Delta Financial Corp., which had been accused of predatory lending, reached an agreement Wednesday with the New York State Attorney General's Office that will cost it about $6 million.

Under the agreement an-nounced by the Attorney General, the subprime lender will lower loan payments on transactions that the state said were illegal. It also agreed to revamp its loan guidelines to settle the predatory lending charges.

In addition, the lender will end payments to brokers who secure higher- rate loans for it and reform its underwriting guidelines to ensure that borrowers have enough money left to live on after making their monthly payments to Delta.

A third-party monitor will be appointed to survey Delta's loan files for the next three years, checking for compliance with civil rights, banking, and consumer fraud laws.

Attorney General Eliot Spitzer charged Delta with making over 1,000 illegal high-interest home equity loans to low-income residents in Brooklyn and Queens over the past three years.

Delta said in a written statement Wednesday that it "has not violated any law" and that it decided to settle after weighing the "time and expense involved in protracted litigation."

The deal, which caps a five-month investigation by the state agency, is expected to raise the bar for settlements in similar cases.

The New York Attorney General's Office and its counterparts across the country are said to be conducting investigations into predatory lending practices by banks and nonbanks.

"This is the first significant subprime lending settlement by a government agency," said Andrew Sandler, a lending attorney with Skadden, Arps, Meagher & Flom in Washington.

Bankers Trust, which serves as trustee for several of Delta's securitized loan pools, was named as co-defendant in a civil case against Delta said to spark the Attorney General's investigation.

Bankers Trust officials did not return phone calls.

A spokesman for Mr. Spitzer said that the investigation was continuing but that he "didn't have any specifics."

Delta investors were unfazed by the news, and the company closed Wednesday up 6%, to $6.562.

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