California, Fannie Mae Sever Ties With New Century
Fannie Mae, the largest U.S. mortgage loan provider, yesterday informed the once largest subprime lender New Century Financial Corp. that it will no longer buy or sell NEWC mortgage loans. While largely symbolic, FNM's actions may be a death blow: NEWC cannot provide mortgages without the partially government-backed Fannie Mae's business. This is the latest in NEWC's litany of troubles: California yesterday joined a dozen other states in ordering NEWC to stop making new mortgage originations, and to direct current applications to rival lenders. NEWC's banking license is also suspended in New York, it's under investigation by the SEC, the U.S. Justice Department and the Senate Banking Committee, and it has cut 1500 jobs...