It's hard to say exactly when the mortgage boom came a tumbling down, but a good place to start would be OC-based New Century Financial, the one-time mortgage lender that came out of nowhere to become one of the biggest players in the subprime business. Today, the SEC is filing civil fraud charges against three of the firm's executives, alleging that they misled investors and overstated profits. Those charged are former CEO and co-founder Brad A. Morrice of Laguna Beach, former CFO Patti Dodge of Irvine, and former Controller David Kenneally of Rossmoor. From the SEC release:
In its complaint, the SEC alleges that New Century disclosures generally sought to assure investors that its business was not at risk and was performing better than its peers. Defendants, however, failed to disclose important negative information, including dramatic increases in early loan defaults, loan repurchases, and pending loan repurchase requests. Defendants knew this negative information from numerous internal reports they regularly received, including weekly reports that Morrice ominously entitled "Storm Watch."