<PAGE>


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

         { X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended JUNE 30, 2000

                                       OR

        {   } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

        For the transition period from __________ to ____________

                       Commission file number  000-22633

                        NEW CENTURY FINANCIAL CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         DELAWARE                                      33-0683629
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

    18400 VON KARMAN, SUITE 1000, IRVINE, CALIFORNIA      92612
--------------------------------------------------------------------------------
   (Address of principal executive offices)            (Zip code)

Registrant's telephone number, including area code:     (949)  440-7030
                                                      --------------------------

--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                  YES         X                       NO
                       ----------------                  ------------------

AS OF JULY 31, 2000, 14,713,235 SHARES OF COMMON STOCK OF NEW CENTURY
FINANCIAL CORPORATION WERE OUTSTANDING.

<PAGE>


               NEW CENTURY FINANCIAL CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                           QUARTER ENDED JUNE 30, 2000

                                      INDEX

<TABLE>
<CAPTION>
PART I         -           FINANCIAL INFORMATION                                      PAGE
<S>                        <C>                                                        <C>
         Item 1.           Financial Statements                                           4

         Item 2.           Management's Discussion and Analysis of
                           Financial Condition and Results of Operations                 14

         Item 3.           Quantitative and Qualitative Disclosures About
                           Market Risk                                                   26

PART II        -           OTHER INFORMATION

         Item 1.           Legal Proceedings                                             27

         Item 2.           Changes in Securities and Use of Proceeds                     27

         Item 3.           Defaults Upon Senior Securities                               27

         Item 4.           Submission of Matters to a Vote of
                           Security Holders                                              27

         Item 5.           Other Information                                             28

         Item 6.           Exhibits and Reports on Form 8-K                              28

SIGNATURES                                                                               29

EXHIBIT INDEX                                                                            30
</TABLE>


                                       2
<PAGE>

Certain information included in this Form 10-Q may include "forward-looking"
statements under federal securities laws, and the Company intends that such
forward-looking statements be subject to the safe-harbor created thereby.
Such statements include (i) the assumptions used to value the Company's
residual securities, including assumptions relating to prepayment rates,
losses and delinquencies and discount rate, (ii) the anticipated mix of whole
loan sales and securitizations for the remainder of 2000, (iii) the
expectation that the Company will be able to fulfill its forward sale
commitments in the third quarter, (iv) the expectation that the Company will
be able to complete a NIMs transaction in August 2000, (v) the Company's
intention to establish an additional financing arrangement, (vi) the
Company's expectation that it will be able further to reduce its all-in
acquisition cost for loans, (vii) the expectation that consolidation of the
retail, Primewest and Anyloan.com operations will reduce overhead and
marketing expenses, (viii) the Company's belief that it will be able to
attract additional capital or a potential buyer through the PaineWebber
engagement and (ix) the belief that any liability with respect to the
Company's legal actions, individually or in the aggregate, will not have a
material adverse effect on the Company. There are many important factors that
could cause the Company's actual results to differ materially from expected
results in the forward-looking statements. Such factors include, but are not
limited to, (i) the Company's limited operating history and its ability to
sustain and manage its growth, (ii) the Company's continued ability to
maintain its funding sources, (iii) the effect of any margin calls under any
of the Company's credit facilities, (iv) volatility in the market for whole
loans, (v) the condition of the market for mortgage-backed securities, (vi)
the ability of the Company to continue to implement cost savings plans for
its business, (vii) the Company's ability to raise additional capital or
attract a buyer through the PaineWebber engagement, (viii) the effect of
proposed legislation and regulations that could restrict the Company's
business, (ix) the Company's ability to improve its cash flow and maintain
adequate liquidity, (x) the Company's ability to reduce the percentage of its
production that is excluded from its whole loan sales by loan purchasers,
(xi) the Company's ability to enter into definitive agreements regarding its
third quarter forward commitments and (xii) the other risks identified in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999 and
its other filings with the Securities and Exchange Commission.

