Industry News

New Century Financial cuts ties to Freddie Mac

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Subprime lender New Century Financial Corp. said it has voluntarily severed its ties to Freddie Mac, and will no longer sell or service loans to the government-chartered mortgage repurchaser. In a Securities and Exchange Commission filing this week, New Century also said it has signed consent agreements with officials in Idaho, Iowa, Michigan and Wyoming formally agreeing that the company will stop lending in those states. Other states including New York and California have also sought such agreements through cease-and-desist orders, and New Century said it is complying with those orders. New Century disclosed on March 8 that it had stopped funding loans after at least five creditors stopped financing the company's operations, and another forced a repurchase of loans it originated. New Century had relied on 15 short-term repurchase agreements and aggregation credit facilities and an asset-backed commercial paper facility that collectively provided $17.4 billion to fund mortgage loan o...