8-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
     PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


       Date of report (Date of earliest event reported): December 21, 2004


                   AMERICAN BUSINESS FINANCIAL SERVICES, INC.
                   ------------------------------------------
             (Exact name of registrant as specified in its charter)


            Delaware                   000-22474                 87-0418807
            --------                   ---------                 ----------
  (State or other jurisdiction        (Commission            (I.R.S. Employer
       of incorporation)              File Number)          Identification No.)


                     100 Penn Square East, Philadelphia, PA         19107
                     --------------------------------------         ------
                    (Address of principal executive offices)       (Zip Code)


                                  215-940-4000
                                  ------------
              (Registrant's telephone number, including area code)


                                 Not Applicable
                                 --------------
          (Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

     |_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)

     |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)

     |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))

     |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))






         All references to the "Company" in this Current Report on Form 8-K
("Current Report") refer to American Business Financial Services, Inc., a
Delaware corporation, and its subsidiaries, unless the context of the
description indicates otherwise.

         Some of the information in this Current Report may contain
forward-looking statements. You can identify these statements by words or
phrases such as "will likely result, " "may, " "are expected to, " "will
continue to," "is anticipated," "estimate," "believes," "projected," "intends
to" or other similar words. These forward-looking statements regarding the
Company's business and prospects are based upon numerous assumptions about
future conditions, which may ultimately prove to be inaccurate. Actual events
and results may materially differ from anticipated results described in those
statements. Forward-looking statements involve risks and uncertainties described
in the Company's reports filed pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), including "Business - Risk Factors" in the
Company's Annual Report on Form 10-K for the year ended June 30, 2004, which
could cause the Company's actual results to differ materially from historical
earnings and those presently anticipated. When considering forward-looking
statements, you should keep these risk factors in mind as well as the other
cautionary statements in this Current Report. You should not place undue
reliance on any forward-looking statement.

ITEM 1.01         ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

$30.0 Million (Formerly $23.0 Million) Residual Repurchase Facility

         On December 21, 2004, the Company and The Patriot Group, LLC
("Patriot") entered into the Amended and Restated Master Repurchase Agreement
(as amended and restated, the "amended repurchase facility"), which amended and
restated the interim repurchase facility, dated November 15, 2004, to increase
the amount under the facility to $30.0 million with the increase of
approximately $9.45 million referred to as the "holdback amount." The interim
repurchase facility provided for Patriot's purchase of $87.6 million of
interest-only strips held by a special purpose entity organized by the Company
to facilitate the transaction (the "Seller") for $23.0 million which the Company
is required to repurchase on the termination date for a repurchase amount
currently equal to $20.4 million.

         Pursuant to the amended repurchase facility, Patriot agreed to release
the holdback amount to the Seller provided that, no later than December 31,
2004, Patriot receives a legal opinion from counsel to the Company to the effect
that, among other things, (i) the Company's pending registration statement for
the sale of subordinated debentures filed with the Securities and Exchange
Commission (the "SEC") has been declared effective, and (ii) subordinated
debentures issued by the Company under such registration statement will be valid
and binding obligations of the Company, subject to customary enforcement
qualifications. The amended repurchase facility also extended the termination
date of the facility to the earliest of (i) June 26, 2006 (previously December
2, 2005 under the interim repurchase facility), (ii) at Patriot's option, upon
an event of default, and (iii) at the Seller's option, upon notice by Patriot
that a change of law as described in the amended repurchase facility has or
would have the effect of reducing Patriot's rate of return. In the event that
the holdback amount is released to the Seller, a repurchase premium of $360,000
is payable at such time and, on the one-year anniversary of the closing of the
amended repurchase facility, a second repurchase premium will be due in the
amount equal to 6.0% of the entire amount of the unpaid repurchase price on that
date.

