New Century stops lending as lenders pull credit (2nd mtg co in as many days)

[UpInArms]

http://www.reuters.com/articlePrint?articleId=USN0840271420070308

NEW YORK (Reuters) - New Century Financial Corp. (NEW.N: Quote, Profile, Research), whose shares fell 25 percent on Thursday amid speculation it would seek bankruptcy protection, said it has received $265 million in financing, but stopped accepting loan applications after some lenders blocked its credit lines.

The real estate investment trust, which offers mortgages to people with poor credit histories, also said the unidentified lender agreed to refinance $710 million of mortgage loans.

Irvine, California-based New Century has been the largest independent U.S. subprime lender, but said its ability to make loans is "substantially limited" because of restrictions by its lenders. It said it expects to again accept applications "as soon as practicable" but offered "no assurance" that it would.

"Like everyone else, they misjudged and didn't keep track of how badly their loans were performing, and when they found out, they weren't well capitalized enough to deal with it," said Allan Berliant, an asset-backed portfolio manager at GMO in Boston, which owns some bonds backed by New Century loans.

<snip>

Earlier this week, another large subprime lender, Santa Monica, California's Fremont General Corp. (FMT.N: Quote, Profile, Research), stopped making loans, and put many of its 2,400 subprime workers on paid leave. It is trying to sell its subprime unit.

...more...

[seriousstan]

1. This is what happens when you offers mortgages to people with poor credit histories.

How hard is that to see?