Lender lays off staff in Bellevue

About 40 workers in Bellevue who once sold subprime mortgages for New Century Financial lost their jobs last week after the troubled Irvine, Calif., company failed to find a buyer for its home-loans business.

The Bellevue employees, who worked out of an office on Southeast Sixth Street, were among 2,000 nationwide let go in this latest round of layoffs, New Century spokeswoman Laura Oberhelman said. The Bellevue office is now closed.

New Century filed for Chapter 11 bankruptcy protection April 2 and quickly laid off 3,200 workers. It tried to sell its home-loans business but found no buyer, Oberhelman said.

Employees at the Bellevue office received two weeks of severance pay as well as unused vacation time, she said.

Subprime loans are made to borrowers with tarnished credit or a heavy amount of debt relative to income.

The loans carry high interest rates compared with prime loans, but often have low initial payments.

New Century, ranked second nationally with $12.2 billion in subprime loans during the final three months of last year, according to National Mortgage News.

More than two dozen subprime lenders have failed, halted operations or put themselves up for sale in recent months as borrowers defaulted and fell into foreclosure.

At the same time, investment banks that once were eager to buy subprime loans and repackage them as bonds sold on Wall Street demanded that lenders repurchase bad loans.

In February, New Century announced it would restate financial results for the first nine months of 2006 because it had not given an accurate accounting of loan repurchases. In March, it stopped making subprime loans, Oberhelman said.

New Century made 4,733 residential real-estate loans totaling $973.7 million last year in Washington, according to the state's Department of Financial Institutions.

A little more than 230 borrowers statewide were left in the lurch when the company stopped making loans, but all have since found loans elsewhere, according to the department.

Last month, more than 100 employees at a Mountlake Terrace-based mortgage lender lost their jobs when it abruptly closed. Mortgage Investment Lending Associates had been active in the subprime market.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com