         The interest-only strips transferred pursuant to the interim repurchase
facility had a book value of $87.6 million at September 30, 2004 and no
additional interest-only strips were transferred to Patriot in connection with
the amended repurchase facility. The amended repurchase facility carries a
pricing rate of 13.5% per annum over the term of the facility and required the
payment of a $140,000 commitment fee at closing. A payment of a repurchase
premium of $1.4 million had been required at closing of the interim repurchase
facility. Patriot is entitled to receive a quarterly maintenance fee of $125,000
on the 15th day of each March, June, September and December until the
termination date. If the interest-only strips are repurchased prior to June 26,
2006, the unpaid amount of all quarterly maintenance fees which would have been
paid through June 26, 2006 shall be paid on the termination date.



                                        2


         Under the terms of the amended repurchase facility, the Seller agreed
to repurchase the interest-only strips from Patriot on the termination date of
the repurchase facility in exchange for the Seller's payment of a repurchase
price presently equal to approximately $20.4 million, or $30.0 million in the
event the holdback amount is released to the Seller, plus any unpaid pricing
differential and fees under the agreement, less the sum of all permanent margin
payments made by the Seller. The Seller agreed to make permanent margin payments
to Patriot of at least $2.0 million per month from January 2005 through June
2005, and at least $1.5 million per month thereafter during the term of the
amended repurchase facility. All income payments on the interest-only strips
purchased by Patriot in connection with the facility will be received by
Patriot, applied to the obligations owed to Patriot under the facility and
considered as permanent margin payments, except that income payments received
during December 2004, less amounts sufficient to pay the pricing differential
and monitoring fee for November 2004 and December 2004, were remitted to the
Seller; provided, however, to the extent the income payments during December
2004 exceed $2.1 million, the excess amount will be retained by Patriot and
considered as permanent margin payments. The Seller received a payment of
approximately $1.16 million at closing representing income payments received
during December.

         Although the amended repurchase facility is structured as a sale and
not a loan to the Company, the Company granted Patriot a security interest in
all of the interest-only strips transferred pursuant to the amended repurchase
facility and all related assets, any rights of the Seller or its affiliates to
effect a cleanup call with respect to the securitizations related to the
interest-only strips, and any rights to purchase delinquent loans in the
underlying securitizations, the exercise of which may only be controlled by
Patriot upon an event of default and notice to the Seller of the desire to
control the exercise of such rights. To secure the Company's obligations under
the facility, the Seller also pledged to Patriot the stock of a wholly-owned
entity which owns an interest-only strip with a book value of $23.2 million and
the Company pledged the stock of a subsidiary which indirectly holds an
ownership interest, referred to as an R certificate, in the Seller and holds an
R certificate in another special purpose vehicle formed by the Company. In
addition, as additional collateral, one of the Company's subsidiaries granted
Patriot an interest in its servicing advances and fees in connection with its
servicing activities under the Company's securitizations and warehouse
facilities, the amount of which outstanding servicing advances was not less than
$37.0 million as of November 30, 2004.

         The amended repurchase facility contains representations, warranties,
conditions, covenants and events of default customary for facilities of this
type. The amended repurchase facility contains customary and other on-going
conditions pursuant to which the Company will be required (i) to maintain at all
times after December 31, 2004 an effective registration statement with the SEC
for the sale of at least $30.0 million of subordinated debentures; (ii) to
maintain its ability to sell or issue its subordinated debentures or senior
collateralized subordinated notes, except for the inability to sell or issue
subordinated debentures or senior collateralized subordinated notes (a) on or
after December 10, 2004 for more than three consecutive weeks or (b) on more
than two occasions during the term of the amended repurchase facility
irrespective of the length of time of any such two occasions; (iii) to satisfy
all requirements for the continued listing of its common stock on the NASDAQ
National Market, with a delisting notification to be considered a default under
the amended repurchase facility subject to the cure period or appeal process
provided in the applicable NASDAQ listings standards or regulations; (iv) to
retain Messrs. Santilli, Ruben and Mandia in their current positions at the
Company or to secure a replacement employee reasonably satisfactory to Patriot
during the term of the amended repurchase facility; (v) to assign to Patriot a
"key man" life insurance policy equal to at least $3.0 million; and (vi) to
amend or acknowledge certain agreements entered into in connection with the
interim repurchase facility in order to reflect the terms of the amended
repurchase facility.



