IE 11 is not supported. For an optimal experience visit our site on another browser.

New Century to lay off 2,000 workers

/ Source: The Associated Press

Financially strapped subprime mortgage lender New Century Financial Corp., failed to receive any bids for its mortgage loan origination business, forcing it to shut down the unit and lay off around 2,000 employees, the company told employees Thursday.

The Irvine-based company, which has been preparing to sell off its assets under Chapter 11 bankruptcy protection since last month, notified employees during a conference call that they would be laid off effective Friday.

Speaking on the call, New Century President and Chief Executive Brad A. Morrice said despite a number of potential buyers for its wholesale and consumer-direct operations, “none of those potential deals have come to pass.”

The deadline for bids for the business unit was Wednesday. New Century’s request to extend the deadline was not supported by its creditors committee, Morrice said, adding that efforts to sell the unit had stopped.

New Century will retain only service personnel and about 250 members of its corporate team as the company continues efforts to liquidation, Morrice said.

“I realize that today’s announcement was not the news that any of us hoped to hear,” Morrice said, his voice quivering at times. “I would be remiss if I did not say how sorry I am for any grief or hardship that any of you may experience as a result of this situation.”

New Century had been the second-largest provider of home loans to high-risk borrowers, but it collapsed after a spike in mortgage defaults led its lenders to pull funding and demand that it buy back bad loans.

The company stopped trying to make new home loans in March due to lack of funds.

As part of its bankruptcy process, New Century was able to find a buyer for its loan servicing business.

Morrice said the sales process for the servicing unit remains on track.

The deadline for additional bids is May 10.