Expect A New Century Bankruptcy Soon

I hate to say I told you so but it looks like New Century Mortgage is going under. Check out this article from Chris Isidore over at CNNMoney.com. Or, just read the highlights below:

The company's filings said that several of its lenders were now demanding New Century and its subsidiaries repurchase all outstanding mortgage loans, and that its other lenders now have the right to make that demand. It said if each of them do, its total repayment obligations would be about $8.4 billion.

"The company and its subsidiaries do not have sufficient liquidity to satisfy their outstanding repurchase obligations under the company's existing financing arrangements," said the company's filing.

"We know they didn't get their $8 billion by holding a bake sale. We knew it would touch other financial institutions; now we'll see how," said Art Hogan, chief market analyst at Jefferies & Co., about the impact New Century would have on the broader financial sector.

Officials at New Century could not be reached for further comment.

Bose George, analyst with Keefe, Bruyette & Woods, an investment bank focused on the financial services sector, said he saw little chance for New Century to avoid filing for bankruptcy unless it could find a buyer for its remaining assets. Even then he's not sure how much value there would be for the company's current shareholders, given its obligations.

In addition, he said that New Century's woes are certain to spread to other subprime lenders.

I agree with Bose, this won't be the last major subprime lender to face bankruptcy or sale this year. If you want to see a list of the 36 lenders and counting that have already gone under head over to The Mortgage Lender Implode-O-Meter.