'Poor Credit Risks' Actively Work to Become Better Borrowers, Survey Finds; Debt Consolidation Top Motivation For Home Equity Loans

Business Wire, March 28, 2003

Business Editors

BALA CYNWYD, Pa.--(BUSINESS WIRE)--March 28, 2003

American Business Financial Services, Inc. (NASDAQ:ABFI) found, in its survey of potential borrowers with less than perfect credit, that the majority are actively taking steps to repair their credit rating and are using home equity loans for debt consolidation.

"The results confirm what we have long suspected," said ABFI Chairman and Chief Executive Officer Anthony J. Santilli, Jr. "Specifically, these individuals represent an underserved, but viable market. They are hardworking people, and access to funds is key to helping them restore their credit."

ABFI surveyed visitors to its www.UplandMortgage.com website who utilized the Company's EasyLoan Advisor(SM). The EasyLoan Advisor tool, one of the most technologically advanced of its kind, helps potential borrowers customize a home equity loan in real time, without negatively impacting individuals' credit the way many application processes do. More than 7,300 potential loan applicants who visited the site during February of 2003 were sent the survey via e-mail.

Santilli said the surveying initiative was done not only to learn more about the Company's primary marketplace, but also to educate the consumer lending community about the non-prime market. "According to industry sources, non-prime borrowers have pumped more than $1 trillion into the economy in the last 10 years," Santilli said "They are, in my opinion, one of the most important drivers of our great economy. We must do all we can to ensure these borrowers have access to funds and a way to get back on the road to financial health."

Of the people who responded to the survey, 62% said they were looking for a loan to consolidate debts. Among the remaining individuals, 15% said they would use a loan to make improvements to their home. Further, 66% of the respondents said they felt that a loan that was successfully paid off would help them repair their credit.

The survey also found that among individuals seeking loans, 86% use credit cards, and 45% have more than three credit cards in their name. "We feel extremely good about the fact that many of our borrowers may be removing debt from credit cards with rates that can be in excess of 20% and consolidating them into a single loan with rates that are much better than that," Santilli noted.

The survey found that 45% of the respondents had received some sort of formal training about how to manage money. "This finding confirms what we have been hearing for years from our borrowers," said Santilli. "Circumstances, not financial sophistication, or lack thereof, is what often leads to an impaired credit rating. Anecdotally, borrowers have told us that layoffs, health problems and family emergencies are typically what puts them at odds with their creditors from time to time."

However, the survey found that the majority of individuals with impaired credit have never worked with an agency that provides counseling for debt-related problems. Of the people who responded to the survey, only 24% have ever worked with a credit counselor. Santilli continued, "We feel strongly that access to funds, combined with access to the kind of counseling provided by our alliance with Consumer Credit Counseling Service of the Delaware Valley (CCCS), can create the one-two punch that many consumers need to restore their credit."

The survey respondents indicated that they felt mortgage rates may not drop any further in the coming months. When asked if they were waiting to lock in a rate because they felt rates would improve, 12% said yes, while 88% answered no.

Regarding the health of the economy, when asked whether they felt the economy would improve over the next six months - even amid a swirl of negative market and war news -- 57% reported they were optimistic.

American Business Financial Services, Inc. is a financial services company operating predominantly in the eastern and central portions of the United States. The Company originates business purpose loans and first and second mortgage loans through a combination of channels, including a national processing center located at its centralized operating office in Bala Cynwyd, Pennsylvania, a regional processing center in Roseland, New Jersey, and several retail branch offices.

For further information, contact Keith Bratz, VP--Corporate Communications, 610-617-7475.