New Century Financial

New Century Financial's 2007 bankruptcy made it the largest subprime lender failure, a preview of the broader crisis to come. The company had grown from $1 billion to $60 billion in loan originations in six years by specializing in subprime borrowers. When housing prices flattened, early payment defaults spiked, and warehouse lenders cut credit. The mechanism failure was business model dependent on perpetually rising housing prices.