New Century to adopt additional lending best practicesMortgagePress.comBest lending practices New Century Financial Corporation, a real estate investment trust and mortgage finance company, has announced the first in a series of additional lending best practices that its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation, will adopt in order to continue to provide customers with fair and informed access to credit. "In light of recent regulatory guidance and the changing interest rate and housing environment, we have re evaluated our programs and practices and developed enhanced policies and techniques to reinforce our goal of providing fair and informed access to credit," said Brad Morrice, president and chief executive officer. "While we believe that our historical practices and programs have been sound, we recognize that the changing environment warrants a fresh evaluation of our lending best practices so that we can best serve our customers, loan buyers and stockholders during this part of the real estate cycle." "These changes are the product of hard work and analysis by our credit, compliance, fair lending and production personnel. We also benefited from our ongoing dialogue with the leading national fair housing, community reinvestment, civil rights and consumer advocacy groups, as well as input from our own distinguished National Community Advisory Council. Our focus is to provide clear explanations of key loan terms for the benefit of all borrowers and to implement policy changes that would assist those borrowers who are most susceptible to principal and interest repayment issues in the current interest rate and housing environment—principally those with weaker credit histories, incomes and fewer financial reserves." The changes that the company plans to adopt consist of enhancements to disclosures, controls, product design and underwriting. These changes include: • Tightening underwriting guidelines for its adjustable-rate mortgage programs for at-risk borrowers. This includes using the fully indexed rate minus one percent as the qualifying rate for these borrowers. • Offering existing adjustable-rate-mortgage and interest-only customers who qualify the option of refinancing into a low fee 30- or 40-year fixed-rate mortgage. • Implementing plain-language disclosures that go beyond legal requirements in explaining terms such as prepayment charges, interest-only features, adjustable payment features, escrows for insurance and taxes and other key features of a loan. • Enhancing its processes for confirming the income information provided on stated income loans. In addition to the closing certification currently employed, the company will introduce a new front-end confirmation early in the loan process, to assist applicants in better understanding the terms of their loan. The company will implement these changes over the next few months and expects to announce further enhancements to its lending practices. For more information, visit www.ncen.com.