8-K

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                       Pursuant to Section 13 or 15(D) of
                      The Securities Exchange Act of 1934

       Date of Report (Date of Earliest Event Reported) January 28, 2000

                           LIFE FINANCIAL CORPORATION
               (Exact Name of Registrant as Specified in Charter)



                                                    
   DELAWARE                              0-22193            33-0743196
(State or Other Jurisdiction      (Commission File No.)   (IRS Employer
   of Incorporation)                                      Identification No.)

10540 Magnolia Avenue, Suite B, Riverside CA              92505-1814
  (Address of Principal Executive Office)                 (Zip Code)


                                 (909) 637-4000
              (Registrant's Telephone Number, Including Area Code)


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ITEM 5.   OTHER EVENTS

     On January 28, 2000, Life Financial Corporation (the "Registrant")
announced that it had completed the sale of the Registrant's remaining residual
mortgage backed securities (the "Securities") retained from securitization and
the related mortgage servicing rights (the "Servicing Rights") owned by the
Registrant's subsidiary, LIFE Bank (the "Bank") for an amount valued at $19.3
million in cash and other consideration.  On January 28, 2000, simultaneous with
the Registrant's sale of the Securities to the Bank, the Securities were sold by
the Bank to Bear Stearns & Co. Inc. and the Servicing Rights were sold to EMC
Mortgage Corporation.

ITEM 7.   FINANCIAL STATEMENTS, PRO FORM FINANCIAL INFORMATION AND EXHIBITS


          (a) Financial Statements of business acquired
                      Not Applicable

          (b) Proforma Financial Information
                      Not Applicable

          (c) Exhibits

              Item No.    Exhibit Index

              99.1        Press Release dated February 1, 2000


                                   SIGNATURE
                                   ---------

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                    LIFE FINANCIAL CORPORATION


                                    By:   /s/   Robert K. Riley
                                          ----  ---------------
                                          Robert K. Riley
                                          President and Chief Executive Officer
                                          February 1, 2000


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                                 EXHIBIT INDEX

      Exhibit Number               Description                    Page No.

          99.1         Press Release dated February 1, 2000          4

                                       3

EX-99.1

                                                             [LOGO APPEARS HERE]

News Release

                                                                        Contact:
                                                                W. Todd Peterson
                                                         Chief Financial Officer
                                                                    909.637.4095

FOR IMMEDIATE RELEASE

   LIFE Financial Corporation Completes Sale of Residual Assets and Mortgage
                       Servicing on All Securitizations

     RIVERSIDE, CALIFORNIA (February 1, 2000) - LIFE Financial Corporation
(NASDAQ: LFCO), today announced that it has completed a comprehensive
transaction which sold the Company's remaining residual mortgage backed
securities retained from securitization and related mortgage servicing rights
for an amount valued at $19.3 million in cash and other consideration. The
transaction, which was executed on December 31, 1999, includes the Company's
remaining residual securities and mortgage servicing for the following
securitizations:

 .  LIFE Financial Home Loan Owner Trust 1997-2,

 .  LIFE Financial Home Loan Owner Trust 1997-3, and

 .  LIFE Bank Asset Backed Certificates, Series 1998-1.


     With the completion of this transaction, the Company realized a one-time
after-tax loss of approximately $16.8 million and achieved three critical
objectives:

 .  the retirement of  $15.4 million in residual financing from PaineWebber,

 .  reduced outstandings on $10.0 million Bank of America revolving line of
   credit from $2.5 million to $0, and

 .  eliminated approximately $2.5 to $3.0 million annual federal tax obligations
   from excess inclusion income from the residual securities.

     "This strategic transaction eliminates underperforming assets and double
leverage at the Parent Company," stated Robert K. Riley, President and Chief
Executive Officer. "By selling the residual securities we have more closely
aligned the Company's capital structure with its core operating business. After
evaluating the previous three-years and expected five-year performance of the
residual securities, we determined that the Parent Company would be required to
pull approximately $8.0 to $10.0 million in capital from LIFE Bank to meet debt
and tax obligations. The decision to sell the residual securities stemmed from
the uncertainty of securing long-term financing for the Company's residual
securities, future performance of the residual securities, and the future
effects on the consolidated Company's earnings and Parent Company cash flow."

FORWARD-LOOKING COMMENTS

The statements contained in this release that are not historical facts are
forward-looking statements based on management's current expectations and
beliefs concerning future developments and their potential effects on the
Company. There can be no assurance that future developments affecting the
Company will be those anticipated by management. Actual results may differ from
those projected in the forward-looking statements. These forward-looking
statements involve risks and uncertainties. These include, but are not limited
to, the following risks:

 .  Changes in the performance of the financial markets,


 .  Changes in the demand for and market acceptance of LIFE's products,

 .  Changes in general economic conditions including interest rates, presence of
   competitors with greater financial resources, and the impact of competitive
   products and pricing,

 .  The effect of the Company's policies,

 .  The continued availability of adequate funding sources,

 .  Actual prepayment rates and credit losses of loans sold as compared to
   prepayment rates and credit losses assumed by the Company at the time of sale
   for purposes of its gain on sale computations,

 .  The effect of changes in market interest rates on the spread between the
   coupon rate on loans sold and the pass through rate on securities backed by
   such loans issued by the Company in securitization transactions and on the
   discount rate assumed by the Company in its gain on sale computations, and

 .  Various legal, regulatory and litigation risks.


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