Bad Credit Lender Unloads Unfunded Home Loans

The list of troubles faced by New Century Financial Corp. continues to mount.

The beleaguered mortgage company has unloaded all of the mortgage loans it originated but had yet to fund, the company said in documents filed with the Securities and Exchange Commission (SEC).

The California mortgage company, which after a long list of financial woes, formally filed for Chapter 11 bankruptcy protection last week, said in the regulatory filing Friday that it has disposed of all the home loans in its inventory.

The home loans were ready for funding, or in other stages of processing, as of April 3, the company said.

New Century worked with state regulators to get the home loans returned to the mortgage brokers who originally submitted the mortgage loan applications so borrowers could apply for loans from other lenders.

The mortgage lender also reached out to other home mortgage lenders to transfer the home loans sold through its retail mortgage division.

New Century, once the second-largest U.S. sub-prime home mortgage lender based on loan volume, stopped making new home loans last month.

It is perhaps the most glaring example of the backlash so many bad credit mortgage providers are seeing after the housing market screeched to a halt.

Regulators and financial professionals across the country are eyeing New Century as a bellwether of where the market may head in the coming months.

SOURCE: Canton Repository