SECURITIES & EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------

                                 SCHEDULE 13G/A*
                                 (Rule 13d-102)

                                 Amendment No. 3

             INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
           TO RULES 13d-1(b), (c) AND (d) AND AMENDMENTS THERETO FILED
                              PURSUANT TO 13d-2(b)

                             Downey Financial Corp.
                                (Name of Issuer)

                              Class A Common Stock
                         (Title of Class of Securities)

                                    261018105
                                 (CUSIP Number)

                                December 31, 2007
             (Date of event which requires filing of this statement)


     Check the appropriate box to designate the rule pursuant to which this
Schedule 13G is filed:


     [ ]  Rule 13d-1(b)
     [X]  Rule 13d-1(c)
     [ ]  Rule 13d-1(d)




                           (Page 1 of 11 Pages)
----------------
     *The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.

     The information required in the remainder of this cover page shall not be
deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934 ("Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).





CUSIP No. 261018105                13G/A                   Page 2 of 11 Pages

----------------------------------------------------------------------------
     (1)    NAMES OF REPORTING PERSONS
            I.R.S. IDENTIFICATION NO.
            OF ABOVE PERSONS (ENTITIES ONLY)
                                          Tontine Overseas Associates, L.L.C.
-----------------------------------------------------------------------------
     (2)    CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
                                                                  (a)  [X]
                                                                  (b)  [ ]
-----------------------------------------------------------------------------
     (3)    SEC USE ONLY
-----------------------------------------------------------------------------
     (4)    CITIZENSHIP OR PLACE OF ORGANIZATION
                             Delaware
-----------------------------------------------------------------------------
NUMBER OF      (5)  SOLE VOTING POWER
                                       -0-
SHARES         ______________________________________________________________

BENEFICIALLY   (6)  SHARED VOTING POWER
                                       593,779
OWNED BY       ______________________________________________________________

EACH           (7)  SOLE DISPOSITIVE POWER
                                       -0-
REPORTING      ______________________________________________________________

PERSON WITH    (8)  SHARED DISPOSITIVE POWER
                                       593,779
-----------------------------------------------------------------------------
     (9)    AGGREGATE AMOUNT BENEFICIALLY OWNED
            BY EACH REPORTING PERSON
                                       593,779
-----------------------------------------------------------------------------
     (10)   CHECK BOX IF THE AGGREGATE AMOUNT
            IN ROW (9) EXCLUDES CERTAIN SHARES **                       [ ]
-----------------------------------------------------------------------------
     (11)   PERCENT OF CLASS REPRESENTED
            BY AMOUNT IN ROW (9)
                                       2.13%
-----------------------------------------------------------------------------
     (12)   TYPE OF REPORTING PERSON **
                                       IA
-----------------------------------------------------------------------------
                    ** SEE INSTRUCTIONS BEFORE FILLING OUT!





CUSIP No. 261018105                13G/A                   Page 3 of 11 Pages

----------------------------------------------------------------------------
     (1)    NAMES OF REPORTING PERSONS
            I.R.S. IDENTIFICATION NO.
            OF ABOVE PERSONS (ENTITIES ONLY)
                                          Tontine Partners, L.P.
-----------------------------------------------------------------------------
     (2)    CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
                                                                  (a)  [X]
                                                                  (b)  [ ]
-----------------------------------------------------------------------------
     (3)    SEC USE ONLY
-----------------------------------------------------------------------------
     (4)    CITIZENSHIP OR PLACE OF ORGANIZATION
                                       Delaware
-----------------------------------------------------------------------------
NUMBER OF      (5)  SOLE VOTING POWER
                                       -0-
SHARES         ______________________________________________________________

BENEFICIALLY   (6)  SHARED VOTING POWER
                                       231,350
OWNED BY       ______________________________________________________________

EACH           (7)  SOLE DISPOSITIVE POWER
                                       -0-
REPORTING      ______________________________________________________________

PERSON WITH    (8)  SHARED DISPOSITIVE POWER
                                       231,350
-----------------------------------------------------------------------------
     (9)    AGGREGATE AMOUNT BENEFICIALLY OWNED
            BY EACH REPORTING PERSON
                                       231,350
-----------------------------------------------------------------------------
     (10)   CHECK BOX IF THE AGGREGATE AMOUNT
            IN ROW (9) EXCLUDES CERTAIN SHARES **                       [ ]
-----------------------------------------------------------------------------
     (11)   PERCENT OF CLASS REPRESENTED
            BY AMOUNT IN ROW (9)
                                       0.83%
-----------------------------------------------------------------------------
     (12)   TYPE OF REPORTING PERSON ** PN
-----------------------------------------------------------------------------
                    ** SEE INSTRUCTIONS BEFORE FILLING OUT!





