|  | | 2007 News and Press Releases | | |
HEADLINE NEWS:
New Century, Biggest Subprime Casualty, Goes Bankrupt (Update2)
Bloomberg. April 2, 2007
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EXCERPT: New Century Financial Corp. became the biggest subprime mortgage company to go bankrupt after the lender, which specialized in loans to people with poor credit records, was overwhelmed by customer defaults. The company filed for Chapter 11 protection today in Wilmington, Delaware, from creditors that include Morgan Stanley and Goldman Sachs Group Inc. About 3,200 people, more than half the workforce, will lose their jobs at the Irvine, California- based company, which said it agreed to sell its mortgage billings and collections unit to Carrington Capital Management LLC for $139 million. New Century rode the U.S. housing boom to become the largest independent provider of mortgages to borrowers with low credit ratings, only to collapse into insolvency as a rising number of customers failed to repay their loans. New Century extended about $60 billion in loans last year, second only to London-based HSBC Holdings Plc in total U.S. subprime mortgages granted. ``They're clearly going to be the poster child for bad practices in the mortgage industry,'' said Matthew Howlett, an analyst at Fox-Pitt Kelton in New York. ``When all is said and done, the management team will be to blame.'' … Criminal Probe U.S. prosecutors have begun a criminal probe of accounting errors and trading in securities at New Century, the company said March 2 in a filing with the U.S. Securities and Exchange Commission. Since then, more than a dozen states have told the company to halt operations, citing complaints from borrowers that their loans weren't being funded. New Century had said it needed concessions from its own lenders to stay in business. |
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