May 05, 2007

No surprise - Subprime king New Century now worthless, lays everyone off

Funny how you can go from the top of the heap one day to firing everyone and closing up shop and firing everyone the next day.


Not funny when it's your job. Not funny when millions of people you "helped" end up losing their house and going bankrupt. Not funny when billions of dollars are lost because of your greed and incompetence. And not funny when you're just the first of many to come.

Want some cheap real estate coming up? Head to Orange County - the home of the mortgage lender implosion and pink slips.

New Century Financial receives no bids for loan-making units and tells 2,000 workers today is their last day.

New Century Financial of Irvine, the largest subprime lender to file for bankruptcy protection, said it will lay off 2,000 of its remaining workers, including 500 in Orange County, effective today, after failing to find a buyer for its loan-making units.

The company, which has come to symbolize the rise and fall of lenders to higher risk borrowers, is facing its final days of existence, said Brad Morrice, New Century's chief executive. It will retain a skeleton crew of about 750 workers, mostly in Orange County, to wind things down.

During a conference call, Morrice told workers there were no bids for its retail or wholesale lending operations by the Wednesday deadline.

"This brings us to today, which is a day that I could never have imagined facing," Morrice said.

"We must terminate most of our remaining workforce, including virtually all origination personnel."

As recently as two months ago, New Century employed 7,200 people. Last year, it originated $60 billion in loans.

25 comments:

Anonymous said...

Can someone explain what happens with the mess they created? What happens to the loans that they made out?

panicearly said...

implosion!

Anonymous said...

GM Subprime Slimed!

Read---> http://www.paperdinero.com/BNN.aspx?id=171


GM’s Q1 2007 earnings plunge 90% as subprime lending from their GMAC family of companies comes home to roost. Ironically, it appears that the lending-housing debacle may force GM to close plants and have layoffs which will inevitably put more pressure on housing.

Originally aired on: 5/3/2007 on Nightly Business Report

Running Time: 2 minutes 37 seconds

Anonymous said...

Not as big of a blow-up as Enron, but impressive nonetheless.

Anonymous said...

Reminds me of working at TD Waterhouse after the tech bubble popped. I grbbed my parachuet and floated away to a cumfy City job and all my friends were fired 6 months later.

Got allot of angry phone calls back then.

Anonymous said...

The bill for this hasn't come due yet. The New Century job losses are just a drop in the bucket.

Anonymous said...

By the way, these people were probably making middle class money. What jobs are they going to move onto? Maybe 10% will do better, 20% the same, and the remaining 70% will suffer the downturn & they'll default on payments. The whole mess will snowball.

Anonymous said...

did anyone short this?

Anonymous said...

To all New Century (former) employees: Buh-bye!

P.S. "Helping" people get mortgages - isn't that like that old saying "The road to hell is paved with good intentions?"

P.P.S Now go get real jobs!

Anonymous said...

how long before playboy's girls of "New Century"?

Anonymous said...

Reminds me of working at TD Waterhouse after the tech bubble popped. I grbbed my parachuet and floated away to a cumfy City job and all my friends were fired 6 months later.

Got allot of angry phone calls back then.


You got allot of angry calls huh...was it about your spelling?

Frank said...

On the bright side, I finally got my building manager to move me to another office, away from the obnoxious foul-mouthed, loud disgusting mortgage scumbags down the hall from me who disturb everyone all day long with their yells and high-fives every time they bring another sucker into the scheme.

At least they'll be broke and evicted soon.

Anonymous said...

With OC prices still going up .8% a year, they can extract money out of their homes and survive for another week

Anonymous said...

Anyone remember ENRON

MortgageBrokeHer said...

Easy come, easy go.

During a conference call, Morrice told workers there were no bids for its retail or wholesale lending operations by the Wednesday deadline.

Let me summarize this in a word, worthless.

FBs should pay attention here, especially those who aren't getting any offers after 30 DOM. Just change that picture to sheriffs moving FB belongings to the curb. Bleed baby, bleed!

Anonymous said...

