- The Washington Times - Wednesday, March 14, 2007

LOS ANGELES (AP) — New Century Financial Corp. said yesterday it has received cease-and-desist orders from banking regulators in four states, claiming some subsidiaries of the troubled subprime mortgage lender have violated state laws.

Regulators from New York, New Hampshire, Massachusetts and New Jersey sent notices to the Irvine company on Tuesday, according to its filing yesterday with the Securities and Exchange Commission.

In their letters, the state regulators say New Century subsidiaries have failed to fund mortgages that closed and didn’t notify the states in a timely manner of financial woes.

Several of New Century’s creditors have cut or halted financing in recent days and demanded the subprime lender buy back loans it sold to them.

New Century, which lends money to home buyers with poor credit histories, has said it doesn’t have enough capital to satisfy its subsidiaries’ outstanding loan-repurchase obligations. The company has stopped accepting loan applications.

The state regulators demanded that the company create escrow accounts to hold fees from pending mortgage applications and from the transfer of outstanding mortgage applications to other lenders.

In the letters, the regulators also sought to keep New Century from paying dividends or bonuses to its officers, directors or shareholders.

The regulators also asked the company to turn over information on its subsidiaries’ businesses, including the status of outstanding mortgage applications and unfunded mortgage loans in each respective state.

New Jersey’s Department of Banking and Insurance said New Century has closed 59 home loans in the state that are not funded, while subsidiary Home123 has closed on eight such loans.

“We are working aggressively to refer consumers to the appropriate industry associations in an effort to assist consumers in reaching other lenders and will pursue every possible remedy for borrowers who have applications pending with these companies,” department Commissioner Steven M. Goldman said.

New Hampshire state banking Commissioner Peter Hildreth said New Century had failed to fund four mortgages after closing on them.

New Century said it was reviewing the states’ requests and had not yet determined whether to appeal but planned to comply.

The company also said it expects to receive similar orders from other states.

In its filing, New Century also said that one of its creditors, Barclays Bank PLC, has demanded that it buy back about $900 million in mortgage loans.

Barclays has said the company defaulted on its financial obligations and is seeking immediate repayment and termination of its financing agreement with the company, New Century said.

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