Subprime Mortgage Lender Target Of Criminal Inquiry
New Century Financial Corp., the second largest U.S. subprime mortgage lender, has reported that it is the subject of a criminal probe into trading in New Century securities as well as accounting errors, according to an online article at MarketWatch.com.
In addition to the criminal inquiry, which is being conducted by the U.S. Attorney's Office for the Central District of California, it has also been reported that both the Securities and Exchange Commission and the regulatory arm of the New York Stock Exchange are looking into the company.
New Century stock was hammered by almost 25% in after-hours trading Friday at about $11, after a 7% fall during the regular session to $14.65.
According to the article, "New Century slashed its forecast for loan production earlier this year because early-payment defaults and loan repurchases have led to tighter underwriting guidelines. The company also said that it has to restate most of its results from 2006 because of mistakes in how it accounted for losses on repurchased loans."
As of now, however, there does not appear to be any official reports of company insiders and others attempting to illegally dump their holdings in New Century stock in view of the anticipated future troubles in the subprime mortgage market; nor does there appear to be any credible reports that company officials have intentionally engaged in "creative accounting" in order to hide the company's losses when they found themselves stuck having to repurchase the bad loans they made. Matters are currently only in the investigative stage at this time.
To read more, see:
New Century says it faces criminal probe
(Subprime-mortgage lender warns it will likely breach lending covenant)
In addition to the criminal inquiry, which is being conducted by the U.S. Attorney's Office for the Central District of California, it has also been reported that both the Securities and Exchange Commission and the regulatory arm of the New York Stock Exchange are looking into the company.
New Century stock was hammered by almost 25% in after-hours trading Friday at about $11, after a 7% fall during the regular session to $14.65.
According to the article, "New Century slashed its forecast for loan production earlier this year because early-payment defaults and loan repurchases have led to tighter underwriting guidelines. The company also said that it has to restate most of its results from 2006 because of mistakes in how it accounted for losses on repurchased loans."
As of now, however, there does not appear to be any official reports of company insiders and others attempting to illegally dump their holdings in New Century stock in view of the anticipated future troubles in the subprime mortgage market; nor does there appear to be any credible reports that company officials have intentionally engaged in "creative accounting" in order to hide the company's losses when they found themselves stuck having to repurchase the bad loans they made. Matters are currently only in the investigative stage at this time.
To read more, see:
New Century says it faces criminal probe
(Subprime-mortgage lender warns it will likely breach lending covenant)
For an article describing the relationship between the subprime mortgage lenders and the large banks who provide them with the necessary financing to enable the making of subprime loans, see Big banks control fate of subprime lenders (Merrill, J.P. Morgan pull back in credit crunch at low-end of mortgage market)
Postscript:
In what appears to be a class action attorney "race to the courthouse" against New Century Financial Corporation, see these recent press releases:
- Dreier LLP Files Class Action Lawsuit Against New Century Financial Corporation
- Brower Piven Announces the Filing of a Class Action Lawsuit Against New Century Financial Corporation
- Green Welling LLP Files Class Action Suit Against New Century Financial Corporation
- Click here for links to press releases of several other recent class action lawsuits commenced against New Century Financial Corporation.
(These four links no longer available online. 10-19-07)
posted by Home Equity Theft Reporter at 12:51 AM
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