Three former executives of Plaza Home Mortgage Bank and one from Long Beach Mortgage have joined forces to form a new company, New Century Financial Corp., that will specialize in originating home loans to people with blemished credit records.
They are Robert K. Cole and Brad Morrice, who were co-presidents at Plaza; Edward F. Gotschall, former chief operating officer of Plaza; and Steve Holder, who had been Long Beach's executive vice president.
The company, which intends to serve a national market, has been operating since late last year and will close its first loan this month. It will be based in Newport Beach, Calif.
New Century will be jumping into a hot and increasingly competitive area of housing finance. Many traditional lenders have been joining the subprime market in recent months in a bid to fatten their profit margins, which have been squeezed by brisk competition for conforming loans.
A secondary market for subprime loans has also been developing rapidly and should help with the expansion of the market.
The three men from Plaza were displaced when the company was sold in 1994 to Fleet Mortgage Group. Plaza, which was based in Santa Ana, Calif., was well established as a B and C lender through its Option One subsidiary.
"The experience of our management team, coupled with our philosophy of developing diversified product lines to gain and maintain market share, will position New Century to become a leader in the nonconforming mortgage banking and consumer finance marketplace," said Mr. Cole, who will be chairman and chief executive of New Century.
Mr. Morrice will be president of the parent company and chief executive of its mortgage subsidiary. At Plaza, he was a director and general counsel of Option One, the company's B and C lending subsidiary.
Mr. Gotschall will be chief operating officer for finance at the parent company and chief financial officer of the mortgage subsidiary. He had been CFO at Plaza and at Option One.
Mr. Holder will be chief operating officer for production. In addition to his stint at Long Beach, he has a background in consumer finance.
A spokeswoman for New Century said the company expected to diversify into other products after getting the ball rolling with its B and C program. No decisions have been made yet about what the added products will be, she said.