Beleagured New Century Financial Corp. disclosed early Tuesday afternoon that it had been notified by Fannie Mae that it would no longer deal with mortgages handled by the company.

In an 8-K filing with the Securities and Exchange Commission, New Century said that "the company and its subsidiaries are no longer able to sell mortgage loans directly to Fannie Mae or act as the primary servicer of any mortgage loans for Fannie Mae." The termination by Fannie Mae puts New Century out of reach of one of the largest pool of funds available to fund mortgages for low- and moderate-income people and also of the implied security afforded by Fannie Mae-backed mortgages.

New Century also disclosed that California, Washington and Florida had joined the growing list of states that have prohibited it from making new mortgage loans either through direct action or consent decree. The two states join New York, New Jersey, Connecticut, Massachusetts, Rhode Island, New Hampshire, Maryland, Tennessee, Ohio and Pennsylvania.

New Century faces possible loan repurchase triggers from nearly all the banks and investment houses that have traditionally lent it money. It has estimated the potential liabilities amounts to nearly $9 billion, an amount the company has said it cannot raise.