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(Bloomberg)   New Century Financial files for bankruptcy amid criminal probe of accounting practices. EVERYBODY SUBPRIME   (bloomberg.com) divider line 67
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3189 clicks; posted to Main » on 02 Apr 2007 at 11:01 AM (7 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2007-04-02 11:04:00 AM
How can this be? They were the mortgage company homeowners have come to know and trust!
 
2007-04-02 11:04:11 AM
This is just market research so that they can get a sense of what it's like for all the customers they've screwed over.
 
2007-04-02 11:04:32 AM
/got nuthin.....brain fart
 
2007-04-02 11:05:54 AM
HAHAHAH.. Serves them right, bastards.

My mortgage was sold to them (non-subprime), and I had more freaking problems with those bastards. They marked three payments as late (and put them on my credit report) even though they were on time -- they weren't crediting them to the right account number because of a problem on their side... and they refused to fix my credit report. I've filed every sort of complaint possible, and it hasn't done a bit of good.

They ended up selling my loan four months after they bought it -- but didn't send me any paperwork saying they were selling it. The first time I heard they had sold it was when the new mortgage company sent me a late notice because New Century hadn't forwarded my payment to them.

I hope everyone in that company burns in hell.
 
2007-04-02 11:06:37 AM
i hope they're the company with all the dancing ads. if so, they deserve to die.
 
2007-04-02 11:06:43 AM
I hate this. I was about to buy a house in the next week or two. Should I wait?
 
2007-04-02 11:06:52 AM
Is it just me or is the color scheme at bloomberg particularly ugly looking?
 
2007-04-02 11:08:04 AM
Just declare bankruptcy and walk away from your debts? What an awesome idea. I predict a lot of home "owners" will be doing the same over the next 2 years.
 
2007-04-02 11:09:09 AM
GlitchCog Go ahead and buy - just stay away from any of the subprime lenders. AND... if the terms of the mortgage sound too good to be true, then they probably are.
 
2007-04-02 11:09:12 AM
falser Just declare bankruptcy and walk away from your debts? What an awesome idea. I predict a lot of home "owners" will be doing the same over the next 2 years.

Too bad most homeowners can't do that anymore because of the recent consumer bankruptcy reforms (pushed by the credit card companies and... mortgage companies).
 
2007-04-02 11:09:45 AM
Oh, this will mean that, perhaps, I'll have work again! (I do corporate bankruptcy work... this was the market we've all been watching for the past several weeks.)
 
2007-04-02 11:10:06 AM
doublesecretprobation: i hope they're the company with all the dancing ads. if so, they deserve to die.

I am in agreement with you. Those ads annoy the living shiat out of me.
 
2007-04-02 11:11:15 AM
GlitchCog.. now's probably one of the best times to buy. There will be a lot of desperate people out there trying to sell their homes before they get foreclosed on.
 
2007-04-02 11:11:57 AM
Burn baby, burn.

The economic expansion we have experienced since the post-tech-bubble recession was nothing more than the effect of unprecedented lending in the real estate market. Way to increase the money supply, Fed.
 
2007-04-02 11:12:40 AM
GlitchCog

Ifyou aren't planning on going anywhere for a few years, it's a buyers market and there are some good deals out there.
 
2007-04-02 11:15:47 AM
As usual, the ones who made the most money and screwed everyone over the most, fled ahead of this announcement and took the millions upon millions of dollars with them.

The employees left behind and taxpayers (i.e. normal folk) will foot the bill.
 
2007-04-02 11:16:01 AM
GlitchCog: I was about to buy a house in the next week or two. Should I wait?

I would (and am). This is just the tip of the iceberg. Your real estate agent will tell you to "buy while interest rates are still at historical lows" in an attempt to sustain current valuations.

It is BS. Houses are still way overvalued in most markets, and now that the money is fleeing the market, prices will come down more than anyone expects. I would rather pay higher interest on a lower principal than the other way around, for tax reasons alone.
 
2007-04-02 11:19:15 AM
This is pretty seriously bad news financially; even though it's really old news. People in the lending business knew this was coming for a few months now.

New Century is the behemoth of the subprime market. Their troubles funding loans are the mortgage industry equivalent of being unable to withdraw your money from a Citibank account.

This is going to be one farking long downturn. It may be semi-permanent.
 
2007-04-02 11:21:35 AM
Oh yeah, don't buy a house quite right yet. shiat is going down and no matter what all those lenders say, it's going to get worse in a very short while which is better for buyers like us.
 
2007-04-02 11:21:45 AM
xtex Too bad most homeowners can't do that anymore because of the recent consumer bankruptcy reforms (pushed by the credit card companies and... mortgage companies).

Actually I'm pretty sure any homeowner can still turn in their keys to the bank and literally walk away from a mortgage without officially declaring bankruptcy. The bank will generally just eat the loss and continue blood sucking other people. That is, until what happened to New Century happens, and they don't have the cash to eat the losses anymore.
 
