The Irvine-based mortgage company specializing in subprime loans has stopped accepting loan applications, which is another sign that the end might be near. The company said in a regulatory filing that it's received $265 million in new financing from an unidentified lender (the WSJ said it's Morgan Stanley), but that won't be enough to keep going. Meantime, there were lots of rumbles today about New Century having to file for bankruptcy protection. It's looking like a liquidity crisis, and those are awfully hard to stem. I mean, how many lenders would be willing to get into this mess unless they were guaranteed a nice payback at the other end? By the way, a reader points out that subprime loans are sometimes used by folks with excellent credit histories who simply don't have enough income to take out a traditional loan. Many of the news stories have suggested that subprime loans as just aimed at homebuyers with lousy credit.
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