New Century Financial Corporation to Adopt Additional Lending Best Practices Designed to Enhance Fair and Informed Access to Credit

IRVINE, Calif., Oct. 12 /PRNewswire-FirstCall/ -- New Century Financial Corporation , a real estate investment trust (REIT) and one of the nation's premier mortgage finance companies, today announced the first of a series of additional lending best practices that its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation, will adopt in order to continue to provide customers with fair and informed access to credit.

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"In light of recent regulatory guidance and the changing interest rate and housing environment, we have reevaluated our programs and practices and developed enhanced policies and techniques to reinforce our goal of providing fair and informed access to credit," said Brad Morrice, President and Chief Executive Officer. "While we believe that our historical practices and programs have been sound, we recognize that the changing environment warrants a fresh evaluation of our lending best practices so that we can best serve our customers, loan buyers and stockholders during this part of the real estate cycle.

"These changes are the product of hard work and analysis by our credit, compliance, fair lending and production personnel," continued Mr. Morrice. "We also benefited from our ongoing dialogue with the leading national fair housing, community reinvestment, civil rights and consumer advocacy groups, as well as input from our own distinguished National Community Advisory Council.

"Our focus is to provide clear explanations of key loan terms for the benefit of all borrowers and to implement policy changes that would assist those borrowers who are most susceptible to principal and interest repayment issues in the current interest rate and housing environment -- principally those with weaker credit histories, incomes and fewer financial reserves," concluded Mr. Morrice.

The changes that the company plans to adopt consist of enhancements to disclosures, controls, product design and underwriting. These changes include:

* Tightening underwriting guidelines for its adjustable-rate mortgage programs for at-risk borrowers. This includes using the fully-indexed rate minus 1 percent as the qualifying rate for these borrowers. * Offering existing adjustable-rate mortgage (ARM) and interest-only customers who qualify the option of refinancing into a low fee 30-year or 40-year fixed-rate mortgage. Any borrower having problems meeting their loan obligations should feel free to contact the company at one of the following numbers to discuss options for keeping them in their home: 1-800-509-8071 or 1-866-395-5880. * Implementing plain language disclosures that go beyond legal requirements in explaining terms such as prepayment charges, interest-only features, adjustable-payment features, escrows for insurance and taxes and other key features of a loan. * Enhancing its processes for confirming the income information provided on stated income loans. In addition to the closing certification currently employed, the company will introduce a new front-end confirmation early in the loan process to assist applicants in better understanding the terms of their loan.

The company will implement these changes over the next few months and expects to announce further enhancements to its lending practices.

Company to Participate at National Fair Housing Alliance Fair Lending Training Conference

In addition, New Century is proud to announce its participation in and support of the National Fair Housing Alliance's (NFHA) Fair Lending Training Conference being held October 12 and 13 in Washington D.C. The conference will feature the foremost experts in their fields and is a cooperative effort between the industry, regulatory and advocacy groups. Speaking at the conference from New Century will be Stergios Theologides, Executive Vice President, Corporate Affairs and General Counsel and Marc Loewenthal, Senior Vice President, Corporate Affairs and Chief Privacy Officer.

About New Century Financial Corporation

Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation is a real estate investment trust and one of the nation's premier mortgage finance companies, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. New Century is committed to serving the communities in which it operates with fair and responsible lending practices. To find out more about New Century, please visit http://www.ncen.com/

Safe Harbor Regarding Forward-Looking Statements

Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws and the company intends that such forward-looking statements be subject to the safe-harbor created thereby. Such forward-looking statements include, but are not limited to: (i) the company's expectation that it will continue to evaluate its lending best practices to best serve its customers, loan buyers and stockholders during this part of the real estate cycle; (ii) the company's plan to adopt the following enhancements to its disclosures, controls, product design and underwriting: (a) tightening underwriting guidelines for its adjustable-rate mortgage programs for at-risk borrowers, (b) offering existing adjustable-rate mortgage (ARM) and interest-only customers the option of refinancing into a low fee 30-year or 40-year fixed-rate mortgage, (c) implementing plain language disclosures that go beyond legal requirements in explaining terms such as prepayment charges, interest-only features, adjustable-payment features, escrows for insurance and taxes and other key features of a loan and (d) enhancing its processes for confirming the income information provided on stated income loans by introducing a new front-end confirmation early in the loan process to assist applicants in better understanding the terms of their loan; (iii) the company's expectation that it will implement these changes over the next few months; and (iv) the company's expectation that it will announce further enhancements to its lending best practices in the coming months. The company cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements. Such factors include, but are not limited to: (i) the condition of the U.S. economy and financial system; (ii) the interest rate environment; (iii) the effect of increasing competition in the company's sector; (iv) the stability of residential property values; (v) the ability of the company to close on its forward loan-sale commitments at its projected gain-on-sale executions; (vi) the potential effect of new state or federal laws and regulations; (vii) the outcome of litigation or regulatory actions pending against the company; and (viii) the company's ability to maintain adequate credit facilities to finance its business. Additional information on these and other factors is contained in the company's Annual Report on Form 10-K for the year ended December 31, 2005 and the other periodic filings of the company with the Securities and Exchange Commission. The company assumes no, and hereby disclaims any, obligation to update the forward-looking statements contained in this press release.