New Century Financial Corp., overwhelmed by rising defaults from borrowers with poor credit records, became the largest subprime mortgage lender ever to fail as it filed for bankruptcy today.
New Century plans to sell most of its assets within 45 days, said the Chapter 11 filing in federal court in Wilmington, Delaware. About 3,200 people, more than half the workforce at the Irvine, California-based company, will be fired. New Century said it already agreed to sell its mortgage billing and collections unit to Carrington Capital Management LLC for $139 million.
The company rode the U.S. housing boom to become the largest independent mortgage lender to subprime borrowers, only to collapse as interest rates rose and home prices fell. New Century's market value soared to more than $3.5 billion in December 2004, and last year it made about $60 billion in loans. Like rival firms, the company lowered its lending standards to keep business flowing after demand slumped.
This was the second largest subprime lender in the country. Not any more.
This won't be the last of this. Not by a long shot.
6 comments:
with 100,000 estimated creditors this is going to one huge bk proceeding
Yep. And it has the possibility of getting really damn ugly.
after everything New Century's been through in the last few weeks, the bankruptcy filing really feels more like crossing t's and dotting i's than actual news.
this bk seems a bit different to me as they will be liquidating the business, as opposed to reorganizing it. they will get the best price they can for the parts, but the business is history.
FMT's accounting firm resigned today.
Also resigned from LEND
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