New Century settles loan buyer breach of contract suit

By Caroline Salls

Pittsburgh, May 16 - New Century Financial Corp. and loan purchaser DB Structured Products, Inc. have settled a complaint in which DB alleged New Century breached two mortgage loan master repurchase contracts, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

Specifically, DB and New Century were disputing whether a group of 235 loans were properly transferred to the loan purchaser upon New Century's Chapter 11 bankruptcy filing.

Under the settlement:

• DB will withdraw its motion for a preliminary injunction that was included in its breach of contract complaint;

• New Century must transfer some loans that are subject to preliminary injunction under Ohio state law to a servicer of DB's choice;

• All funds being held in a Union Bank of California, NA special deposit account must be paid to DB, as well as all future amounts deposited in the account.

New Century said there is currently $267,616 in the account;

• New Century is required to reconcile all amounts collected on the DB loans;

• DB can credit a $331,000 pre-bankruptcy claim asserted by New Century toward any pre-bankruptcy amounts owed by New Century to DB; and

• Neither party can attempt to sell or transfer any of the loans in question without consent of the other party.

New Century, an Irvine, Calif.-based financial company, filed for bankruptcy on April 2. Its Chapter 11 case number is 07-10416.

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