Lenders to halt New Century financing... What!?!

I Found this on Yahoo News today and though I would share it.

If you want to check further into it here is the link.

 http://news.yahoo.com/s/nm/20070312/bs_nm/newcentury_lenders_dc_5

NEW YORK (Reuters) - New Century Financial Corp., the largest independent U.S. subprime mortgage lender, said on Monday its lenders plan to halt financing, pushing the company closer to bankruptcy amid dwindling cash and $8.4 billion in obligations that could come due immediately.

After the market opened, the New York Stock Exchange delayed trading in the company's shares, citing a pending news announcement. New Century shares had already plunged 48 percent before regular NYSE trade, dropping to $1.66.

The exchange said it is reviewing the continued listing status of New Century's stock.

New Century of Irvine, California, said it could be forced to repurchase about $8.4 billion in loans, if lenders accelerated all of its obligations. Among the key lenders is investment bank Morgan Stanley (NYSE:MS - news), which could force New Century to repurchase $2.5 billion in loans. Other lenders include Citigroup (NYSE:C - news), Bank of America Corp. (NYSE:BAC - news), Credit Suisse First Boston, Goldman Sachs Group Inc. (NYSE:GS - news) and Ixis Real Estate Capital.

The repurchase obligation to Morgan Stanley was the largest cited by New Century in a filing with the U.S.

Securities and Exchange Commission.

As of September 30, New Century reported $25.1 billion in total assets, including $14 billion in loans held for investment, and total liabilities of $23 billion. The company reported $350 million in cash and liquidity at the end of the year, but it appears its cash has fallen below $60 million, according to Monday's SEC filing.

New Century shares, down 89 percent this month, have been hammered by a barrage of negative announcements, including that it would stop making new loans and was the target of a criminal investigation.

Over the past several weeks, subprime shares have been battered over a rising tide of late payments by borrowers. That trend continued on Monday, lopping 13 percent off Fremont General Corp.'s (NYSE:FMT - news) stock and 13 percent off NovaStar Financial Inc. (NYSE:NFI - news) shares. Accredited Home Lenders Holding Co. (Nasdaq:LEND - news) shares tumbled 20 percent to $12.59, a level unseen in nearly four years.

Robert Froehlich, chief investment strategist at DWS Scudder, said a crimp in subprime lending could hurt U.S. housing demand.

"Because of the virtual collapse of mortgage lending standards over the past couple of years in the U.S., rapid growth in sub-prime lending has accounted for much of the incremental home purchase demand in recent years," Froehlich said. "Removing this segment will soften already slowing demand."

New Century's struggles are part of a wider meltdown among lenders to less credit-worthy home buyers, which has seen the sector struggle amid soaring default rates.

"The company and it subsidiaries do not have sufficient liquidity to satisfy their outstanding repurchase obligations under existing financial arrangements," New Century said in a regulatory filing.

New Century also said there was no guarantee it will get adequate financing to meet its obligations. If the company is not able to satisfy repurchase obligations, lenders could liquidate related mortgage loans.

New Century would be on the hook for any difference between the liquidation amount and the contractual amount of the loans.

"The company and its subsidiaries may not have sufficient resources to satisfy any such deficiency," New Century said.

That might set the stage for a bankruptcy filing, if a white knight financing deal does not materialize.

New Century said it had received two letters from Bank of America, accelerating the subprime lenders repurchase obligations, pegged at $600 million.

New Century also said it has been accused of breaching a covenant with Citigroup that required the subprime lender to maintain at least $60 million in cash.