Anthony, forgive me for not being very impressed by a website that thinks the abbreviation for Social Security Number is "SIN."

I can't wait to hear the explanation for how these people are scamming the system by voluntarily requesting an identification number from the IRS. Yeah, that's the first thing I'd do if I were hiding from the government: call the IRS to get a number to use to pay my taxes with.

stecc,
buyers market

Thanks for the update, Anthony. I was afraid you were one of those people who thinks that Social Security is a pact with the Devil. We have some of those folk on this side of the border.

CR,

Fitch also downgraded their senior debt to B from B+ on Wednesday.

"While details have not been released, Fitch believes that more downside risk will materialize as a result of FMT's announcement pressuring FMT's financial flexibility" English translation: no one will touch their paper with a 10 foot pole, run do not walk to the nearest available exit.

Next week promises to be exciting. The week after that Bear and Lehman report. Don't change the channel.

S&P just downgraded NEW's debt to B from BB- and left it on CreditWatch with negative implications.

"We have growing concerns regarding the amount of financial stress facing New Century following the company's announcement that it will delay the release of its fourth-quarter and full-year 2006 results, as well as the restatement of
the first three quarters of 2006. In a residential mortgage market where
investors and other participants are rapidly losing confidence, it may be a
challenge for the company to work through current credit trends..."

Doesn't sound like they like whatever they have heard from NEW. Monday should be interesting.

Tanta,

$14MM on the loans involving CCI, which is about a 13% haircut if memeory serves. Given what scratch and dent loans are going for on completed, habitable structures unemcumbered by liens from the subcontractors, that sounds a little optimistic. Wonder if that includes a litigation reserve?

Brian, I'm just guessing that they ran into some obscure regulatory rule that says once your ALLL reaches 50% of your portfolio assets, you have to mail the keys to the bank to the FDIC.

From what I've read, $21MM might fund the litigation reserve. Now, about those cracking concrete pads--I mean houses--with the mechanics' liens . . .

Here are few tidbits, more to follow:

In connection with the restatement process, the Audit Committee of the Company’s Board of Directors (the “Audit Committee”), advised by its independent counsel who is assisted by forensic accountants, has initiated its own independent investigation into the issues giving rise to the Company’s need to restate its 2006 interim financial statements, as well as issues pertaining to the Company’s valuation of residual interests in securitizations in 2006 and prior periods.

In addition, the Company is determining the amount of the adjustment to the estimated fair value of its residual interests in securitizations to reflect revised prepayment, cumulative loss and discount rate assumptions with respect to the mortgage loans underlying these assets. The Company is revising the assumptions to reflect relevant data such as recent loss experience, changing market conditions and updated expectations regarding higher credit losses and faster prepayment speeds.

KPMG has informed the Company that, among other matters, it will need to be informed of the results of the Audit Committee’s investigation and the results of the Company’s negotiations with its credit providers for covenant waivers and amendments as described in Part IV before completing its audit.

. The Company currently expects that it will report a pretax loss for both the fourth quarter and the full year ended December 31, 2006.

These negative trends in results compared to 2005 are attributable primarily to:

1.\tLower Net Gain on Sale – The Company’s net gain on sale of its mortgage loans declined over the course of 2006 due primarily to (i) increased exposure to repurchased loans from whole loan buyers, (ii) increases in the percent of loans rejected by whole loan investors during their due diligence review prior to purchase and (iii) increasing severity of loss upon disposition of repurchased and other loans in discounted loan sales.

2.\tReduction in Carrying Value of Residual Assets – The Company expects to record an adjustment to the estimated fair value of its residual interests in securitizations to reflect revised prepayment, cumulative loss and discount rate assumptions with respect to the mortgage loans underlying these residual interests.

3.\tReduction in Carrying Value of Mortgage Loans Held for Sale – The Company expects to record a lower-of-cost-or-market valuation allowance reflecting the Company’s current estimate of the fair value of its inventory of mortgage loans held for sale, which is lower than the Company’s cost basis in those loans. This fair value estimate reflects changes in market conditions.

4.\tAllowance for Losses on Loans Held for Investment – The Company expects to record an increase in its allowance for losses on its portfolio of loans held for investment reflecting relevant data such as recent loss experience, changing market conditions and updated expectations regarding higher credit losses and faste

Holy crap doesn't begin to describe it, Pablo. CR, read that FMT statement!

Only 6 of 11 lenders have waived the profitability requirement so far. They have asked that it been waived for the entire year. KPMG raises the going concern opinion if they don't get the waivers. Criminal investigation. Yikes.

". Because of the previously announced restatement, the Company obtained written waivers from its various lenders with respect to compliance with this delivery requirement through March 15, 2007. If, as may occur, the Company does not file its restated financial statements for the quarters ended March 31, June 30 and September 30, 2006 and the 2006 Form 10-K on or before March 15, 2007, the Company will seek to obtain additional written waivers from its various lenders with respect to this delivery requirement.

In addition, 11 of the Company’s 16 financing arrangements require it to report at least $1 of net income for any rolling two-quarter period. The Company expects that it will not meet this requirement for the two-quarter period ended December 31, 2006. As a result, the Company is seeking to obtain waivers with respect to this covenant.

To date, six of the Company’s 11 financing arrangements whose agreements contain this rolling two-quarter net income covenant have executed waivers. Certain of these waivers will become effective when the Company receives similar waivers from each of the other lenders having the rolling two-quarter net income covenant.

In addition, where applicable, the Company is seeking amendments to its financing arrangements to modify this rolling two-quarter net income covenant for the remainder of 2007. Although there can be no assurance that the Company will receive these amendments and waivers from all of its lenders, the Company is in active dialogue with these lenders and has made progress in this regard.

In the event the Company is unable to obtain satisfactory amendments to and/or waivers of the covenants in its financing arrangements from a sufficient number of its lenders, or obtain alternative funding sources, KPMG has informed the Audit Committee that its report on the Company’s financial statements will include an explanatory paragraph indicating that substantial doubt exists as to the Company’s ability to continue as a going concern.

The staff of the SEC has requested a meeting with the Company to discuss the events leading up to the announcement of the restatements and the Company intends to comply with the SEC’s request.

On February 28, 2007, the Company received a letter from the United States Attorney’s Office for the Central District of California (the “U.S Attorney’s Office”) indicating that it was conducting a criminal inquiry under the federal securities laws in connection with trading in the Company’s securities, as well as accounting errors regarding the Company’s allowance for repurchase losses. The U.S. Attorney’s Office is requesting voluntary assistance by the Company, which the Company has agreed to provide."

All we need is DeForest Kelley (sp?) to come out and say "It's dead, Jim!"