Irvine-based New Century Financial Corp., a mortgage lender to borrowers with imperfect credit, is paying $10 million plus future payments for Access Lending Corp., a funder of home loans generated by brokers.
Sugar Land, Texas-based Access provides financing for mortgage originators doing $5 million to $100 million per month. The company is known as a warehouse lender that funds loans made by brokers and bankers who may not have the cash on hand to bankroll mortgages.
“This transaction allows New Century to enter the growing and underserved warehouse lending market,” said Kevin M. Cloyd, a New Century executive vice president.
The deal is set to close in the first quarter. Under the deal, Access Lending could get more payments in the next two years.
New Century is one of the largest subprime mortgage lenders. The company acquires mortgages from brokers and does business directly with borrowers through its Home123 unit.
Like other lenders, New Century is seeing profits squeezed amid higher interest rates and stepped up competition.
In November, New Century’s loan volume was $5.1 billion in November, up 42% from a year earlier, including loans made by recently acquired RBC Mortgage Co.
The company has been boosting interest rates on its loans to protect profits in the wake of rate increases by the Federal Reserve Board. New Century saw its profit slip in the third quarter.
