| New Century, Biggest Subprime Casualty, Goes Bankrupt (Update4)
April 2 (Bloomberg) -- New Century Financial Corp., overwhelmed by rising defaults from borrowers with poor credit records, became the largest subprime mortgage lender ever to fail as it filed for bankruptcy today. New Century plans to sell most of its assets within 45 days, said the Chapter 11 filing in federal court in Wilmington, Delaware. About 3,200 people, more than half the workforce at the Irvine, California-based company, will be fired. New Century said it already agreed to sell its mortgage billing and collections unit to Carrington Capital Management LLC for $139 million. The company rode the U.S. housing boom to become the largest independent mortgage lender to subprime borrowers, only to collapse as interest rates rose and home prices fell. New Century's market value soared to more than $3.5 billion in December 2004, and last year it made about $60 billion in loans.
What Is A Reverse Mortgage?
Reverse mortgages are becoming popular among the senior citizens. They give seniors easy money in lieu of the part ownership of their home. If you want to go for a reverse mortgage, the information below will help you: What is reverse mortgage? For senior citizens above 62 years, lenders offer instant cash without any monthly payments. This allows the pensioners with a home, but no cash, to get easy financing to meet their daily needs or for any other purposes. This allows them to convert their equity tied up in their home into cash. What are the advantages and risks of this type of mortgage? .
Caution against overreacting to the subprime-lending rout
Bill Nygren, manager of the top-performing Oakmark Fund, said investors were making a mistake by selling shares of banks such as Citigroup Inc. and Washington Mutual Inc. Nygren has 13 percent of the $5.9 billion mutual fund's assets in financial stocks, which have declined on concern a rout in the market for subprime mortgages may spread to credit card and car-loan companies. Shares of Washington Mutual, the fund's biggest holding, dropped 12 percent this year, and Citigroup's stock fell 8 percent. At least 30 U.S. home lenders have halted operations or sought buyers during the last 12 months as late payments on subprime mortgages made to people with poor or inadequate credit reached a four-year high in the fourth quarter. "Investors are overreacting to the upturn in mortgage delinquencies," Nygren, 48, said from his office in Chicago.
|
