Accessibility links

Breaking News

US Investigators Probe Sub-Prime Mortgage Lender

A top U.S. mortgage lender says it is being investigated by the U.S. Securities and Exchange Commission, amid speculation that the company is headed for bankruptcy.

New Century Financial Corporation is the second-largest sub-prime mortgage company in the United States. It issued a statement Tuesday saying the U.S. regulator requested certain documents to investigate the company's accounting.

On Monday, the New York Stock Exchange halted trading in shares of New Century after the company said it can not pay its creditors.

New Century's problems follow the bankruptcy of some other U.S. sub-prime lenders. Some economists have expressed concern that the fallout could spread and hold back U.S. economic growth.

"Sub-prime" refers to loans made to people with poor credit histories or high debt burdens. Such mortgages generally carry a higher risk of default and a higher interest cost to borrowers.

The default rate for sub-prime mortgages has risen recently in the United States, cutting the flow of funds to lenders, and forcing some of them out of business.

New Century's stock price has dropped steeply this year as news emerged of its financial problems.

Some information for this report was provided by Reuters.