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Regulators tell New Century to stop doing business in four states

New York, New Jersey, New Hampshire and Massachusetts send cease-and-desist orders to the sub-prime lender.

March 15, 2007|From the Associated Press

New Century Financial Corp. said Wednesday that it had received cease-and-desist orders from banking regulators in four states, claiming that some subsidiaries of the troubled sub-prime mortgage lender have violated state laws.

Regulators from New York, New Hampshire, Massachusetts and New Jersey sent notices to the Irvine-based company on Tuesday, according to its filing with the Securities and Exchange Commission.

In their letters, the state regulators claim that New Century subsidiaries have failed to fund mortgages that closed and that the company didn't notify the states in a timely manner of its financial woes.

Several of New Century's creditors have cut or halted financing in recent days and demanded that the sub-prime lender buy back loans it sold to them.

New Century, which lends money to home buyers with poor credit histories, has said it doesn't have enough capital to satisfy its subsidiaries' outstanding loan repurchase obligations.

The company has stopped accepting loan applications.

New Century said it was reviewing the states' requests and had not yet determined whether to appeal but planned to comply.

In its filing, New Century also said that one of its creditors, Barclays Bank, had demanded that it buy back about $900 million in mortgage loans.

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