Brad A. Morrice, vice chairman of mortgage lender New Century Financial Corp., projects the company's production will grow to $30 billion in 2004, adding that New Century was on track to hit its $27 billion target this year. Morrice recently spoke at the Friedman Billings Ramsey Group's investor conference.

Additionally, its proprietary Web-based loan submission service, "FastQual," accounted for an unexpectedly large portion of the company's originations. Launched in the first quarter of 2002, the platform was initially projected to comprise 20% of its loan origination program but by the third quarter of this year, that figure was $5.7 billion, or a whopping 75% of its origination program. The platform, currently used by Fannie Mae and Freddie Mac, will soon receive ratings of some sort from Moody's Investors Service and Standard & Poor's.

"We're hoping to achieve a rating in the first or second quarter [of 2004]," Morrice said.

About 20% of New Century's revenue comes from on-balance sheet securitizations and 80% from whole-loan sales; according to company figures, New Century has boosted its market share to 8.3% from 3.7% in 3Q01. With $7.7 billion in wholesale production, it is the No. 1 wholesaler of non-prime loans in the U.S. Four new regional operating centers are planned for 2004.

According to CFO Patti M. Dodge, on-balance sheet securitizations are a "huge element" of New Century's success story. By 3Q03, those securitizations totaled $3.8 billion, with $5 billion projected for 2004. Allowing loans to stay on the balance sheet creates earnings that will be recognized in future periods, Dodge noted. Furthermore, of the projected $7 in EPS for

2004, Dodge stated $2 of that would be derived from on-balance sheet securitizations, with the other $5 stemming from mortgage operations.

"A stable, predictable interest rate environment in 2004 will aid us," said CEO Robert K. Cole. He noted word from key government figures is to not expect any surprises next year. Rates are expected to go up, but not enormously.

In other conference news, another nonprime lender drawing a packed house was Accredited Home Lenders, which closed a $515 million ABS issue in late November.

Co-founder Ray McKewon announced $5.6 billion in year-to-date originations, $4.2 billion in whole-loan sales and $1.2 billion in securitizations. A total of $2.56 billion was extended to Accredited from warehouse lenders.

"We will have an active quarterly securitization program next year," McKewon said.

Like New Century, Accredited's officers are not expecting dramatic interest rate hikes next year.

"We look for reasonable interest rate increases, perhaps 150 basis points over the course of the year," said CEO James Konrath.

As 54% of its loans are aimed at cash-out refinance and debt consolidation, and 37% for outright purchases, the only portion of Accredited's lending program that stands to be heavily affected by rising interest rates is the 9% it recorded in rate and/or term refinance.

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