Anonymous said...
Reminds me of working at TD Waterhouse after the tech bubble popped. I grbbed my parachuet and floated away to a cumfy City job and all my friends were fired 6 months later.

Got allot of angry phone calls back then.

You got allot of angry calls huh...was it about your spelling?

May 05, 2007 4:20 PM

= = = = = = = = = = = = = = = = =

Oh Yeah! That's some nasty spellin'!!!!

Anonymous said...

Thanks New Century! I made enough $$ shorting your worthless stock to retire now! THANKS A LOT! Here's a KISS..muuuuaaahhh!

Quit work last week.
Im DONE with corrupt (coporate) America!

Leaving for Hawaii tomorrow for 6 month vacation...

Ah, life is good!

So glad not to be a fu*ked borrower in Orange County!!! hahahahahahahahahaahah

Anonymous said...

Indymac will be the next New Century

Enron move over, here come the dot-condo lenders!

Anonymous said...

"To all New Century (former) employees: Buh-bye!

P.S. "Helping" people get mortgages - isn't that like that old saying "The road to hell is paved with good intentions?"

P.P.S Now go get real jobs!

May 05, 2007 2:43 PM
"

HAHAHAHAH CLASSIC!!!!

I guess we'll see MORE houses for SALE in Irvine! More SUPPLY, LESS DEMAND!!! And you should know what happens to PRICES after that!

HAR HAR HAR!
Good riddence!

Anonymous said...

Lots more supply of strippers and bartenders in OC!

Peahippo said...

There's nothing surprising about being on "top of the heap one day to firing everyone and closing up shop and firing everyone the next day".

This is the now-standard hype/crash business model for companies in the West.

Since Westerners place ZERO value on sustainable methods of anything (business, economy, environment, living, etc.), short-term thinking rules most mentalities, and the logical end point of such thinking is the enaction of business scams. This is the Hype/Crash model. Businesses are formed to milk them of as much money as possible (cheating investors, employees, suppliers, taxpayers) until the entire fraud is too exposed and must crash.

This is why the West's cultures are dying. It may as well be categorized as cannibalism.

I hear over 60 lenders (primarily subprime) have gone out of business in the last 6 months. Such a crash was no accident. Their 'failures' were designed into their operational structures to begin with. The megabanks who supplied their credit lines are the ones who designed it all in the macro sense. The executives who operated the failing lenders also helped to design it all, since they took huge compensation and played with stock options all along. It was all designed to fail and any banker or exec who claims to be surprised should be smacked as a filthy little liar.

Also, another topic that should be considered: If you have a NEWC loan and it got sold for pennies on the dollar, you should strongly consider taking the buyer to court to establish that sale as the ACTUAL PRICE. Why should your $450K mortgage be payable as $450K when your new mortgage holder paid $50K for it? The new price is obviously $50K and the home is only worth $50K. The basics of this kind of economics should strike the American populace one way or another.

Market Rhymes said...

It seems as if the public's attention has raced ahead of the sub-prime debacle and is on death-watch for the Alt-a mortgages.

It wasn't long ago that the debate was over whether home prices would return to their normal rates of appreciation or would they actually decline. The have just started to decline minimally, and the debate is over. The price correction is far from over.

The sub-prime collapse is a forgone conclusion, but unless the contagion extends further up the food chain to higher-quality mortgages, then the sub-prime hiccup won't even be a shadow to the 1970's S&L blowup.

Start up the food chain, and the S&L comparisons will be a part of the venacular. That is when the culmination of events will begin to snowball on the public's awareness.

Instead of a downturn in the housing market, it will be painfully apparent the "Madness of Crowds" was a driving force on the nation's real estate explosion. That will clarify the next steps. The pendulum is swinging and will not reset at zero; it will be a nasty Japanese-style correction.

It will register to almost everyone that their personal balance sheets have an ever more costly liability supporting a declining asset.

The rush to the exits will be done through narrowing aisles, increasing the force of the rush.

Then we can talk about the comparisons; the way this delusion rhymed with other delusions.

The stock market will likely not be spared.

Mark Rhymes

http://marketrhymes.com

fat lady singing said...