                                       3

<PAGE>



                          ITEM 1. FINANCIAL STATEMENTS

               New Century Financial Corporation and Subsidiaries
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            (Dollars in thousands, except per share amounts)
                                                                       June 30,        December 31,
                                                                         2000             1999
                                                                      ---------         ---------
<S>                                                                   <C>               <C>
ASSETS:
Cash and cash equivalents ....................................        $   3,096         $   4,496
Loans receivable held for sale, net (notes 2 and 5) ..........          526,218           442,653
Residual interests in securitizations (note 3) ...............          393,906           364,689
Mortgage servicing assets (note 4) ...........................           22,371            22,145
Accrued interest receivable ..................................            3,057             1,538
Income taxes receivable ......................................               --               548
Office property and equipment ................................            3,470             3,780
Prepaid expenses and other assets ............................           33,381            23,860
                                                                      ---------         ---------
TOTAL ASSETS .................................................        $ 985,499         $ 863,709
                                                                      =========         =========
LIABILITIES AND STOCKHOLDERS' EQUITY:

Warehouse and aggregation lines of credit (note 5) ...........        $ 504,404         $ 428,726
Residual financing ...........................................          205,291           177,493
Subordinated debt ............................................           35,000            20,000
Notes payable ................................................            2,139             3,051
Income taxes payable .........................................              484                --
Accounts payable and accrued liabilities .....................           35,180            26,484
Deferred income taxes ........................................           29,135            34,992
                                                                      ---------         ---------
        Total liabilities ....................................          811,633           690,746

Stockholders' equity:
Preferred stock, $.01 par value.  Authorized 7,500,000 shares;
    40,000 shares issued and outstanding .....................               --                --
Common stock, $.01 par value.  Authorized 45,000,000 shares;
    issued and outstanding 14,706,560 shares at June 30, 2000
    and 14,694,984 shares at December 31, 1999 ...............              147               147
Additional paid-in capital ...................................           89,162            85,625
Retained earnings, restricted ................................           84,571            87,351
                                                                      ---------         ---------
                                                                        173,880           173,123
Deferred compensation costs ..................................              (14)             (160)
                                                                      ---------         ---------
        Total stockholders' equity ...........................          173,866           172,963
                                                                      ---------         ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...................        $ 985,499         $ 863,709
                                                                      =========         =========
</TABLE>


See accompanying notes to unaudited condensed consolidated financial statements.


                                       4

<PAGE>

               New Century Financial Corporation and Subsidiaries
                Condensed Consolidated Statements of Operations
                      (In thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                        Six Months Ended June 30,   Three Months Ended June 30,
                                         -----------------------      -----------------------
                                           2000           1999          2000           1999
                                         --------       --------      --------       --------
<S>                                      <C>            <C>           <C>            <C>
REVENUES:
  Gain (loss) on sale of loans ....      $ 21,205       $ 59,615      $ (1,605)      $ 30,187
  Interest income .................        36,212         28,974        17,771         13,656
  Servicing income ................        38,360         21,580        19,227         12,115
  Other income ....................           540             --           540             --
                                         --------       --------      --------       --------
    Total revenues ................        96,317        110,169        35,933         55,958
                                         --------       --------      --------       --------
EXPENSES:
  Personnel .......................        28,315         24,793        15,070         12,602
  Interest ........................        35,478         23,352        17,392         10,936
  General and administrative ......        24,160         19,235        12,672          9,761
  Advertising and promotion .......         7,407          5,127         3,943          2,742
  Professional services ...........         2,900          2,436         1,516          1,316
                                         --------       --------      --------       --------
    Total expenses ................        98,260         74,943        50,593         37,357
                                         --------       --------      --------       --------
Earnings (loss) before income
    taxes .........................        (1,943)        35,226       (14,660)        18,601

Income taxes (benefit) ............          (613)        14,535        (6,057)         7,722
                                         --------       --------      --------       --------
Net earnings (loss) ...............      $ (1,330)      $ 20,691      $ (8,603)      $ 10,879
                                         ========       ========      ========       ========
Basic earnings (loss) per share
    (note 6) ......................      $  (0.19)      $   1.39      $  (0.63)      $   0.73
                                         ========       ========      ========       ========
Diluted earnings (loss) per share
    (note 6) ......................      $  (0.19)      $   1.15      $  (0.63)      $   0.60
                                         ========       ========      ========       ========
</TABLE>


See accompanying notes to unaudited condensed consolidated financial statements.


