In what could be a a key ruling for those of us hoping to learn more about shady subprime lending practices, a bankruptcy judge has given New Century Financial until February 6 to turn over a report of an investigation into the firm's cash handling practices to bankruptcy monitors.
Michael Missal was appointed by judge Kevin Carey to look into the accounting mistakes and/or fraud that led the firm to file false financial statement with the SEC in 2005 and 2006. According to the AP, "That report has yet to be filed. Missal said that continued foot-dragging by the defunct lender, former leaders and accounting firm KPMG will hold it up until March."
However, he has filed the report on possible cash mishandling, but it has not been made public at the request of New Century.
If and when his full report becomes public, regulators and the public may get a glimpse of just how dirty the subprime lending industry has gotten -- you have to think KPMG is dragging its feet for a reason.
New Century is probably not alone as a company that engaged in questionable behavior related to subprime lending. Keep that in mind if you're thinking about bottom-fishing with beaten-down stocks like Novastar (NYSE: NFI) and Countrywide Financial (NYSE: CFC)
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Reader Comments (Page 1 of 1)
1-10-2008 @ 3:54PM
Joe Henry said...
How can you possibly classify Countrywide with bottomfeeders such as Novastar and New Century? Do you even know what a sub-prime loan is? Countrywide has for years been a well capitalized, well managed company that has helped more people become homeowners than any lender in history save the US government with their guaranteed loan programs. Countrywide specializes in prime loans to creditworthy borrowers and while they may do some non-prime loans, they certainly do not stoop to the practices of lenders such as you mentiion. AND no I dont work for Countrywide, I have been a broker for many years and the loans that are sent to lenders like Novastar and New Century to name a few are the loans that Countrywide will not make.