Ohio Attorney General Marc Dann announced an agreement between his office and New Century Financial Corp. whereby New Century agrees to stop soliciting mortgage loans to Ohio consumers, accepting mortgage loan applications in Ohio, accepting any fees in conjunction with mortgage loans in Ohio, and initiating or continuing any foreclosure actions in Ohio of loans currently or prospectively in default.

The Stipulated Preliminary Injunction entered into by the Ohio Attorney General and New Century on March 28, 2007 follows a series of temporary restraining orders involving New Century in recent weeks. These actions, granted by the Cuyahoga County, Ohio Court of Common Pleas, prevented New Century from making any mortgage loans in Ohio and halted their foreclosure actions.

New Century has faced nationwide scrutiny in recent weeks arising from financial difficulties and, recently, announced that its business relationship with Freddie Mac had ended. The agreement between the Ohio Attorney General and New Century permits a thorough review of mortgage loan documents and sets a series of timeframes before foreclosure actions may commence by New Century in Ohio. The agreement specifically exempts from the detailed foreclosure procedures loans purchased by Fannie Mae or Freddie Mac, business to business loans, FHA or VA guaranteed mortgages, and certain fixed rate mortgage products.

Recent news reports state that the Ohio Attorney General’s Office is reviewing similar foreclosure and mortgage issues by other lenders, although lenders’ identities were not disclosed. Reports of high foreclosures and “predatory lending” concerns have been frontpage issues in Ohio for the past several years, leading to the passage of Senate Bill 185, the Ohio Homebuyers’ Protection Act.

For more information about the New Century agreement, SB 185, or other real estate lending issues in Ohio, contact Terrence O’Donnell (614.227.2345), Justin Ristau (614.227.4857), Christopher Slagle (614.227.8826) or any member of the Bricker & Eckler Consumer Finance & Mortgage Banking Group.