US 2nd largest SubPrime drops 70%

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NEW YORK – Mounting concerns on Wall Street that mortgage lenders might be hurt by increasing defaults and delinquencies sent investors fleeing Monday from some of the biggest names in the industry.

The meltdown among lenders that specialize in home loans to people with weak credit, known in the industry as subprime lenders, again ravaged stock prices. Financial institutions from Britain’s HSBC Holdings PLC to subprime leader Countrywide Financial Corp. sank amid reports of strained portfolios as loans went bad.

The latest to rattle the markets was New Century Financial Corp., the nation’s second-largest subprime lender. The Irvine, Calif.-based company disclosed a criminal probe into the trading of its securities and into the lender’s accounting procedures.

Already beleaguered investors were swift to react. New Century’s shares plummeted nearly 70 percent, wiping $532 million from its market value.

chicagotribune.com/business/ … siness-hed

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