New Century Financial Corp. said Monday all of its lenders have cut funding or announced their intent to halt financing after the subprime mortgage lender failed to make payments, pushing the company further toward bankruptcy.
“The company and its subsidiaries do not have sufficient liquidity to satisfy their outstanding repurchase obligations under the company’s existing financing arrangements,” New Century said in a filing with the Securities and Exchange Commission.
New Century, which lends money to prospective home buyers who have poor credit histories, uses short-term borrowings to finance mortgage loan originations and purchases. The company said there is no guarantee it will receive additional financing.
“If the company and its subsidiaries are not able to satisfy their repurchase obligations, one or more of the company’s lenders may seek to liquidate the mortgage loans or other assets,” New Century said.
The company received letters from Wall Street lenders including Bank of America, Goldman Sachs, Morgan Stanley and Citigroup, among others, alleging events of default.
Last Thursday, New Century said it stopped accepting all new loan applications because it was short on financing. The company faces a slew of investor lawsuits and an investigation by the U.S. Attorney’s Office for the Central District of California.
Its stock price has been hammered by investors in recent weeks, falling from around $30 a month ago, to close Friday at $3.21 on the New York Stock Exchange. Shares plummeted early Monday before trading was halted.