<PAGE>

                                                                    EXHIBIT 10.4

                                                                  EXECUTION COPY

                                 AMENDMENT NO. 2

                                       TO

                             LOAN PURCHASE AGREEMENT


     The LOAN PURCHASE AGREEMENT, dated as of May 10, 2002 (the "Agreement"),
among NEW CENTURY FUNDING I, a Delaware statutory trust, NEW CENTURY MORTGAGE
CORPORATION, a California corporation (the "Seller") and NEW CENTURY FINANCIAL
CORPORATION, a Delaware corporation ("New Century Financial" and together with
the Seller, the "New Century Parties"), as previously amended by Amendment No. 1
thereto dated as of November 21, 2002, is hereby being further amended by this
Amendment No. 2 dated as of June 23, 2003 (the "Amendment") as follows:

1.   Amended Terms.  The Agreement is hereby amended as follows:

     (a)  Section 3.01(a) (xii) of the Agreement is hereby amended to read as
     follows:

          "Tangible Net Worth. As of December 31, 2001, the aggregate Tangible
          Net Worth of New Century Financial is not less than $200,000,000. As
          used in this Agreement, the "Tangible Net Worth" of New Century
          Financial is the positive excess, if any of (i) all amounts which
          would be included under assets on the balance sheet of New Century
          Financial at such date under GAAP, but disregarding (a) assets booked
          as "organizational expenses" or as "goodwill", (b) notes due from
          Affiliates, (c) capitalized mortgage servicing rights, valued at the
          sole discretion of the Agent, using its reasonable business judgment,
          taking into account the level of interest rates, the characteristics
          of the mortgage loans and general market conditions, and (d) other
          intangible assets, over (ii) Total NC Indebtedness;"

     (b)  Section 4.01(h) is hereby amended to read as follows:

          "Limitation on Guarantees. The New Century Parties shall not create,
          incur, assume or suffer to exist any Guarantees by any of them of the
          obligations of others, in excess of $100,000 in the aggregate, except
          as otherwise listed on Schedule 4 hereto. As used in this Section
          4.01(h), a "Guarantee" shall not include a guarantee by one or more of
          the New Century Parties of an obligation (including a capitalized
          lease obligation) of one or more other New Century Parties."

     (c)  Section 4.01(j) of the Agreement is hereby amended as follows:

          "Maintenance of Ratio of Total Indebtedness to Book Equity: Liquidity.
          New Century Financial (i) shall not permit the consolidated ratio of

                                        1

<PAGE>

          aggregate Total NC Indebtedness to its aggregate book equity as
          determined under GAAP to be greater than 10: 1 as measured as of the
          last day of each calendar quarter and (ii) shall provide to the Agent
          on the last day of each fiscal quarter a tabulation of all borrowings
          pursuant to the Other Financing Documents. At no time following the
          Effective Date shall New Century Financial have unencumbered cash or
          Cash Equivalents, including short-term investments, of less than
          $30,000,000."

     (d)  The definition of "Total Indebtedness" is hereby replaced with the
     definition of "Total NC Indebtedness" as follows:

          "Total NC Indebtedness" means, for any period, the aggregate
          Indebtedness of New Century Financial during such period maintained in
          accordance with GAAP less the aggregate amount of any such
          Indebtedness that is reflected on the balance sheet of New Century
          Financial in respect of obligations incurred pursuant to a
          securitization transaction, solely to the extent such obligations are
          secured by the assets securitized thereby and are non-recourse to New
          Century Financial. In the event that any Indebtedness would be
          excluded from the calculation of Total NC Indebtedness but for the
          existence of recourse, New Century Financial shall be entitled
          nonetheless to exclude the amount of such Indebtedness that is not
          subject to recourse. The amount of any recourse shall be the stated or
          determinable amount thereof or, if not stated or determinable, the
          maximum reasonably anticipated liability in respect thereof as
          determined by New Century Financial in good faith and in accordance
          with GAAP."

     (e)  Paragraph (15) of Part I (Eligible Mortgage Loans) of Schedule 1 to
     the Agreement is hereby deleted in its entirety and replaced with the
     following:

          "LTV. No First Mortgage Loan has a LTV greater than 100%. No Second
          Mortgage Loan has a CLTV greater than 100%.

     (f)  Part II (Defined Terms) of Schedule 2 to the Agreement is hereby
     amended by the inclusion of the following proviso after the final word
     "Property" in each of the definitions of "Combined LTV or CLTV" and
     "Loan-to-Value Ratio or LTV":

          "provided, however, that the determination of such ratio for each
     Mortgage Loan shall be adjusted downward, as appropriate, to reflect the
     reductive effect of the PMI Policy (if any) for such Mortgage Loan."

     (g)  New Century Capital Corporation is hereby added as a party to the
     Agreement as an additional "New Century Party". The defined term "New
     Century Parties" is hereby defined to refer, collectively, to New Century
     Financial Corporation, New Century Mortgage Corporation and New Century
     Capital Corporation.

                                       2

<PAGE>

2.   Representations and Warranties. Each of the Seller and New Century
     Financial hereby represents and warrants to the Agent that, after giving
     effect to the amendments provided for herein, the representations and
     warranties contained in the Agreement and the other Note Documents will be
     true and correct in all material respects as if made on and as of the date
     hereof and that no Default or Event of Default will have occurred and be
     continuing.