                                       5

<PAGE>

               New Century Financial Corporation and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              (In thousands)
                                                                          Six Months Ended June 30,
                                                                           2000              1999
                                                                        -----------       -----------
<S>                                                                     <C>               <C>
Cash flows from operating activities:
Net earnings (loss) ..............................................      $    (1,330)      $    20,691
Adjustments to reconcile net earnings (loss) to net cash used in
    operating activities:
  Depreciation and amortization ..................................            4,849             2,805
  NIR gains ......................................................          (35,116)          (75,134)
  Initial deposits to over-collateralization accounts ............          (21,944)          (36,026)
  Deposits to over-collateralization accounts ....................          (40,416)           (9,510)
  Release of cash from over-collateralization accounts ...........           31,500             8,475
  Servicing gains ................................................           (3,138)           (7,462)
  Amortization (accretion) of NIRs/I/O's .........................           15,562            (1,526)
  Market value adjustment of residual securities .................           21,197                --
  General valuation provision for NIRs ...........................               --            13,000
  Net proceeds from NIMS transaction .............................               --            76,098
  Provision for losses ...........................................            5,850             3,589
  Loans originated or acquired for sale ..........................       (2,064,305)       (1,850,653)
  Loan sales, net ................................................        1,964,916         1,813,263
  Principal payments on loans receivable held for sale ...........           21,695             4,170
  Increase in warehouse and aggregation lines of credit ..........           69,875            27,898
  Net change in other assets and liabilities .....................          (10,019)            3,315
                                                                        -----------       -----------
Net cash used in operating activities ............................          (40,825)           (7,007)
                                                                        -----------       -----------
Cash flows from investing activities:
  Purchase of office property and equipment ......................             (746)             (185)
  Acquisition of Primewest .......................................              (43)               --
                                                                        -----------       -----------
Net cash used in investing activities ............................             (789)             (185)

Cash flows from financing activities:
  Net proceeds from residual financing ...........................           27,798            (9,246)
  Proceeds from issuance of subordinated debt ....................           15,000                --
  Net repayments of notes payable ................................             (912)             (820)
  Payment of dividends on convertible preferred stock ............           (1,450)             (746)
  Net proceeds from issuance of stock/purchase of treasury stock .             (222)             (506)
                                                                        -----------       -----------
Net cash provided by (used in) financing activities ..............           40,214           (11,318)
                                                                        -----------       -----------
Net decrease in cash and cash equivalents ........................           (1,400)          (18,510)
Cash and cash equivalents, beginning of period ...................            4,496            30,875
                                                                        -----------       -----------
Cash and cash equivalents, end of period .........................      $     3,096       $    12,365
                                                                        ===========       ===========
Supplemental cash flow disclosure:
  Interest paid ..................................................      $    35,570       $    23,525
  Income taxes paid ..............................................      $     4,212       $     9,610
Supplemental non-cash financing activity:
  Stock issued in connection with acquisition of Primewest .......      $        43       $       108
  Net assets acquired through acquisition of subsidiary ..........      $       553       $        --
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                       6

<PAGE>

               NEW CENTURY FINANCIAL CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                             JUNE 30, 2000 AND 1999

1.       Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six months ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000.

RESIDUAL INTERESTS IN SECURITIZATIONS - Residual interests in securitizations
(Residuals) are recorded as a result of the sale of loans through
securitizations and the sale of residual interests in securitizations through
what are sometimes referred to as net interest margin securities (NIMS).