2007-04-02 11:22:34 AM
H31N0US


GlitchCog: I was about to buy a house in the next week or two. Should I wait?

I would (and am). This is just the tip of the iceberg.


I defintely would hold off if its for investment purposes; I wouldn't buy a house right now unless I was planning on holding on to it for at least 10 years.
 
2007-04-02 11:25:45 AM
No one saw this coming. Fortunately, the business losses can be socialized.
 
2007-04-02 11:26:15 AM
Lots of interesting "junk" floating around in the MBS and subprime mortgage markets. It's a good time to pick it over and rebuild some of these lenders into larger, more concentrated powers, as I suspect Citi, Wells and a few others are doing.
 
2007-04-02 11:27:02 AM
GlitchCog: I was about to buy a house in the next week or two. Should I wait?

Good luck getting a mortgage. I saw an article over the weekend in the NY Times that over the last 3 weeks standards have tightened up so much that even people with good credit are now being turned down for mortgages (unless they are willing to take higher interest rates and pay other fees). If that remains a widespread issue for a long period of time, the market will probably soften even further.
 
2007-04-02 11:28:01 AM
What's scary is that everyone is focusing on the subprime market - this thing is WAY bigger than that.

Alt-A and then prime paper is next - those people stretched just as hard to get their slice of everlasting wealth - the only difference being is they can hold on a little longer due to having some assets.

They'll stop paying the mortgage just as soon as the assets run out and the 401k's been liquidated to try to survive.

California housing is going down 35%+ by the time this is over.
 
2007-04-02 11:28:46 AM
falser: Actually I'm pretty sure any homeowner can still turn in their keys to the bank and literally walk away from a mortgage without officially declaring bankruptcy

The way it actually works is the homeowner is left with either a deficiency judgment, a large income tax bill for forgiven debt, and endless harassment.
 
2007-04-02 11:35:07 AM
Just declare bankruptcy and walk away from your debts? What an awesome idea. I predict a lot of home "owners" will be doing the same over the next 2 years.

And, for the record, this is a serious misconception. Corporations who declare Chapter 11 (as this company did) do not "walk away" from their debts.
 
2007-04-02 11:40:05 AM
damageddude: Good luck getting a mortgage. I saw an article over the weekend in the NY Times that over the last 3 weeks standards have tightened up so much that even people with good credit are now being turned down for mortgages (unless they are willing to take higher interest rates and pay other fees). If that remains a widespread issue for a long period of time, the market will probably soften even further.

I think this is just market reflex. It'll get real tight for 6 months and start to loosen up a bit.
 
2007-04-02 11:41:48 AM
damageddude: Good luck getting a mortgage.

I skimmed that, and understood it to apply to the types of zero down mtgs that inflated the bubble in the first place. If you have been saving enough for your 20% down, paying off your ccs every month, and making a decent income, you should be able to get a 30 year fixed rate easily enough.

Better yet, wait until the banks (the ones left standing) have so much infinite-duration real estate assets on their books (foreclosure fallout) that they welcome anyone willing and able to assume a mortgage...just to get some cash flow.
 
2007-04-02 11:46:20 AM
My mortgage was originally with New Century and it was sold to Citibank before the 1st payment was even due.
 
2007-04-02 11:47:07 AM
There are absolutely no Infidels in the subprime market. In fact, they cower at the gates of ALL our markets.
 
zez
2007-04-02 11:49:52 AM
New Century rode the U.S. housing boom to become the largest independent provider of mortgages to borrowers with low credit ratings, only to collapse into insolvency as a rising number of customers failed to repay on time.

www.robsell.com
 
2007-04-02 12:10:23 PM
words.grubbykid.com
 
2007-04-02 12:18:51 PM
I'm scheduled for a closing already with a rate locked in now for over a week. I got a good deal on a foreclosure near the Charlotte NC market. 1400sqft on 2.5 wooded acres for $105k. Appraisal came back at $155k. Even with the market collapsing in larger areas, I don't expect the value of this house to fall below what I'm paying for it. And I do hope to stay there 10 years, maybe more. It's the house I've wanted for many years.
 
2007-04-02 12:26:35 PM
"The economic expansion we have experienced since the post-tech-bubble recession was nothing more than the effect of unprecedented lending in the real estate market. "

You forget that all the various local governments were in on it too, as inflated housing prices allowed them to tax on the inflated value. It's how JEB! financed everything in Florida, increasing taxes on homeowners through bullshiat property value increases, so "no tax increases and some nonsense tax cuts" = more money into state coffers - because it was all really tax increases.
 
2007-04-02 12:28:28 PM
Dubya's_Coke_Dealer... I think a lot of people have overlooked that nugget. State and local gov'ts are going to get hit hard when the market resets itself. They've come to depend on all this inflated income.
 
