Exhibit 10.3

 

MORGAN STANLEY MORTGAGE CAPITAL INC.

1221 Avenue of the Americas, 27th Floor

New York, New York 10020

 

October 1, 2004

 

New Century Financial Corporation

18400 Von Karman, Suite 1000

Irvine, California 92612

Attention: Ralph Flick

 

  Re: Termination of Guaranty

 

Ladies and Gentlemen:

 

Reference is hereby made to (i) that certain Second Amended and Restated
Guaranty, dated as of January 30, 2004 (as amended, restated, supplemented or
otherwise modified from time to time, the “Existing Guaranty”), made by New
Century Financial Corporation, a Delaware corporation (the “Existing Guarantor”)
in favor of Morgan Stanley Bank (“MSB”) and Morgan Stanley Mortgage Capital Inc.
(“MSMCI”, together with MSB, the “Beneficiaries”) and (ii) that certain Third
Amended and Restated Master Loan and Security Agreement, dated as of October 1,
2004 (as amended, restated, supplemented or otherwise modified from time to
time, the “Loan Agreement”), among NC Capital Corporation, a California
corporation (“NC Capital”), New Century Mortgage Corporation, a California
corporation (“New Century”), NC Residual II Corporation, a Delaware corporation
(“NC Residual”, together with NC Capital and New Century, the “Existing
Borrowers”), New Century Credit Corporation, a California corporation (“NC
Credit”, together with the Existing Borrowers, collectively, the “Borrowers”,
each, a “Borrower”), Morgan Stanley Bank, a Utah industrial loan corporation
(“MSB”), as a lender (a “Lender”), and Morgan Stanley Mortgage Capital Inc., a
New York corporation (“MSMCI”), as a lender (a “Lender”, in such capacity,
together with MSB, collectively, the “Lenders”) and as agent for the Lenders (in
such capacity, the “Agent”).

 

This letter will serve as confirmation that, (i) effective as of the date
hereof, the Existing Guarantor has been renamed New Century TRS Holdings, Inc.,
a Delaware corporation, (ii) pursuant to that certain Guaranty, dated as of
October 1, 2004 (the “Replacement Guaranty”), made by New Century Financial
Corporation, a Maryland corporation (f/k/a New Century REIT, Inc., a Maryland
corporation) (the “Replacement Guarantor”) in favor of the Lenders and the
Agent, the Replacement Guarantor shall be the Guarantor under the Loan Agreement
and (iii) effective upon the effectiveness of the Replacement Guaranty, the
Existing Guaranty shall be deemed to be terminated and, except for those
provisions which by their terms survive such termination, the Existing Guaranty
shall be of no further force or effect and the Existing Guarantor shall have no
further obligations thereunder.

 

[SIGNATURES FOLLOW]

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Very truly yours,

MORGAN STANLEY MORTGAGE

CAPITAL INC.

By:

 

/s/ Paul J. Najarian

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Name:

 

Paul J. Najarian

Title:

 

Vice President

 

Acknowledged and agreed:

MORGAN STANLEY BANK

By:

 

/s/ Paul J. Najarian

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Name:

 

Paul J. Najarian

Title:

 

Vice President

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Acknowledged and agreed:

 

NEW CENTURY TRS HOLDINGS, INC., a Delaware corporation

(f/k/a New Century Financial Corporation, a Delaware corporation)

 

By:

 

/s/ Kevin Cloyd

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Name:

 

Kevin Cloyd

Title:

 

Executive Vice President

 

NEW CENTURY FINANCIAL CORPORATION, a Maryland corporation

(f/k/a New Century REIT, Inc., a Maryland corporation)

 

By:

 

/s/ Kevin Cloyd

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Name:

 

Kevin Cloyd

Title:

 

Executive Vice President