                                        3


         In addition, the amended repurchase facility requires that there must
not have occurred any material adverse change or effect as described in the
agreement and provides as a condition precedent that Patriot must have entered
into a letter agreement pursuant to which Patriot conditionally agrees to
release its security interest in certain servicing advances, which interest was
granted under the interim repurchase facility, upon a sale of these assets to a
third party unrelated to the Company. The amended repurchase facility also
requires that, on or before December 24, 2004, (i) a subsidiary of the Seller
whose stock was pledged by the Seller as collateral under the amended repurchase
facility must agree to prohibit or otherwise restrict the further pledge or
transfer of its assets or the incurrence of additional indebtedness, as
applicable, and (ii) a payment direction be given by the Seller and the
subsidiary referenced in clause (i) above to direct certain cash flows received
on the interest-only strips owned by such subsidiary to Patriot in order to
satisfy any obligations outstanding under the facility, which amounts Patriot
agreed to remit to the Seller after the satisfaction of any payments then due to
Patriot provided that no event of default exists under the facility.

         The failure to satisfy any of the initial or on-going conditions
contained in the amended repurchase facility or the loss of servicing rights
under more than two of the Company's outstanding securitizations or a default
under any warehouse facility constitutes an event of default which will
accelerate payment of amounts due under the amended repurchase facility and
require the Seller to repurchase immediately the interest-only strips sold to
Patriot. The agreement also provides that, in the event of an event of default,
if the Seller is unable to repurchase the interest-only strips sold to Patriot
and pay all obligations due to Patriot pursuant to the terms of the agreement,
Patriot may sell the interest-only strips to satisfy all obligations, including
the repurchase price, fees and expenses, owed to Patriot under the amended
repurchase facility. Any excess proceeds of sale after satisfaction of such
obligations to Patriot are to be paid to the Seller. The Company also
acknowledged that (i) assessments of the market value of the interest-only
strips and the related assets transferred to Patriot pursuant to this agreement
will be made by Patriot in its sole discretion, and (ii) the Seller will not
receive any cash flows from the interest-only strips until the obligations under
the facility are satisfied.

         The amended repurchase facility will be accounted for as a financing
transaction with the assets transferred to Patriot retained on the Company's
balance sheet and the right to repurchase recorded as a liability on the balance
sheet.

Second Amendment and Restatement of the Amended and Restated Security Agreement
Related to Senior Collateralized Subordinated Notes

         On December 21, 2004, certain of the Company's subsidiaries (each a
"grantor" and, collectively, the "grantors") entered into a second amended and
restated security agreement (the "security agreement") dated December 21, 2004
with U.S. Bank, National Association (the "secured party"), as trustee for the
holders of the senior collateralized subordinated notes issued in the prior two
exchange offers engaged in by the Company and to be issued in the third exchange
offer in which the Company is currently engaged (collectively,
"securityholders"), to reconfirm the prior grant to the secured party of a
security interest in the right to receive certain cash flows arising out of each
grantor's ownership interest in ABFS Warehouse Trust 2003-1 ("Trust 2003-1").

         Pursuant to the security agreement, each grantor confirmed and granted
to the secured party for the benefit of the securityholders a continuing lien on
and security interest in each grantor's rights with respect to each R
certificate (collectively "R certificates") held by the applicable grantor in
Trust 2003-1, including each grantor's right to receive all cash due under the
Trust 2003-1 trust agreement (the "Trust 2003-1 payment intangibles"), and all
proceeds, products, offspring, and profits related to the R certificate
(collectively, the "collateral"). Upon the occurrence of a triggering event, as
defined below, the grantor's and secured party's rights with respect to the R
certificates are limited solely to the right to receive the Trust 2003-1 payment
intangibles. For this purpose, Trust 2003-1 payment intangibles generally refer
to cash flows generating from the interest-only strips held in the Trust 2003-1.