CUSIP No. 261018105                13G/A                   Page 4 of 11 Pages

----------------------------------------------------------------------------
     (1)    NAMES OF REPORTING PERSONS
            I.R.S. IDENTIFICATION NO.
            OF ABOVE PERSONS (ENTITIES ONLY)
                                          Tontine Financial Partners, L.P.
-----------------------------------------------------------------------------
     (2)    CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
                                                                  (a)  [X]
                                                                  (b)  [ ]
-----------------------------------------------------------------------------
     (3)    SEC USE ONLY
-----------------------------------------------------------------------------
     (4)    CITIZENSHIP OR PLACE OF ORGANIZATION
                                       Delaware
-----------------------------------------------------------------------------
NUMBER OF      (5)  SOLE VOTING POWER
                                      -0-
SHARES         ______________________________________________________________

BENEFICIALLY   (6)  SHARED VOTING POWER
                                      1,897,883
OWNED BY       ______________________________________________________________

EACH           (7)  SOLE DISPOSITIVE POWER
                                      -0-
REPORTING      ______________________________________________________________

PERSON WITH    (8)  SHARED DISPOSITIVE POWER
                                      1,897,883
-----------------------------------------------------------------------------
     (9)    AGGREGATE AMOUNT BENEFICIALLY OWNED
            BY EACH REPORTING PERSON
                                       1,897,883
-----------------------------------------------------------------------------
     (10)   CHECK BOX IF THE AGGREGATE AMOUNT
            IN ROW (9) EXCLUDES CERTAIN SHARES **                       [ ]
-----------------------------------------------------------------------------
     (11)   PERCENT OF CLASS REPRESENTED
            BY AMOUNT IN ROW (9)
                                       6.81%
-----------------------------------------------------------------------------
     (12)   TYPE OF REPORTING PERSON ** PN
-----------------------------------------------------------------------------
                    ** SEE INSTRUCTIONS BEFORE FILLING OUT!




CUSIP No. 261018105                13G/A                   Page 5 of 11 Pages

----------------------------------------------------------------------------
     (1)    NAMES OF REPORTING PERSONS
            I.R.S. IDENTIFICATION NO.
            OF ABOVE PERSONS (ENTITIES ONLY)
                                          Tontine Management, L.L.C.
-----------------------------------------------------------------------------
     (2)    CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
                                                                  (a)  [X]
                                                                  (b)  [ ]
-----------------------------------------------------------------------------
     (3)    SEC USE ONLY
-----------------------------------------------------------------------------
     (4)    CITIZENSHIP OR PLACE OF ORGANIZATION
                                       Delaware
-----------------------------------------------------------------------------
NUMBER OF      (5)  SOLE VOTING POWER
                                      -0-
SHARES         ______________________________________________________________

BENEFICIALLY   (6)  SHARED VOTING POWER
                                      2,129,233
OWNED BY       ______________________________________________________________

EACH           (7)  SOLE DISPOSITIVE POWER
                                      -0-
REPORTING      ______________________________________________________________

PERSON WITH    (8)  SHARED DISPOSITIVE POWER
                                      2,129,233
-----------------------------------------------------------------------------
     (9)    AGGREGATE AMOUNT BENEFICIALLY OWNED
            BY EACH REPORTING PERSON
                                      2,129,233
-----------------------------------------------------------------------------
     (10)   CHECK BOX IF THE AGGREGATE AMOUNT
            IN ROW (9) EXCLUDES CERTAIN SHARES **                       [ ]
-----------------------------------------------------------------------------
     (11)   PERCENT OF CLASS REPRESENTED
            BY AMOUNT IN ROW (9)
                                      7.64%
-----------------------------------------------------------------------------
     (12)   TYPE OF REPORTING PERSON **
                                      IA
-----------------------------------------------------------------------------
                    ** SEE INSTRUCTIONS BEFORE FILLING OUT!






