New Century Financial
New Century Financial was a United States mortgage lender and real estate investment trust that became one of the largest independent originators of subprime mortgages before entering Chapter 11 bankruptcy in 2007.
Last updated October 14, 2026
AI crawler reads
No AI crawler has read this profile since Oct 28, 2026.
Overview
New Century Financial was a United States mortgage-lending company founded in 1995 by former managers and co-founders of Option One Mortgage, including Brad Morrice, Robert K. Cole, and Edward Gotschall. Headquartered in Irvine, California, the company originated and purchased residential mortgage loans through operating subsidiaries including New Century Mortgage Corporation and Home123 Corporation. Its principal focus was non-prime and subprime lending to borrowers who did not qualify for conventional prime mortgages. The company expanded rapidly during the housing and mortgage-credit boom of the late 1990s and early 2000s. It began originating and purchasing loans in 1996 and grew from a small operation with approximately 50 employees into a national lender with numerous regional operating centers. In 2004, New Century converted into a real estate investment trust and obtained a New York Stock Exchange listing. That year it originated approximately $42.2 billion in mortgages. Its business model depended heavily on originating loans, selling or securitizing them, and using warehouse credit facilities to fund closings before those loans were sold. This structure left the company exposed to loan repurchase demands, deteriorating credit performance, and the withdrawal of warehouse lenders. New Century continued to grow in 2005 and 2006. Its reported net income for fiscal 2005 was approximately $417 million, and by 2006 it had become the second-largest issuer of subprime mortgages in the United States, behind HSBC Finance, with approximately $51.6 billion in subprime originations. Its Home123 division was promoted through advertising featuring Bob Vila, and the company also pursued sports marketing, including a NASCAR sponsorship and support for a Chip Ganassi Racing with Felix Sabates team. The market environment changed sharply in the second half of 2006. Loan demand slowed, mortgage delinquencies and defaults increased, and warehouse lenders became less willing to finance New Century's pipeline. The company faced demands to repurchase loans under contractual representations and warranties, while its accounting for repurchase losses and other obligations came under scrutiny. In March 2007, New Century announced that it would stop accepting new loan applications, disclosed that lenders could demand billions of dollars in repayments, and became the subject of federal criminal and regulatory inquiries. Trading in its shares was halted and the company was delisted from the NYSE. New Century and affiliated entities filed for Chapter 11 bankruptcy protection in the District of Delaware on April 2, 2007. The filing followed substantial layoffs and was accompanied by plans to liquidate assets and wind down much of the business. Debtor-in-possession financing allowed portions of the servicing and liquidation operations to continue. The loan-servicing business was later sold to Carrington Capital Management for approximately $188 million, while other assets and brands were disposed of during the bankruptcy process. In 2008, a private company acquired certain brand assets, including the New Century and Home123 names, although the original public mortgage company did not resume operations. The company's collapse became an important early corporate failure in the United States subprime-mortgage crisis. A bankruptcy examiner's report released in 2008 described significant improper or imprudent practices involving loan origination, operations, accounting, and financial reporting, and criticized the role of auditor KPMG. In 2009, federal regulators sued former senior officers over alleged misleading statements to investors. In 2010, Brad Morrice, Patti M. Dodge, and David N. Kenneally agreed to settlements totaling approximately $90 million in related proceedings and accepted five-year bars on serving as directors of public companies; the settlements did not include admissions of wrongdoing. New Century's bankruptcy and collapse were later referenced in popular accounts of the financial crisis, including the 2015 film The Big Short.
History
New Century Financial began operations in 1995 in Irvine, California, founded by former Option One Mortgage managers. It started originating and purchasing loans in 1996 and expanded through the late-1990s housing boom. The company used a model centered on producing mortgage loans, selling them into the secondary market, and relying on warehouse lenders to finance loans before sale or securitization. In 2004, New Century converted to a real estate investment trust and became publicly traded on the New York Stock Exchange. Its mortgage volume reached approximately $42.2 billion that year. Growth continued in 2005, when it reported net income of about $417 million and operated through dozens of regional centers. A substantial share of its activity was concentrated in California, although the company served borrowers across the United States. The company was particularly active in subprime lending. In 2006, it originated approximately $51.6 billion in subprime mortgages, ranking behind HSBC Finance among issuers in that segment. Its Home123 division supported the consumer-facing brand, while advertising and sponsorship activity—including Bob Vila endorsements and NASCAR partnerships—helped promote the business. The credit cycle turned during the second half of 2006. Slower originations, rising defaults, loan repurchase requests, and tightening warehouse credit undermined New Century's liquidity. In early 2007, the company disclosed accounting and financial problems, criminal and regulatory inquiries, and the loss or threatened withdrawal of funding from many lenders. It stopped accepting new loan applications on March 8, 2007. Stock trading was halted shortly afterward, and the company was removed from the NYSE. New Century filed for Chapter 11 bankruptcy on April 2, 2007. It had already eliminated thousands of jobs and arranged debtor-in-possession financing to support an orderly wind-down. Parts of the servicing operation were sold to Carrington Capital Management, while creditors and counterparties contested access to equipment, records, and other assets. The original operating company did not return as a functioning mortgage lender. Brand assets were later sold separately, including the New Century and Home123 names. The bankruptcy generated extensive litigation and regulatory scrutiny. A court-appointed examiner's report released in 2008 found significant improper or imprudent practices in lending, operations, accounting, and reporting, and questioned the conduct of the company's auditor. Federal regulators later pursued former officers for alleged misleading statements to investors. Settlements announced in 2010 included monetary payments and director bars, although the settling individuals did not admit wrongdoing. New Century's failure became a representative episode of the subprime-mortgage collapse and the broader 2007–2008 financial crisis.