                                        4


         A "triggering event" shall mean: (a) a default or an event of default
under any of the indentures entered into by the Company in connection with the
prior two exchange offers and to be entered into by the Company in connection
with the third exchange offer (collectively, the "indentures"), or any documents
related to the indentures, that results in a right by the secured party or any
of the securityholders, irrespective of whether exercised, to accelerate the
maturity of the obligations owed to the secured party or any of the
securityholders; (b) the acceleration by the secured party or any of the
securityholders of the obligations owed to any of them under the indentures or
any documents related to the indentures, or (c) the exercise by the secured
party or any of the securityholders of their enforcement rights or remedies or
any other action by the secured party or any of the securityholders to exercise
control over Trust 2003-1.

         Under the security agreement, in addition to any other legend required
to be reflected on the R certificates, each R certificate will be legended to
reflect certain restrictions as described in the trust agreement related to
Trust 2003-1.

         The parties to the security agreement agreed that, if at any time, any
grantor transfers, exchanges, releases or disposes of any portion of the
collateral in conformity with the provisions of the security agreement or the
indentures in connection with any financing, re-financing, sale or exchange
transaction, the security interest granted in the security agreement shall,
without further action on the part of any grantor or secured party, be
automatically released.

         The foregoing brief summaries of agreements entered into by the Company
are not intended to be complete, and are qualified in their entirety by
reference to the agreements, which are incorporated by reference from the
Company's reports filed pursuant to the Exchange Act.

ITEM 2.03.        CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
                  UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF THE REGISTRANT.

$30.0  Million (Formerly $23.0 Million) Residual Repurchase Facility

         On December 21, 2004, the Company and Patriot entered into the Amended
and Restated Master Repurchase Agreement, which amended and restated the
Company's $23.0 million interim residual repurchase facility, dated November 15,
2004, to provide for a $30.0 million residual repurchase facility subject to the
Company's satisfaction of certain conditions which facility and conditions are
described above in Item 1.01.


                                        5



ITEM 8.01.   OTHER EVENTS.

         On December 23, 2004, the Company issued the press release attached
hereto as Exhibit 99.1 related to its current liquidity situation which is
incorporated by reference herein.

ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial statements of businesses acquired.

             None.

(b) Pro forma financial information.

             None.

(c) Exhibits.

             The following exhibit is filed herewith:

             Exhibit
             Number     Description
             ------     -----------


               99.1    Press release issued by the Company on December 23, 2004.













                                   SIGNATURES

         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 hereunto duly authorized.

Dated:  December 23, 2004

                                      AMERICAN BUSINESS FINANCIAL SERVICES, INC.


                                      By:        /s/ Stephen M. Giroux
                                             -----------------------------------
                                      Name:  Stephen M. Giroux
                                      Title: Executive Vice President,
                                             General Counsel and Secretary






                                        6

EX-99

FOR IMMEDIATE RELEASE

              AMERICAN BUSINESS FINANCIAL SERVICES, INC. ANNOUNCES
        LIQUIDITY ISSUES AND INABILITY TO REPAY MATURING DEBT OBLIGATIONS



         Philadelphia, PA ... December 23, 2004 ... American Business Financial
Services, Inc. (ABFS) (NASDAQ: ABFI), today announced it filed a registration
statement with the Securities and Exchange Commission in October 2004 and is
unable to sell subordinated debentures until this registration statement is
declared effective. This delay continues to adversely affect the Company's
liquidity. The Company is unable to predict whether or when it will get through
the SEC registration process or the results of such process and, as a result,
the Company is unable to determine at this time when or whether it will be able
to commence sales of the subordinated debentures under the new registration
statement.

