New Century Financial

This is what a typical mortgage lender's stock price looks like (or soon will)...



New Century Financial just announced a criminal probe into the trading of its securities, and its accounting procedures. The NY Times has a great article today on this latest way for a few people to get millions of dollars through good old fashioned hard work...

Even in affluent Orange County, Calif., the growing wealth of executives and brokers in the booming mortgage industry was hard to miss.

For Kal Elsayed, a former executive at New Century Financial, a large lender based in Irvine, driving a red convertible Ferrari to work at a company that provided home loans to people with low incomes and weak credit might have appeared ostentatious, he now acknowledges. But, he says, that was nothing compared with the private jets that executives at other companies had. “You just lost touch with reality after a while because that’s just how people were living,” said Mr. Elsayed, 42, who spent nine years at New Century before leaving to start his own mortgage firm in 2005. “We made so much money you couldn’t believe it. And you didn’t have to do anything. You just had to show up.”

Don't worry, the Top Executives, as always, will be fine.

New Century’s stock price, which seemed to mirror the trajectory of the subprime business, peaked at nearly $66 a share in December of 2004 and traded in the $40s most of last year; on Friday, it was trading at $11 a share after the market closed. In a series of sales from August to November, two of the company’s founders sold shares for an average price of about $40 a share, for a total profit of $21.4 million.

...Robert K. Cole, 60, a co-founder who retired as chairman and chief executive last year, lives in a 6,100-square-foot oceanfront home in Laguna Beach that is valued at tens of millions of dollars...

I wonder if Mr. Cole used a 100% no-doc option ARM to buy his mansion (probably just paid cash).

The stock closed below $5 today. This sad employee lovefest is from the New Century website:

"I’ve had so much trust in the three founders [Bob Cole, Chairman and CEO; Brad Morrice, Vice Chairman, President and COO; and Ed Gotschall, Vice Chairman]. They are smart people and they have always made great decisions to grow this company and to make it what it is right now.” [name removed to save probably soon-to-be terminated employee from embarassment], Area Sales Manager, Irvine, California

“All one has to do is listen to the founders when they address stockholders or the rank and file, and the words are always the same: we are the best and we are going to stay that way. They instill a level of confidence and enthusiasm through the entire organization.” [ditto], Area Sales Manager, Bloomington, Minnesota

“We would be lucky to have just one of these guys leading our company, let alone all three of them.” [good grief], Area Sales Manager, Campbell, California

(Employees probably would have a slightly different opinion of these three today).

Way to go Bob, Brad & Ed! Good thing stupid people weren't running the company!