3.   No Other Amendments, Effective Date.

          (a)  Except and to the extent expressly amended herein, the Agreement
shall remain in full force and effect, without any waiver, or additional
amendment or modification of any other provision thereof.

          (b)  The amendments effected hereby shall be deemed to apply
prospectively from and after the date hereof, with the exception of (i) the
amendment to Section 4.01(h) regarding Guarantees and (ii) the joinder of New
Century Capital Corporation as a "New Century Party", which shall be deemed to
apply retroactively to May 10, 2002.

4.   Expenses. The New Century Parties agree to pay and reimburse the Agent for
     all of the reasonable out-of pocket costs and expenses incurred by the
     Agent in connection with the preparation, execution and delivery of this
     Amendment, including, without limitation, the reasonable fees and
     disbursements of Dewey Ballantine LLP, counsel to the Agent.

5.   Governing Law. This Amendment, in all respects, shall be governed by, and
     construed in accordance with, the laws of the State of New York, including
     all matters of construction, validity and performance, without regard to
     principles of conflicts of law.

6.   Counterparts. This Amendment may be executed by the parties hereto in
     separate counterparts, each of which when so executed and delivered shall
     be an original, but all such counterparts together shall constitute but one
     and the same instrument.

7.   Merger and Integration. Upon execution of this Amendment by the parties to
     the Agreement, this Amendment shall be incorporated into and merged
     together with the Agreement. Except as provided herein, all provisions,
     terms and conditions of the Agreement shall remain in full force and effect
     and the Agreement as hereby amended is further ratified and reconfirmed in
     all respects.

8.   Capitalized Terms. Capitalized terms used herein and not defined herein
     have their respective meanings as set forth in the Agreement and if not
     therein then by reference therein to terms in the Note Purchase Agreement.

9.   Voting Rights. For the convenience of cross-referencing, reference is
     hereby made to that certain direction letter of even date herewith (the
     "Direction Letter") wherein New Century Mortgage Corporation, as the
     Administrator of New

                                       3

<PAGE>

     Century Funding I under the Administration Agreement and the Depositor
     under the Trust Agreement, (a) directs Wilmington Trust Company to take all
     such action with respect to the Trust as is consistent with the terms and
     conditions of each of the Agreement and the Trust Agreement and (b) thereby
     represents and warrants that (i) it is the holder of the majority of Voting
     Rights (as defined in the Trust Agreement) and (ii) the actions to be taken
     by Wilmington Trust Company pursuant to the Direction Letter and hereunder
     are authorized by, and do not conflict with, the Transaction Documents.

10.  Liability. It is expressly understood and agreed by the parties that (a)
     this Amendment is executed and delivered by Wilmington Trust Company, not
     individually or personally, but solely as Owner Trustee, in the exercise of
     the powers and authority conferred and vested in it, pursuant to the Trust
     Agreement, (b) each of the representations, undertakings and agreements
     herein made on the part of the Trust is made and intended not as personal
     representations, undertakings and agreements by Wilmington Trust Company
     but is made and intended for the purpose of binding the Trust with respect
     thereto, (c) nothing herein contained shall be construed as creating any
     liability on Wilmington Trust Company, individually or personally, to
     perform any covenant either expressly or impliedly contained herein, and
     the right to claim any and all such liability, if any, being expressly
     waived by the parties hereto and by any person claiming by, through or
     under the parties hereto, and (d) under no circumstances shall Wilmington
     Trust Company be personally liable for the payment of any indebtedness or
     expenses of the Trust or be liable for the breach or failure of any
     obligation, representation, warranty or covenant made or undertaken by the
     Trust hereunder or under any other related documents. Nothing expressed or
     implied in the preceding sentence, however, shall alter the terms and
     conditions of Section 5.1 of the Trust Agreement.

                  [Remainder of page intentionally left blank.]

                                       4

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
2 to the Agreement to be duly executed and delivered as of the date specified
above.

                                        NEW CENTURY FUNDING I


                                        By: WILMINGTON TRUST COMPANY, not in its
                                            individual capacity, but solely as
                                            Owner Trustee under the Trust
                                            Agreement


                                        By:       /s/  Patricia A. Evans
                                           -------------------------------------
                                           Name:  Patricia A. Evans
                                           Title: Assistant Vice President

                                        NEW CENTURY MORTGAGE CORPORATION


                                        By:      /s/  Patrick Flanagan
                                           -------------------------------------
                                           Name:  Patrick Flanagan
                                           Title: President

                                        NEW CENTURY FINANCIAL CORPORATION


                                        By:      /s/  Patrick Flanagan
                                           -------------------------------------
                                           Name:  Patrick Flanagan
                                           Title: Executive Vice President

                                        NC CAPITAL CORPORATION

                                        By:       /s/  Patrick Flanagan
                                           -------------------------------------
                                           Name:  Patrick Flanagan
                                           Title: Chief Executive Officer

         [Signature Page for Amendment No. 2 to Loan Purchase Agreement]

                                       5