New Century Gives up the Ghost
Chuck Ponzi April 2nd, 2007
Not as if everyone didn’t expect this, but New Century has filed for Chapter 11 Bankruptcy protection.
As always, I am interested in the impact on the local economy… as it is central to my forecast for Orange County’s housing debacle.
Subprime mortgage lender New Century Financial Corp. filed Monday for Chapter 11 bankruptcy protection, and said it would fire 3,200 workers, or 54 percent of its work force, to better position the company for a possible sale.
And, cutting off the arm to escape:
New Century said it has agreed to sell its loan servicing business to Carrington Capital Management LLC and its affiliate for about $139 million, subject to the approval of the bankruptcy court.
There’s not much left of this company to reorganize. Might as well make it a Chapter 7 and be done with it. I guess all we need now is to sell the new office chairs and give up the commercial office space in Irvine…
I recently heard some rumblings of how commercial RE was going to save our sorry butts in OC… not here, not now.
************************Update 04-02-2007 5:45PM**************************************
Just found out that Matthew Padilla has the inside scoop on Layoffs for New Century:
500 from Today.
I suppose many more to come.
Best quote:
Jack Kyser, chief economist with the Los Angeles County Economic Development Corp., which also covers Orange County, said buyers are interested in parts of New Century, but no one is likely interested in the brand or company as a whole.
“What do people think of when you say New Century?,” Kyser said. “There’s no value in the company name anymore.”
You can say that again. New Century has turned into a certain liability for other companies similarly named.
I’m guessing I’m wondering more about who is still making these loans and what fraud protection is out there.
If its still just FICO then I don’t know what to say. I hate to think of the FDIC bailing out lenders like in the whitewater scandal.
Some of this stuff. I can’t see how the risk premiums are going to help with such inflated prices. Even with 5% cash down as CFC has been asking and good fico… If you are getting near the wishing price you could still be talking about an impressive profit split for desperate scamming flippers.
Reltor Jim had a few funny sales in Carlsbad last month in his posts. So, perhaps flippers are making some fraudulent transactions to save their asses.
For all us lanlords, whats your take on rent fluctuation in this downward market? My take, as we see more and more forclosers these obvious fools will need a place to stay and rebuild. i dont see rent increase in certain areas, if at all. As babby boomers began to retire and move out of socal to other less inflated areas, i see stability in the long run for those areas. ie: idaho/washington.