Flood

Repurchases Force New Century to Restate Earnings 

Caught unprepared by a flood of loan repurchases, New Century Financial Corporation said late Wednesday that it will restate its consolidated financial results for the first three quarters of 2006 and will delay the release of fourth quarter results indefinitely as the subprime REIT looks to correct errors associated with its accounting for loan repurchases. In addition to failing to perform fair-value adjustments on its loan loss reserves after repurchases, New Century said repurchase allowances did not account for a growing volume of repurchase claims during 2006. Collectively, the errors suggest that as subprime market performance deteriorated throughout the year, repurchase volumes at the subprime morgage banking giant quickly outstripped originally-established loss reserves.