New Century also said yesterday that it has received subpoenas in a criminal investigation over some accounting issues. Its shares are in the process of being kicked off the New York Stock Exchange and didn't trade yesterday. The crumbling foundations of subprime are rippling through the overall housing market – and raising fears of a broader economic malaise.
“It's already having an impact on housing,” said Stan Ross, chairman of the Lusk Center for Real Estate at the University of Southern California. “A lot of people are spooked. They're just looking at all this press coverage. They don't quite understand it yet, and they're getting nervous.”
Because of rising delinquencies, some lenders have begun to tweak the underwriting standards for better credit borrowers – particularly for loans that offer no down payment and incomplete proof of income, according to mortgage brokers. Subprime loan delinquencies have soared to their highest level in four years, hitting 13.3 percent in the fourth quarter for all active subprime loans, the Mortgage Bankers Association announced yesterday.