Chief Financial Officer Employment Agreement

May 15, 1998


Mr. Albert Mandia 4 Sprucefield Court New Hope, PA 18976


Dear Al:


We are pleased to offer you employment as Chief Financial Officer for American Business Financial Services, Inc., ("ABFS" or "Company") reporting directly to me, at a base salary of $275,000 if annualized. In addition, you will be eligible for a Management Incentive Target Bonus of 40% of your salary, beginning fiscal year 1999 (July 1, 1998 through June 30, 1999). Payment of this bonus will be contingent upon you and the Company achieving specific goals and objectives, and will be paid upon completion of the Company's audited financial statements for its fiscal year end. These goals and objectives will be established and agreed upon by me and you. This offer of employment is contingent upon your formal acceptance by the end of the day on Friday, May 22, 1998, and upon your reporting to work on or before Monday, June 1, 1998.


You will also receive a monthly car allowance in the amount of $600 per month during your employment with the Company.


In addition, we are pleased to offer you options to purchase 12,500 shares of American Business Financial Services Common Stock. The price of these shares will be set at the closing market price on your first day of employment. The options will vest over a five year period with twenty percent (20%) vesting each year. You will be able to exercise your first twenty percent one year from your date of employment and forty percent two years from that date, and so forth through the five years. Upon vesting, you will have five years in which to exercise that portion of your option which vested. A more detailed explanation of the vesting provisions as well as all other terms and conditions of your stock option grant are specified in the Company's Employee Stock Option Plan. You will also be eligible to participate in the annual executive stock option award program each year.


Mr. Albert Mandia May 15, 1998 Page 2.


You will be ...