New Century MSR Sale Fetches Higher than Expected Price
Carrington Capital Management has received Bankruptcy Court approval to purchase New Century Financial Corp.'s loan servicing business for $188 million.
The price is considerably higher than the original $139 million offer from Carrington. That original deal was subject to competition from higher bids, the Bankruptcy Court noted in early April. That news, along with favorable pricing on the sale of assets from Fremont Mortgage, helped lift mortgage stock prices last week.
New Century said the final price was reached following an auction involving several bidders.
New Century, Irvine, Calif., filed for bankruptcy protection earlier this year and is in the process of liquidating its assets.
The sale is expected to preserve the jobs of some 500 employees. The company once employed over 6,000 people and was the nation's second largest funder of subprime credit quality loans. Last year, New Century produced $51.6 billion of subprime loans, but its finances quickly unraveled as buybacks and early payment defaults took a toll. At the end of last year, New Century serviced $41 billion of home loans, making it the 14th largest B&C servicer.
But New Century has dismissed virtually all of its lending staff.
Lazard and AlixPartners are financial advisors to New Century in the bankruptcy proceedings. O'Melveny & Myers LLP acts as legal advisors with respect to the bankruptcy.
More information about New Century's chapter 11 case is available on its Web site at www.ncenrestructuring.com.
New Century Financial Corporation is a real estate investment trust (REIT) founded in 1995 and headquartered in Irvine, California.
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