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Ohio Moves to Shut Down New Century Financial

March 15, 2007

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A Cuyahoga County, Ohio Common Pleas judge has granted a temporary restraining order that bars New Century Financial Corporation, the troubled sub-prime lender teetering on the brink of financial collapse, from operating in the state.

"We are doing everything in our power to protect homeowners whose mortgages are held by New Century as well as consumers who have pending applications," Attorney General Marc Dann said. "And we are also demanding that this company be held accountable for all its misdeeds."

Dann said New Century "provides a glaring and disturbing look at the problems associated with predatory lending. If nothing else, this debacle underscores the need for us to drive New Century and unscrupulous operators out of our state once and for all."

In the suit, the attorney general and John Reardon, Superintendent of Financial Institutions, charge the company, whose well-publicized financial problems have caused upheaval in the world's financial markets, has committed numerous violations of the Consumer Sales Practices Act, as well as the Ohio Mortgage Loan Act and Ohio Mortgage Brokers Act.

Those violations include making false and misleading statements, accepting money from consumers to process loans even though the company knew it did not have the money to fund them, failing to promptly deliver promised services, and failing to act in good faith.

In light of these acts, Dann asked the Court for a declaratory judgment stating that each act alleged in the complaint is a violation of the Consumer Sales Practices Act and an injunction to stop New Century and it subsidiaries from doing any of the following:

• Soliciting consumers for brokers services or mortgage loans
• Accepting fees from consumers to process loans
• Accepting mortgage loan applications in Ohio
• Arranging appraisals
• Initiating new foreclosure actions
• Pursuing pending foreclosures
• Enforcing foreclosure sale notices
• Evicting consumers from houses in foreclosure.

The suit also asks the court to require the company to notify all consumers whose loans are in process that they will not be funded, return all fees paid by consumers whose loans are pending, and release consumers with pending loans from any contract or liability.

Dann is also asking the court to impose fines against New Century and to order the lender to maintain all business records related to transactions in Ohio for a period of five years.

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