Friday, March 2, 2007

Sub-Prime Update

From the AP

Subprime mortgage lender New Century Financial Corp. said Friday it won't be able to file its 2006 annual report on time, and plans to request an extension from the Securities and Exchange Commission.

In early February, New Century announced it would restate financial results for the quarters ending March 31, June 30 and Sept. 30, 2006, to correct accounting errors for losses to too to buy back bad loans.

Three quarters of restatements -- that is not a good sign.

Then there's GM:

The cratering of the subprime mortgage industry could present more than just a pothole for General Motors Corp.

The world's largest auto maker disclosed Thursday that it will need more time to file its 2006 annual report with the Securities and Exchange Commission, marking the second year in a row the company has postponed the key filing.

Many analysts attribute this year's delay to a substantial hit the Detroit-based automaker might take from the exposure its part-owned finance unit -- GMAC Financial Services -- has to the business of making mortgage loans to people with weak credit or heavy debt burdens.

Just what Detroit needs right now -- financial headaches. The phrase "substantial hit" indicates analysts are pretty concerned about the situation.