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New Century Discloses 2 Class Action Filings

Lender named as defendant in Illinois, New Jersey cases

June 18, 2004


Two class action lawsuits have been filed against New Century. A New Jersey case accuses the company of RESPA, TIL and state violations while another case in Illinois alleges violations of that state's high rate loan laws.

New Century Financial Corp. reported the lawsuits in a FORM 8-k filing with the Securities and Exchange Commission (SEC).

The first case was filed by Joseph and Emma Warburton, as plaintiffs, in a U.S. District Court in New Jersey, the Irvine, Calif., holding company said in the filing.

New Century reported in the filing that the complaint, which also names subsidiary New Century Mortgage Corp., alleges RESPA (Real Estate Settlement Procedures Act) violations, TIL (Truth in Lending Act) violations and New Jersey Consumer Fraud Act violations.

Also named as defendants were Foxtons Inc., Foxtons North America, Foxtons Realtor and Foxtons Financial Inc., according to the FORM 8-k. Foxtons, acting as the plaintiff's broker, allegedly charged fees and received a yield spread premium without disclosing the same to the plaintiffs until the time of closing, the SEC document said.

The class includes New Jersey customers of Foxtons.

The second class action lawsuit was filed in Illinois, the litigation update said. Defendant New Century Mortgage allegedly violated Section 4.1a of the Illinois Interest Act by charging more than 3 points on loans with an interest rate of 8% per annum or higher, the company reported, and violated state law by improperly charging certain fees and taxes.

Also named as a defendant in the Illinois case was Nations Title Agency of Illinois Inc., according to the filing. That class reportedly includes New Century's Illinois borrowers.

The plaintiff in the Illinois case is Kristi Lyn Randall, New Century reported.

Banking behemoth Wells Fargo Financial was named as a defendant in an unrelated class action lawsuit filed on behalf of Illinois borrowers by consumer advocate organization ACORN. That case also claims violations of Illinois' lending law because of fees that exceeded 3%. ACORN said Wells could wind up paying twice the finance charge on the loans.

Sam Garcia has been in mortgage lending since 1980, and is publisher of MortgageDaily.com and MortgageChronicle.com.

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