- The Washington Times - Monday, March 12, 2007

NEW YORK (AP) — New Century Financial Corp. said yesterday that all of its lenders have cut funding or announced their intent to halt financing after the subprime mortgage lender failed to make payments, pushing the company further toward bankruptcy.

“The company and its subsidiaries do not have sufficient liquidity to satisfy their outstanding repurchase obligations under the company’s existing financing arrangements,” the nation’s second-largest subprime lender said in a filing with the Securities and Exchange Commission.

New Century, which lends money to prospective home buyers who have poor credit histories, uses short-term borrowing to finance mortgage-loan originations and purchases. The company said there is no guarantee it will receive additional financing.

“If the company and its subsidiaries are not able to satisfy their repurchase obligations, one or more of the company’s lenders may seek to liquidate the mortgage loans or other assets,” New Century said.

The company received letters from Wall Street lenders including Bank of America, Goldman Sachs, Morgan Stanley and Citigroup charging events of default.

On Thursday, New Century said it stopped accepting all new loan applications because it was short on financing. The company faces a slew of investor lawsuits and an investigation by the U.S. Attorney’s Office for the Central District of California.

Its stock has been hammered by investors in recent weeks, falling from around $30 a month ago to close Friday at $3.21 on the New York Stock Exchange. Shares plummeted $1.55, or 48 percent, to finish yesterday at $1.66.

As many as 1.5 million more Americans may lose their homes, another 100,000 people in housing-related industries could be fired, and an estimated 100 additional subprime mortgage companies that lend money to people with bad or limited credit may go under, according to real estate agents, economists, analysts and a Federal Reserve governor.

Mortgage defaults over the next two years may climb to $225 billion, probably not enough to be a drag on the U.S. economy, according to debt strategists at Lehman Brothers Holdings Inc.

The New York Stock Exchange halted trading of New Century yesterday morning while it decided whether to keep listing the company’s securities in light of the liquidity problems.

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