Which banks or lenders would hire management or brokers with New Century on their resume? Good luck finding another job in the financial sector.

Adam "Slow Hand" Smith said...

In the macroeconomic sense, I'd say 'Market Rhymes' has it right.

Our economy now consists of running from one asset bubble to the next, and it's hard to imagine that the powers that be don't understand it, let alone intentionally drive it in that direction. Changes in capital gains tax laws are the most striking aspect here, as was loose lending standards (where Helicopter Ben's comments about throwing money out of helicopters basically confirmed that loose money was no accident).

We're in an era where "investment" has become rampant speculation, and the current admin's 'free market' philosophy means there's no one around to regulate business... Even though we have laws regulating businesses, the rule of law has become 'caveat emptor'.

In the past decade, we've seen the dot.com bubble/bust, the housing bubble/bust, and now the stock market is once again on the rise! Why? Part of the motivation for the housing boom of 2000-2006 was the perception that the stock market was risky after the dot-com reality check, and liquidity spilled into real estate. Once it got going, market inertia drove it past 'investment' into the realm of flat-out speculation, with lenders offering 100% financing in loan devices that were quite simply speculation (whether the buyer realized it or not).

What's ironic here is that the lessons of 1929 Stock Market crash have been lost on today's investors: one of the main problems was that stocks were available on margins, where the common man could buy stocks without even using any 'real' money of their own. As a result, many people rushed to the market without having any 'skin in the game' to restrict them, and mindless optimism prevailed.

The striking aspect for the housing bubble is that we've returned to the same principles of investment as 1929, except instead of stocks people are buying houses, with infinite leverage! How could that NOT end badly?

Now the stock market is heating up again, as those who played the "flipper game" and pulled out in time (or at least, didn't LOSE money here) are now putting their money back into the stock market, as it's on a winning streak.

I have a feeling we'll be cycling thru various asset bubbles at an increasing frequency, at least until the fundamentals kick back in with a vengeance....

Market Rhymes said...

At the risk of the two of us giving each other positive strokes in an already aging post...

I agree with you Mr. Smith.

Too often I shy away from 1929 comparisons since it is viewed as an anomoly and gives the appearance of being melodramatic.

I cannot recall the percentage of the public that was in stocks in 1929, but it was very low (maybe somewhere around 10%).

The roaring 20's, the music, the flappers, and the booming industrial age were all real; they just didn't really factor in to the average person's life. There were still a large percentage of the population tied to agriculture and the 20's were a volatile period for farming.

Today's housing market is participated in by the masses and leverage is almost incalculable.

Some economists like to point to housing as different since people need a place to live and don't buy and sell their homes frequently, making them relatively illiquid.

Unfortunately too many people upgraded to McMansions and took that uncalculable risk in the last two to seven years. All that turnover makes the macro-risk of a downturn, not only equivalent to a 1929-style collapse, but exceeds it.

The only difference is that the Fed has a game plan to not let the money supply shrink to exaggerate a recession/ depression. That might have been a great game plan before they oiled the printing presses in the last two decades (since the 1987 meltdown).

Now they will be pushing on a string. The most effective way for liquidity to be added is to magnify it through fractional reserve banking; allowing the banks to lend the same dollar over and over again. What is the consumer going to borrow against and borrow to buy what?

Short term interest rates may be cut again by the Fed, but watch the long end rise as bond investors realize they are being tied to a commodity that is too plentiful and therefore too cheap (dollars).

A few world central banks protecting themselves to pare down dollar reserves and that snowball becomes the mother of all avalanches.

The dollar is trashed; the Fed has no choice but to return strength to the dollar before hyper-inflation is knocking on the door; and then we have the recession that has been postponed and has to be deep enough and long enough to rid the marketplace of malinvestment; the opposite of speculation.

Now that gets us back to the homeowners with their declining assets. Many of them are already turning their properties to rental properties. Instead of the masses working their way into bigger homes with granite and tile accessories, they will be trying to rent their granite and tile palaces and buy or rent a cheaper home with formica and linoleum.