of the Board of Directors (or similar governing body, or any committee or subcommittee thereof) in accordance with subsection (c) above;

(e) To the extent the Company informs its Board of Directors of any significant corporate actions, including extraordinary dividends, mergers, acquisitions or dispositions of assets, issuances of significant amounts of debt or equity and material amendments to the organizational documents of the Company or any of its subsidiaries, then the Company will (i)

use its reasonable best efforts to inform the Investor or its designated representatives in advance of any such action and (ii) provide the Investor or its designated representatives with the right to consult with and advise the Company and its subsidiaries with respect to such actions; and

(f) Notwithstanding anything to the contrary, the Company shall not be obligated pursuant to this letter agreement to provide access to any specific information the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel(s); provided that nothing contained in this letter shall limit the rights of any board member of the Company designated by the Purchaser to receive any information otherwise provided to the Company’s Board of Directors.

(g) The Investor agrees that it will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this letter agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this letter agreement by the Investor or its affiliates), (b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; or (d) must be disclosed pursuant to applicable law; provided, that the Investor promptly notified the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure. Notwithstanding the foregoing, the Investor may disclose confidential information to (i) its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company and (ii) its directors, officers, employees, general partners, limited partners, and advisors, in each case, so long as the Investor informs each such person that the information is confidential and directs each such person to maintain the confidentiality of such information.

The Company hereby agrees, and shall cause each of its subsidiaries to agree, to consider, in good faith, the recommendations of the Investor or its designated representatives in connection with the matters on which it is consulted as described above, recognizing that the ultimate discretion with respect to all such matters shall be retained by the Company and its subsidiaries.

If in compliance with the terms of the Warrant Agreement or the Financing Agreement, the Purchaser transfers all or any portion of its investment in any Warrants, Warrant Shares or Debt (or other securities of the Company into which such Debt may be converted or for which such Debt may be exchanged or exercised) to an affiliate or to any third party (or to a direct or indirect wholly-owned conduit subsidiary of any such third party) that is intended to qualify as a venture capital operating company under the United States Department of Labor Regulation published at 29 C.F.R. Section 2510.3-101(d)(3)(i), such affiliate or third party shall be afforded the same rights with respect to the Company afforded to the Investor hereunder and shall be treated, for such purposes, as a third party beneficiary hereunder; provided that in no event shall any of the Company or any of its subsidiaries be required to recognize or permit more than two board observers in the aggregate at any time.

At such time as the Purchaser and its affiliates cease to own, in the aggregate, at least 5 million Warrant Shares (assuming that all of the Warrants have been exercised, but without regard to limitation imposed by Section 1D of the Warrant), (1) the Investor shall only have the

rights provided by paragraphs (a)(i), (a)(ii)-(iv) (in each case, only to the extent that the Company is otherwise producing such financial statements, budgets or reports) and (b), (2) the Investor shall remain subject to the provisions of paragraphs (f) and (g), and (3) the other provisions of this letter shall terminate and be of no further force or effect.

This letter agreement and the rights and the duties of the parties hereto shall be governed by, and construed in accordance with, the laws of the State of New York and may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument.

DELTA FINANCIAL CORPORATION

By: /s/ Hugh Miller_________

Name: Hugh Miller

Title: President & CEO

Agreed and acknowledged as of the date first

above written:

AG REALTY FUND VII, L.P.

General Partner:

AGR VII LLC

By:

Angelo, Gordon & Co., L.P.

Manager

By:

/s/ Michael Gordon______

Name: Michael Gordon

Title:

AG REALTY FUND VII (TE), L.P.

General Partner:

AGR VII LLC

By:

Angelo, Gordon & Co., L.P.

Manager

By:

/s/ Michael Gordon_______

Name: Michael Gordon

Title: