Industry News

Lawsuit claims New Century mishandled escrow, loan payments

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The latest lawsuit against troubled subprime lender New Century Financial Corp. alleges the company failed to deposit loan payments it was collecting on behalf of an investor that had purchased loans into the appropriate account. The lawsuit by UBS Real Estate Securities Inc. alleges New Century misappropriated $3.8 million in mortgage payments that were supposed to be placed in a third-party account during a period the loans were subject to a repurchase agreement. Such agreements typically allow investors to demand that loan originators repurchase loans if they default within 30, 60 or 90 days. The lawsuit, filed Thursday in U.S. Bankruptcy Court for the District of Delaware, also alleged New Century has failed to account for missing escrow payments totaling $1.7 million the Associated Press reported. New Century announced Monday that it had filed for Chapter 11 bankruptcy protection and laid off 3,200 workers, and was selling its servicing assets and servicing platform. The compan...