1 HAWTHORNE FINANCIAL CORPORATION NEWS RELEASE For Immediate Release For Further Information, Contact Norman Morales Executive Vice President and Chief Financial Officer (310) 725-5000 Hawthorne Financial Corporation Announces Exchange Offer for its 12-1/2% Notes due 2004 El Segundo, California, February 23, 1998 -- Hawthorne Financial Corporation (NASDAQ:HTHR) announced today the commencement of an offer to exchange its $40 million aggregate principal amount of restricted 12-1/2% Notes due 2004 outstanding for a like amount of its registered 12-1/2% Notes due 2004. The exchange offer is being conducted in accordance with the terms of the initial issuance of the Notes on December 31, 1997, and is being made upon the terms and conditions set forth in a Prospectus and in a related Letter of Transmittal which are being provided to holders of record of the Notes. The exchange offer is not conditioned on any amount of Notes being exchanged. The exchange offer is scheduled to expire at 5:00 p.m., Eastern Time, on March 25, 1998, unless extended. 4