- 2010
Former officers settle claims
[1]Three former officers agreed to monetary settlements and five-year public-company director bars.
- 2008
Bankruptcy examiner's report released
[1]The examiner identified substantial problems in the company's lending, operations, accounting, and reporting processes.
- 2007
Funding crisis and trading halt
[1]The company stopped accepting new loan applications, lost access to major funding lines, and was halted and delisted from the NYSE.
- 2007
Chapter 11 bankruptcy
[1]New Century Financial and related entities filed voluntary Chapter 11 petitions in Delaware.
- 2006
Subprime lending reaches peak scale
[1]New Century originated approximately $51.6 billion in subprime mortgages and ranked among the largest issuers in the United States.
- 2004
Conversion to a real estate investment trust
[1]New Century converted to a real estate investment trust and was listed on the New York Stock Exchange.
- 1996
Mortgage origination begins
[1]The company began originating and purchasing mortgage loans and expanded its workforce beyond its initial small operating base.
- 1995
Company founded
[1]New Century Financial was established in Irvine, California, by former Option One Mortgage managers.
Products and positioning
A national, high-volume mortgage originator focused on non-prime and subprime residential borrowers. Before its collapse, New Century positioned itself as a major independent alternative to banks and prime-lending institutions.
Residential mortgage lending · 1996
New Century Mortgage
The core mortgage business originated and purchased residential loans, with a strong emphasis on non-prime and subprime borrowers. Loans were generally funded through warehouse facilities and subsequently sold or securitized, exposing the company to repurchase obligations and secondary-market conditions.
Mortgage and consumer-facing financial services brand
Home123
Home123 was New Century's consumer-facing mortgage division and was promoted through national advertising, including campaigns featuring Bob Vila. The brand and related assets were separated from the failed operating company during the bankruptcy and later reintroduced under new ownership as a real-estate marketing and technology business.
Controversies
2010
Settlements and director bars
Three former officers agreed to settlements totaling approximately $90 million and were barred from serving as directors of public companies for five years. The settlements did not include admissions of wrongdoing.
2009
Regulatory claims against former officers
Federal regulators alleged that former officers misled investors about New Century's financial condition and prospects.
2008
Bankruptcy examiner allegations
An examiner's report described significant improper and imprudent practices involving loan origination, operations, accounting, and financial reporting, and criticized auditor oversight.
Marketing campaigns
- Home123 Bob Vila advertising
United States
Home123 used television personality Bob Vila as an advertising spokesman to promote its mortgage offering and consumer visibility.
Outcome. The campaign was associated with the pre-bankruptcy Home123 marketing program; no later performance result is established in the supplied sources.
- NASCAR sponsorship
United States
New Century promoted itself as the official mortgage company of NASCAR and sponsored a Chip Ganassi Racing with Felix Sabates team in NASCAR Cup and Busch series competition.
Outcome. The sponsorship belonged to the company's expansion-era brand marketing and ended with the company's financial collapse.
Brand decisions
2007
File for Chapter 11 and wind down operationsOtherBackground
The company could not satisfy major lender repayment and repurchase obligations after losing access to financing.
Action taken
New Century and related entities filed voluntary Chapter 11 petitions and arranged debtor-in-possession financing.
Aftermath
Thousands of jobs were eliminated, assets were liquidated, and the servicing business was sold to Carrington Capital Management.
2004
Convert to a real estate investment trustStrategyBackground
New Century was expanding its mortgage origination and capital-markets activities during a period of strong housing and credit growth.
Action taken
The company converted to a real estate investment trust and became publicly listed on the NYSE.
Aftermath
The conversion preceded a period of rapid growth but left the company exposed to the subsequent reversal in mortgage-credit conditions.
Recent events
- 2007
New Century Financial stops accepting new loan applications[1]
Other
The company suspended new loan applications while seeking financing after lenders reduced or withdrew warehouse credit support.
- 2007
New York Stock Exchange halts and ends trading in New Century shares[1]
Bankruptcy · Regulation
Trading was halted as the company disclosed severe liquidity and lender problems, and the shares were subsequently delisted.
- 2007
New Century files for Chapter 11 bankruptcy[1]
Bankruptcy
New Century Financial and related entities sought bankruptcy protection after losing access to funding and facing large repayment and loan-repurchase demands.
Sources1 sources
Cite this profile: Cite the canonical profile. /brand-wiki/new-century-financial · Editorial policy · How profiles are compiled