New Century Mortgage Corporation07-10419DebtorIn re:Case No.State the gross amount of income the debtor has received from employment, trade, or profession, or from operation of the debtor's business,including part-time activities either as an employee or in independent trade or business, from the beginning of this calendar year to the date thiscase was commenced. State also the gross amounts received during the two years immediately preceding this calendar year. (A debtor thatmaintains, or has maintained, financial records on the basis of a fiscal rather than a calendar year may report fiscal year income. Identify thebeginning and ending dates of the debtor's fiscal year.) If a joint petition is filed, state income for each spouse separately. (Married debtorsfiling under chapter 12 or chapter 13 must state income of both spouses whether or not a joint petition is filed, unless the spouses are separatedand a joint petition is not filed.)
1. Income from employment or operation of business
AMOUNT( 000s)SOURCE$ (69,278)1/1/2007 - 3/31/2007 Business Operations (loan origination fees, other fees, other loan costs, interest on loans, interest expense,intercompany interest, interest on investments, other income, interest expense on LHFI, servicing revenue, gain on loans fromsale)$ 701,7621/1/2006 - 12/31/2006 Business Operations (loan origination fees, other fees, other loan costs, interest on loans, interestexpense, intercompany interest, interest on investments, other income, interest expense on LHFI, servicing revenue, gain onloans from sale)$ 1,690,1931/1/2005 - 12/31/2005 Business Operations (loan origination fees, other fees, other loan costs, interest on loans, interestexpense, intercompany interest, interest on investments, other income, interest expense on LHFI, servicing revenue, gain onloans from sale)In connection with the restatement of its previously filed interim financial statements for the quarters ended March 31, 2006, June 30, 2006 and September30, 2006 (the "Interim Financial Statements"), the Audit Committee of the Board of Directors of New Century Financial Corporation (the "Company"), onthe advice of its independent counsel, initiated an independent investigation into the issues giving rise to the Company’s need to restate the InterimFinancial Statements, and as previously reported to the Securities and Exchange Commission, subsequently expanded the investigation to include issuespertaining to the Company’s valuation of certain residual interests in securitizations in 2006 and prior periods (the "Internal Investigation"). In addition toits independent counsel, the Audit Committee also retained forensic accountants and other professionals (collectively, the "Investigative Team") to assist itin connection with the Internal Investigation.Based on recent communications with members of the Investigative Team, the Audit Committee determined that there were errors in the Company’spreviously filed annual financial statements for its fiscal year ended December 31, 2005 (the "2005 Financial Statements") with respect to both theaccounting and reporting of loan repurchase losses and the Company’s valuation of certain residual interests in securitizations. The Company’s ability tofurther investigate these matters is constrained as the Company is currently in liquidation proceedings under chapter 11 of the Bankruptcy Code. However,based upon the work performed by the Investigative Team, the Audit Committee and management believe that it is more likely than not that these errors inthe aggregate resulted in a material overstatement of pretax earnings in the 2005 Financial Statements. Accordingly, on May 23, 2007, the Company’sBoard of Directors concluded, based upon the recommendation of the Audit Committee, that the 2005 Financial Statements should no longer be reliedupon.The 2005 gross income numbers listed above are as previously reported. The 2006 gross income reflects preliminary adjustments associated with therestatement process.
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