New Century Financial Corp., the struggling maker of subprime mortgages, disclosed early Monday morning in an SEC filing that four more states has issued cease-and-desist orders that prohibit New Century from taking applications for new mortgage loans.
According to the filing, Connecticut, Rhode Island, Maryland and Tennessee issued the orders on Wednesday and Thursday last week. The orders allege that New Century violated state laws by failing to fund mortgages at closing. The orders were similar to those issued earlier by Massachusetts, New Jersey, New York and New Hampshire.
Additionally, New Century has entered into a consent agreement with the state of Pennsylvania that will prohibit it from making any new loans in that state, and it has disclosed that the Ohio Attorney General filed a civil action in state court seeking to bar new loans in that state as well.
New Century also disclosed that one of its lenders, DB Structured Products Inc., had demanded the repurchase of some $900 million in outstanding mortgage loans originated in 2005 and 2006. It again estimated the total amount of outstanding mortgages that it could be forced to repurchase amounted to $8.7 billion. In earlier filings, New Century said it did not have the assets to fund those repurchases. The filing Monday did not specify whether New Century had the cash available to meet DB Structured Products repurchase agreement.
New Century, based in Irvine, Calif., has also disclosed that it is under investigation by the U.S. Attorney for the Central District of California and by the Securities and Exchange Commission. Its stock has been delisted by the New York Stock Exchange and is now traded on the so-called "pink-sheet" market.