2007-04-02 12:35:43 PM
GlitchCog

You should definitely buy if you hate your money and want to lose it over the next 5-7 years. The real estate meltdown is currently in its infancy and will be going on for at least the next 3-5 years. I would only buy if I had a large amount of cash on hand in the event I needed to move right away or lost my job, since you will be bringing a large check to any sale in the near future.

Don't buy real estate until everyone you know thinks you are an idiot for buying real estate.
 
2007-04-02 12:48:09 PM
Dubya's_Coke_Dealer: You forget

Didn't forget. Nobody was complaining about their high assessment when it meant they could leverage that into a HELOC and buy an SUV or whatever. It was all part of the scam.

Now the tail will wag the dog as Realtors hype "This house assessed at $XXX,XXX!!!" as if that assessment were based on reality and is therefore justification for excessive valuation.

The towns will not be in a hurry to adjust anything down, so the payback will be higher taxes eroding the buyer's capabilities even further.

This party is going to have one hell of a hangover.
 
2007-04-02 12:53:22 PM
The chair of the Public & Community Affairs on their Board of Directors, Dr. Harold A. Black, was one of my finance professors at the University of Tennessee. He was probably the most egotistical s.o.b. I've ever had in all my business classes. Most of the class time was spent talking about his Porsche, his two Harleys, his new truck, and how many important decisions he made during his tenure working for the government. Oh and he also boasted way too much about New Century even when their stock prices started falling last November.
 
2007-04-02 12:53:37 PM
Solution:

Geico.com
 
2007-04-02 01:01:27 PM
DO NOT BUY A HOUSE NOW.

The blood isn't even in the water yet. The subprimes going bankrupt will take 6-9 months to filter through in price reductions. It takes sellers a LONG time to wake up to the fact that they can't get last year's prices for their house because the buyer pool has shrunk greatly, due to the tightening of liquidity and the bailing out of all the speculators. Wait until the housing crisis is the #1 lead story in the news for months (I'd guess August/September of this year) and then start looking. Find 10 houses you like and offer each one 25% less than they're asking.
 
2007-04-02 01:05:34 PM
So buying a house near Santa Monica right now is a bad idea then people?

Oh dear....
 
2007-04-02 01:08:23 PM
cltbuilder

Sounds awesome, congrats!

When my wife and I were house hunting about 18 months ago, we found a house we loved on 3 acres. We put a bid and even though ours was higher, the sellers went with the 2nd highest bid. I think they were trying to move extremely fast.

Although our house now is nicer, and larger than the home on three acres was, I still think about it every so often. Would have been nice to have all that room for the 3 kids to run around. Now they just play in the street. LOL
 
2007-04-02 01:13:05 PM
I work for New Century, so I'm getting a kick out of these rep....

oh shiat.
 
2007-04-02 01:14:02 PM

You should definitely buy if you hate your money and want to lose it over the next 5-7 years.


You know, I just don't think that applies to all areas of the country. I am in the midwest, and we are getting a lot of families from California. They sell their house in California, get a much larger house here, and still have hundreds of thousands in the bank. In 2006 real estate prices rose 14% in my city. The house next to mine, which sold middle of 2006 for around $324, is now for sale at $409.

The houses behind mine are slightly smaller than mine, not as nice materials inside or out. (My doors are solid wood, hardwood floors, all brick house. The houses behind me do not have solid doors, and they are brick on the front only.) They are listed at 7k more than I paid for my house just 13 months ago. I sure hope they sell :-)
 
2007-04-02 01:21:08 PM
JKulp42757
You know, I just don't think that applies to all areas of the country. I am in the midwest, and we are getting a lot of families from California. They sell their house in California, get a much larger house here, and still have hundreds of thousands in the bank. In 2006 real estate prices rose 14% in my city. The house next to mine, which sold middle of 2006 for around $324, is now for sale at $409.


California investors and families have artificially inflated your market and you don't think that will effect your house price in the future? What if they stop showing up, since the bubble is currently blowing up in California and Florida?

Pretty much every area of the country that has had any housing appreciation beyond the normal 3-5% in the last few years will be hurting soon. They were all part of the same massive credit bubble and it doesn't matter if its the midwest or southern california, abnormal appreciation will result in reversion to the mean.
 
2007-04-02 01:31:42 PM
I own puts on this stock, they have been making me an awful lot of money.
 
2007-04-02 01:35:09 PM
Here's a forum about all this: www.globalhousepricecrash.com
 
2007-04-02 01:36:05 PM
Same thing happened in 1998. Lenders folded left and right. Not to worry. After a few months they were back with new names and no baggage(as in loans they had to buy back).
 
2007-04-02 01:42:34 PM
California investors and families have artificially inflated your market and you don't think that will effect your house price in the future? What if they stop showing up, since the bubble is currently blowing up in California and Florida?

I'm already in my house, and don't plan on moving for awhile, so I'm really not concerned about it. I do agree that it could possibly happen. Although the price differences are so staggering, even with a bubble pop in California, the prices won't come close to comparing:

$330k in California


$299k in Missouri
 
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