         The Company's limited ability to sell subordinated debt during the
second quarter of fiscal 2005 and the level of subdebt redemptions experienced
during this period seriously depleted the Company's cash. As a result, the
Company is currently unable to make principal and interest payments when due
under the terms of the indentures relating to the Company's subordinated
debentures and senior collateralized subordinated notes. The Company's inability
to make principal and interest payments when due creates an event of default
under the terms of these indentures. As a result of the foregoing, the Company
may seek protection under the federal bankruptcy laws or may be forced into an
involuntary bankruptcy filing. The Company is preparing for this strategic
alternative should it become necessary.

         As a result of the Company's continuing liquidity issues, including its
limited ability to sell subordinated debentures during the second quarter of
fiscal 2005, the Company is currently not in compliance with several
requirements in both of its credit facilities. Under the terms of these credit
facilities, this noncompliance creates an event of default and the lenders may
declare all amounts outstanding under the facilities immediately due and
payable; however, to date, the lenders have not elected to take such action. An
event of default under these credit facilities also creates an event of default
under other debt instruments to which the Company is a party. The Company is in
discussions with its lenders regarding these defaults. There can be no assurance
that the Company will be able to obtain the necessary waivers or that the
waivers will not contain conditions that are unacceptable to the Company. The
Company has also received a notice from the landlord of its Philadelphia
facility that the Company is in default under its lease.

         As previously disclosed, at various times since June 30, 2003, the
Company has been also been out of compliance with the net worth requirement in
several of its pooling and servicing agreements and sale and servicing
agreements (collectively referred to in this document as the servicing
agreements) and has been required to obtain waivers from and amendments to these
agreements. As a result of the amendments to the Company's servicing agreements,
all of the Company's servicing agreements associated with bond insurers now
provide for term-to-term servicing and, in the case of its servicing agreements
with two bond insurers, the Company's rights as servicer may be terminated at
the expiration of a servicing term in the sole discretion of the bond insurer.
The waiver of the net worth covenant, and the reappointment of the Company as a
servicer that it had received from one of the Company's bond insurers expired on
December 14, 2004. As a condition for further extensions and waivers, this bond
insurer required the Company to appoint a backup servicer and satisfy other
requirements related to the servicing of these loans. Although the Company
expects to obtain the necessary waiver and extension of the servicing agreement,
there can be no assurance that the Company will continue to receive the waivers
and servicing agreement extensions the Company needs to operate or that such
waivers or extensions will not contain conditions that are unacceptable to the
Company. Moreover, the Company was also notified of an event of default under
the amended servicing agreement by one of the Company's bond insurers.


         In addition, as a result of these developments, the Company has
determined to postpone until further notice its annual meeting of shareholders
previously scheduled for December 27, 2004 at 3:00 p.m. The Company has also
determined to postpone its contemplated closing of an exchange offer which was
previously scheduled to close on December 31, 2004.

         American Business Financial Services, Inc., together with its
subsidiaries, is a financial services organization operating mainly in the
eastern and central portions of the United States and California. The Company
originates, sells and services home mortgage loans through its principal direct
and indirect subsidiaries.

         For further information, contact Keith Bratz, VP--Corporate
Communications, 215-940-4525 or Bruce Boyle at 215-850-4639.

                                      # # #

         Certain statements contained in this press release, which are not
historical facts, may be deemed to be forward-looking statements under federal
securities laws. There are many important factors that could cause American
Business Financial Services, Inc. and its subsidiaries' actual results to differ
materially from those indicated in the forward-looking statements. Such factors
include, but are not limited to, ability to obtain financing, amount of debt
outstanding, restrictive covenants in debt instruments, ability to successfully
implement changes in business strategy, ability to maintain the listing on the
NASDAQ National Market System, valuation of the interest-only strips and
servicing rights retained by the Company, general economic conditions, including
interest rate risk, future residential real estate values, regulatory changes
(legislative or otherwise) affecting the mortgage lending and real estate
industries, regulatory investigations of lending practices, lending to
credit-impaired borrowers, competition, demand for the Company's products,
relationships with brokers, loan prepayment rates, delinquency and default
rates, access to securitization markets, changes in factors influencing or
interruptions in securitization and whole loan sale markets and other risks
identified in the Company's Securities and Exchange Commission filings.