New Century Sale Remains Uncertain
Efforts to salvage and sell the servicing shop and wholesale platform of bankrupt subprime giant New Century Financial Corp. remained up in the air as Mortgage Servicing News went to press.
NCFC, which filed for Chapter 11 bankruptcy protection this spring, is trying to sell its servicing platform, which at year-end boasted $40 billion in subprime receivables, ranking 14th nationwide, according to the Quarterly Data Report.
A hedge fund, Carrington Capital Management, has made a bid on the servicing platform, but the $139 million deal has not closed. Meanwhile, several hedge funds, including Ellington Management Group, have placed bids on some of the firm's whole loans. Ellington, a source said, also is eyeing the subprime servicing platform of Fremont Investment & Loan, Santa Monica, Calif., a $27 billion servicer.
All of the deals are subject to bankruptcy court approval and could be superseded by superior offers.
And the proposed sale of the NCFC's wholesale lending unit has apparently come to naught, with the firm laying off 2,000 workers.
The deadline to sell the unit came and went in early May. One company insider told Mortgage Servicing News, "We just got the word: no bidders for the origination side. So, we are done."
Meanwhile, a battle is brewing between current NCFC executives managing the bankruptcy and the Department of Justice. DOJ wants to kick out management - including president and CEO Brad Morrice - and replace them with a trustee.
Questions also have been raised in regard to large retention bonuses being offered to current management to stay on.
A few months back, the DOJ opened a criminal probe of NCFC regarding its accounting practices and stock sales by insiders.
In 2006, NCFC ranked second nationwide among all U.S. subprime funders, originating $51.6 billion, according to figures compiled by MSN and the Quarterly Data Report. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com