New Century files for bankruptcy; selling units

[Roland99]

Source: MarketWatch

New Century Financial filed for bankruptcy protection on Monday and said it would lay off 3,200 people, or half its workforce, immediately as the second-largest subprime mortgage lender succumbed to a credit crunch in the sector.

New Century shares fell 4.7% to $1.01 during afternoon trading on Monday. The stock was trading above $30 at the start of 2007.

The company filed for Chapter 11 bankruptcy in Delaware. Creditors include many of Wall Street's biggest banks including Goldman Sachs and Lehman Brothers.

...

New Century also said it agreed to sell its mortgage servicing business to Carrington Capital Management LLC, an affiliated investment firm, for about $139 million. The company is also selling some of its loans and residual interests in some securitized loan pools to Greenwich Capital for roughly $50 million.

Read more: http://www.marketwatch.com/news/story/new-century-files-bankruptcy-fire/story.aspx?guid=%7B7C56E86A%2DCF67%2D4545%2D8CC4%2DE727D21CFB74%7D

[whistle]

1. Who exactly is New Century Financial and why is the bankruptcy

...of this company critical? Were they one of the companies that testified before congress about two weeks ago that was televised over C-Span?

<snip>
New Century's financial backers pulled back in February and the company stopped making loans in early March. The company, which was restating results to fix accounting problems, also faces several investigations including a federal criminal probe.

"The market for subprime mortgages changed drastically, which hurt all subprime lenders. New Century's accounting issues only exacerbated its decline," Zack Gast, an analyst at the Center for Financial Research and Analysis, said. "At this point we are waiting for additional information to see the extent of losses equity and debt holders will need to take."

New Century Chief Executive Brad Morrice said he regretted the move but added that, "given the sudden and significant challenges facing our industry," bankruptcy was the best way for the company to sell its servicing and loan origination businesses to other firms. <end>

[youngdem]

2. Canary in the coal mine

They are a big subprime lender, and when someone like them doesn't even bother to reorganize to attempt to survive, you can bet their underlying financial health is a pile of dog shit.

This doesn't bode well for other subprime lenders, because if a large one like New Century is in trouble with their risk spread over one of the larger subprime pools, then you can bet it looks worse for others.

[whistle]

4. Yes, I see what you mean....

...total lack of Federal Lending review and oversight. The Alan Greenspan scheme of financial derivatives and highly leveraged hedge funds fraud finally coming to a peak and threatening the collapse of the central banking system.

[matcom]

6. actually what is happening here is Wall Street is shoving out the little guys

Wall Street has decided it wants to own the subprime market and they are buying the smaller lenders for pennies on the dollar. Basically saying 'fuck you', we just won't buy any of your paper if you don't sell out to us.

Subprime FICO requirements have changed a bit but that is simply knee-jerk reactions.

[EST]

3. What lies!

The market for subprimes did not "change drastically," as stated. The cumulative total of subprime loans on which the borrower had to default due to underemployment, improper vetting and all the other borderline illegal tactics used to generate money for the greedy simply has reached the breaking point.
I realize there is going to be a huge upheaval due to the falling market and millions are going to suffer, but I cannot help the feeling of smug satisfaction that a huge bunch of these market hogs are going to lose, big time. There are lots of tall buildings around, pick the one that appeals...

[Laughing Mirror]

5. Does this mean no more bribery $$ to Hillary & Co

& all her cohorts on the Hill for keeping these predatory scams legal for so long.

[Heidi]

7. Kick.

:kick:

[Omaha Steve]

8. Major Home Lender Files for Bankruptcy

Source: AP

Major Home Lender Files for Bankruptcy

Monday April 2, 6:19 PM EDT

LOS ANGELES (AP) — New Century Financial Corp., once the nation's second-largest provider of home loans to high-risk borrowers, filed for bankruptcy protection on Monday, the victim of its own financial missteps as well as pressures felt by its rival lenders.

New Century immediately fired 3,200 workers — more than half its work force — and said it intends to sell off its major assets.

"The Chapter 11 process provides the best means for selling our servicing and loan origination operations to financially sound parties," president and chief executive Brad A. Morrice said in a statement.

"It is our hope that potential buyers will be in a stronger position than we are to employ many of our associates on an ongoing basis," he said.


Read more: http://money.excite.com/jsp/nw/nwdt_rt_top.jsp?news_id=ap-d8o8o34o1&

[Maddy McCall]

9. Another predatory lender bites the dust.

Good riddance to bad rubbish.

[sam sarrha]

12. do the people they screwed get to file bankrupsy..??

[Maddy McCall]

13. From what I heard on NPR today...

people who were screwn by them are just waiting to find out what the next step will be. Many have already lost their homes. Many are in the process of losing their homes. They are waiting to hear what will happen next.

[sam sarrha]

16. their debt will be sold to someone else for pennies on the dollar ..its a scam and they will have to

pay the WHOLE AMOUNT minus the $5 their house was auctioned for.

sounds like something his father did

[The Sushi Bandit]

10. Let them F*ckin Burn

and their executives should be tared and feathered for predatory lending

[babylonsister]

11. So families can't file for bankruptcy, but these people can? nt

[sam sarrha]

14. is Ditec one of these lenders.. they talk way too fast..

[Omaha Steve]

15. That is owned by GMAC

Part of GM. I thought I heard awhile back it is up for sale.

[BlueInPhilly]

19. New Century is NOT OWNED by GMAC

Ditech IS owned by GMAC and it is definitely NOT for sale!!! Ditech's loans are actually NOT subprime!

[Old and In the Way]

17. This will be like the Savings and Loan debacle of the 80's.

The only 'buyer' left will be Uncle Sam. Gotta love this Republican deregulation. Making us all worth less.

[Imagevision]

18. And the economy is in great shape right?

[Roland99]

20. Dow Jones is up well over 100 points today.

[kineneb]

21. ...and another one bites the dust...

this is the beginning, there will be more.

Stay tuned to watch the US economy go into a slow death spiral.

More layoffs > even fewer people employed > fewer purchases > rinse and repeat... the housing sector had been the only "expanding" sector of the economy, falsely held up by low interest rates and subprime loans.