Although I have not focused on the issue here, other blogs have discussed the taking of the sub-prime lending market. The latest shot is the Chapter 11 filing of New Century Finance (see also here). one of the largest sub-prime lenders in the country. New Century also laid off 3200, more than half its workforce.
During the real estate boom earlier this decade, subprime lenders such as New Century, which is based in Irvine, Calif., made loans that carried high monthly payments to people with poor credit, making them far more likely to enter foreclosure. In Massachusetts, those subprime loans are being blamed for a sharp increase in foreclosure filings against homeowners last year. State and federal regulators said that many subprime borrowers were given loans for houses they could not afford.
New Century made $52 billion in subprime loans nationwide in 2006. In Massachusetts, New Century was the third largest subprime lender in 2005, according to the most recent available data. ….
On March 13, the banking commission ordered New Century to cease selling mortgages in the state after the company said it expected to post a fourth-quarter loss and would restate earnings in the two prior quarters.
New Century is not the first recent filing –
In early February, some home buyers were left in the lurch when Connecticut-based Mortgage Lenders Network USA Inc. experienced a cash crisis and could not fund its loans. Some customers were eventually able to close on their loans, or find a new lender, but others were not able to complete their home purchases.
Mortgage Lenders Network eventually filed for bankruptcy protection, and regulators began closely monitoring other lenders in the state.