CUSIP No. 261018105               13G/A              Page 6 of 11 Pages

----------------------------------------------------------------------------
     (1)    NAMES OF REPORTING PERSONS
            I.R.S. IDENTIFICATION NO.
            OF ABOVE PERSONS (ENTITIES ONLY)
                                                          Jeffrey L. Gendell
-----------------------------------------------------------------------------
     (2)    CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
                                                                  (a)  [X]
                                                                  (b)  [ ]
-----------------------------------------------------------------------------
     (3)    SEC USE ONLY
-----------------------------------------------------------------------------
     (4)    CITIZENSHIP OR PLACE OF ORGANIZATION
                                       United States
-----------------------------------------------------------------------------
NUMBER OF      (5)  SOLE VOTING POWER
                                       -0-
SHARES         ______________________________________________________________

BENEFICIALLY   (6)  SHARED VOTING POWER
                                       2,723,012
OWNED BY       ______________________________________________________________

EACH           (7)  SOLE DISPOSITIVE POWER
                                       -0-
REPORTING      ______________________________________________________________

PERSON WITH    (8)  SHARED DISPOSITIVE POWER
                                       2,723,012
-----------------------------------------------------------------------------
     (9)    AGGREGATE AMOUNT BENEFICIALLY OWNED
            BY EACH REPORTING PERSON
                                       2,723,012
-----------------------------------------------------------------------------
     (10)   CHECK BOX IF THE AGGREGATE AMOUNT
            IN ROW (9) EXCLUDES CERTAIN SHARES **                       [ ]
-----------------------------------------------------------------------------
     (11)   PERCENT OF CLASS REPRESENTED
            BY AMOUNT IN ROW (9)
                                       9.78%
-----------------------------------------------------------------------------
     (12)   TYPE OF REPORTING PERSON **
                                       IN
-----------------------------------------------------------------------------
                    ** SEE INSTRUCTIONS BEFORE FILLING OUT!






CUSIP No. 261018105                13G/A                 Page 7 of 11 Pages

The Schedule 13G/A filed on January 29, 2007 is hereby amended and restated by
this Amendment No. 3 to the Schedule 13G.

Item 1(a).     Name of Issuer:

     The name of the issuer is Downey Financial Corp. (the "Company").

Item 1(b).     Address of Issuer's Principal Executive Offices:

     The Company's principal executive offices are located at 3501 Jamboree
Road, Newport Beach, CA 92660.

Item 2(a).     Name of Person Filing:

     This statement is filed by:

          (i) Tontine Overseas Associates, L.L.C., a limited liability company
              organized under the laws of the State of Delaware
              ("TOA"), which serves as investment manager to Tontine Overseas
              Fund Ltd., a Cayman Islands Corporation ("TO"), TFP
              Overseas Fund, Ltd., a Cayman Islands exempted company
              ("TFPO"), with respect to the shares of Common Stock
              directly owned by TO and TFPO;

         (ii) Tontine Partners, L.P., a Delaware limited partnership ("TP")
              with respect to the shares of Common Stock directly owned by it;

        (iii) Tontine Financial Partners, L.P., a Delaware limited partnership
              ("TFP"), with respect to the shares of Common Stock directly owned
              by it;

         (iv) Tontine Management, L.L.C., a Delaware limited liability
              company organized under the laws of the State of Delaware ("TM"),
              with respect to the shares of Common Stock directly owned by TP;

          (v) Jeffrey L. Gendell, a United States citizen ("Mr. Gendell") with
              respect to the shares of Common Stock directly owned by himself,
              TO, TFPO and TP.

              The foregoing persons are hereinafter sometimes collectively
referred to as the "Reporting Persons." Any disclosures herein with respect to
persons other than the Reporting Persons are made on information and belief
after making inquiry to the appropriate party.





CUSIP No. 261018105                  13G/A                 Page 8 of 11 Pages

Item 2(b).     Address of Principal Business Office or, if None, Residence:

     The address of the business office of each of the Reporting Persons is 55
Railroad Avenue, Greenwich, Connecticut 06830.

Item 2(c).     Citizenship:

     See Item 2(a) above.

Item 2(d).     Title of Class of Securities:

     Common Stock, $0.01 par value (the "Common Stock")

Item 2(e).  CUSIP Number:

     261018105

Item 3. If this statement is filed pursuant to Rules 13d-1(b) or 13d-2(b) or
(c), check whether the person filing is a:

          (a)   [ ] Broker or dealer registered under Section 15 of the Act,

          (b)   [ ] Bank as defined in Section 3(a)(6) of the Act,

          (c)   [ ] Insurance Company as defined in Section 3(a)(19) of the
                    Act,

          (d)   [ ] Investment Company registered under Section 8 of the
                    Investment Company Act of 1940,

          (e)   [ ] Investment Adviser in accordance with Rule 13d-1
                    (b)(1)(ii)(E),

          (f)   [ ] Employee Benefit Plan or Endowment Fund in accordance
                    with 13d-1 (b)(1)(ii)(F),

          (g)   [ ] Parent Holding Company or control person in accordance
                    with Rule 13d-1 (b)(1)(ii)(G),

          (h)   [ ] Savings Association as defined in Section 3(b) of the
                    Federal Deposit Insurance Act,

          (i)   [ ] Church Plan that is excluded from the definition of an
                    investment company under Section 3(c)(14) of the Investment
                    Company Act of 1940,

          (j)   [ ] Group, in accordance with Rule 13d-1(b)(1)(ii)(J).

