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Natixis to Bid New Century Adieu

Mark DeCambre

France's fourth-largest bank, Natixis, plans on unloading $800 million in mortgage loans tied to beleaguered subprime lender New Century (NEWC).

A Natixis spokeswoman in Paris was unable to comment, and a spokeswoman at New Century didn't immediately return a call for comment.

The move marks the second such subprime selloff by bank lenders looking to unload debt provided to the troubled mortgage lender. At the same time, it suggests that a bankruptcy may be imminent.

Natixis is conducting a public auction for loans provided to New Century subsidiaries NC Asset Holding LP, New Century Mortgage Corp., NC Capital Corp., Home 123 Corp. and New Century Credit Corp.

The French lender announced the auction Tuesday in an advertisement, similar to one taken out by Morgan Stanley (MS) in The New York Times and The Wall Street Journal on Friday, where it disclosed plans to hawk $2.48 billion in New Century debt.

New Century has stopped making new loans and funding loans in process, as virtually all of its lenders have pulled its lines of credit.

Natixis was created in November from the merger of units of Groupe Caisse d'Epargne and Groupe Banque Populaire.

Irvine, Calif.-based New Century has stated publicly that it has no more than about $60 million to operate its business, and a number of states, including New Jersey and California, have forced it to cease and desist from providing residential loans.

The company is under investigation by the Securities and Exchange Commission and U.S. Attorney's office, and the New York Stock Exchange delisted the company for falling below listing requirements.

Most recently, Barclays has asked New Century to repurchase $900 million of mortgage loans.

Lenders such as New Century, Fremont General (FMT), Accredited Home Lenders (LEND) and NovaStar (NFI) have been rocked by rising delinquencies and defaults.

In addition, the companies also have been slammed by financing providers looking for lenders to take back at least a portion of loans sold to them.

More than two dozen subprime lenders have been forced to close or sell operations as defaults on those mortgages have risen to a seven-year high, according to data compiled by Friedman Billings Ramsey of Arlington, Va.

Fremont General announced last week that it is selling $4 billion of loans. The Santa Monica, Calif., lender said it was exiting the subprime business in February.

Accredited scored a $200 million term loan commitment from hedge fund Farallon Capital Management of San Francisco. Accredited is selling $2.7 billion worth of loans held for sale to an unnamed buyer so it can meet margin calls.