     Not applicable.






CUSIP No. 261018105                  13G/A                Page 9 of 11 Pages

Item 4.   Ownership.

    A.   Tontine Overseas Associates, L.L.C.
              (a) Amount beneficially owned:  593,779
              (b) Percent of class: 2.13% The percentages used herein and in
the rest of Item 4 are calculated based upon the 27,853,783 shares of Common
Stock issued and outstanding as of September 30, 2007 as reflected in the
Company's Form 10-Q for the fiscal year ended September 30, 2007.
              (c) (i) Sole power to vote or direct the vote: -0-
                 (ii) Shared power to vote or direct the vote: 593,779
                (iii) Sole power to dispose or direct the disposition: -0-
                 (iv) Shared power to dispose or direct the disposition: 593,779

    B.   Tontine Partners, L.P.
              (a) Amount beneficially owned: 231,350
              (b) Percent of class: 0.83%
              (c) (i) Sole power to vote or direct the vote: -0-
                 (ii) Shared power to vote or direct the vote: 231,350
                (iii) Sole power to dispose or direct the disposition: -0-
                 (iv) Shared power to dispose or direct the disposition: 231,350

    C.   Tontine Financial Partners, L.P.
              (a) Amount beneficially owned:  1,897,883
              (b) Percent of class: 6.81%
              (c) (i) Sole power to vote or direct the vote: -0-
                 (ii) Shared power to vote or direct the vote: 1,897,883
                (iii) Sole power to dispose or direct the disposition: -0-
                 (iv) Shared power to dispose or direct the disposition:
                      1,897,883

    D.   Tontine Management, L.L.C.
              (a) Amount beneficially owned:  2,129,233
              (b) Percent of class: 7.64%
              (c) (i) Sole power to vote or direct the vote: -0-
                 (ii) Shared power to vote or direct the vote: 2,129,233
                (iii) Sole power to dispose or direct the disposition: -0-
                 (iv) Shared power to dispose or direct the disposition:
                      2,129,233

    F. Jeffrey L. Gendell
              (a) Amount beneficially owned: 2,723,012
              (b) Percent of class:  9.78%
              (c) (i) Sole power to vote or direct the vote: -0-
                 (ii) Shared power to vote or direct the vote: 2,723,012
                (iii) Sole power to dispose or direct the disposition: -0-
                 (iv) Shared power to dispose or direct the disposition:
                      2,723,012





CUSIP No. 261018105                  13G/A                Page 10 of 11 Pages

Item 5.     Ownership of Five Percent or Less of a Class.

     Not applicable.

Item 6.     Ownership of More than Five Percent on Behalf of Another Person.

     TM, the general partner of TP and TFP, has the power to direct the affairs
of TP and TFP, including decisions respecting the disposition of the proceeds
from the sale of the shares of the Company. Mr. Gendell is the managing member
of TM and TOA, and in that capacity directs their operations. Each of the
clients of TOA has the power to direct the receipt of dividends from or the
proceeds of sale of such shares.

Item 7.     Identification and Classification of the Subsidiary Which Acquired
the Security Being Reported on by the Parent Holding Company.

     Not applicable.

Item 8.  Identification and Classification of Members of the Group.

     See Item 2.

Item 9.  Notice of Dissolution of Group.

     Not applicable.

Item 10.  Certification.

     Each of the Reporting Persons hereby makes the following certification:

          By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were not acquired and are not held for
the purpose of or with the effect of changing or influencing the control of the
issuer of the securities and were not acquired and are not held in connection
with or as a participant in any transaction having that purpose or effect.






CUSIP No. 261018105                 13G/A                 Page 11 of 11 Pages

SIGNATURES

After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.


DATED:  February 08, 2008

                                 /s/ JEFFREY L. GENDELL
                                 ---------------------------------------------
                                 Jeffrey L. Gendell, individually, and as
                                 managing member of
                                 Tontine Management, L.L.C.,
                                 general partner of
                                 Tontine Partners, L.P. and
                                 Tontine Financial Partners, L.P.
                                 managing member of
                                 Tontine Overseas Associates, L.L.C.