The loan securitizations are generally structured as follows: First, the Company
sells a portfolio of mortgage loans to a special purpose entity (SPE) which has
been established for the limited purpose of buying and reselling mortgage loans.
The SPE then transfers the same mortgage loans to a Real Estate Mortgage
Investment Conduit or Owners Trust (the REMIC or Trust), and the Trust in turn
issues interest-bearing asset-backed securities (the Certificates) generally in
an amount equal to the aggregate principal balance of the mortgage loans. The
Certificates are typically sold at face value and without recourse except that
representations and warranties customary to the mortgage banking industry are
provided by the Company to the Trust. One or more investors purchase these
Certificates for cash. The Trust uses the cash proceeds to pay the Company the
cash portion of the purchase price for the mortgage loans. The Trust also issues
a certificate representing a residual interest in the payments on the
securitized loans. In addition, the Company may provide a credit enhancement for
the benefit of the investors in the form of additional collateral
(over-collateralization account or OC Account) held by the Trust. The OC Account
is required by the servicing agreement to be maintained at certain levels.

At the closing of each securitization, the Company removes from its consolidated
balance sheet the mortgage loans held for sale and adds to its consolidated
balance sheet (i) the cash received, (ii) the estimated fair value of the
interest in the mortgage loans retained from the securitizations (Residuals),
which consist of (a) the OC Account and (b) the net interest receivable (NIR)
and (iii) the estimated fair value of the servicing asset. The NIR represents
the discounted estimated cash flows to be received by the Company in the future.
The excess of the cash received and the assets retained by the Company over the



                                       7
<PAGE>

carrying value of the loans sold, less transaction costs, equals the net gain on
sale of mortgage loans recorded by the Company.

The NIMS are generally structured as follows. First, the Company sells or
contributes the Residuals to an SPE which has been established for the limited
purpose of receiving and selling asset-backed residual interests in
securitization certificates. Next, the SPE transfers the Residuals to an Owner
Trust (the Trust) and the Trust in turn issues interest-bearing asset-backed
securities (the Bonds and Certificates). The Company sells these Residuals
without recourse except that normal representations and warranties are provided
by the Company to the Trust. One or more investors purchase the Bonds and
Certificates and the proceeds from the sale of the Bonds and Certificates, along
with a residual interest certificate that is subordinate to the Bonds and
Certificates, represent the consideration to the Company for the sale of the
Residuals.

At the closing of each NIMS, the Company removes from its consolidated balance
sheet the carrying value of the Residuals sold and adds to its consolidated
balance sheet (i) the cash received, and (ii) the estimated fair value of the
portion of the Residuals retained, which consists of the net interest receivable
(NIR) and the OC account. The excess of the cash received and assets retained
over the carrying value of the Residuals sold, less transaction costs, equals
the net gain or loss on the sale of Residuals recorded by the Company.

The Company allocates its basis in the mortgage loans and residual interests
between the portion of the mortgage loans and residual interests sold through
the Certificates and the portion retained (the Residuals and servicing
assets) based on the relative fair values of those portions on the date of
sale. The Company may recognize gains or losses attributable to the changes
in the fair value of the Residuals, which are recorded at estimated fair
value and accounted for as "held-for-trading" securities. The Company is not
aware of an active market for the purchase or sale of Residuals and,
accordingly, the Company determines the estimated fair value of the Residuals
by discounting the expected cash flows released from the OC Account (the cash
out method) using a discount rate commensurate with the risks involved. The
Company has increased the effective discount rate to approximately 13% on the
estimated cash flows released from the OC Account to value the Residuals
through securitization and approximately 15% on the estimated cash flows
released from the Trust to value Residuals through NIMS transactions.

The Company receives periodic servicing fees for the servicing and collection of
the mortgage loans as master servicer of the securitized loans. In addition, the
Company is entitled to the cash flows from the Residuals that represent
collections on the mortgage loans in excess of the amounts required to pay the
Certificate principal and interest, the servicing fees and certain other fees
such as trustee and custodial fees. At the end of each collection period, the
aggregate cash collections from the mortgage loans are allocated first to the
base servicing fees and certain other fees such as trustee and custodial fees
for the period, then to the Certificateholders for interest at the pass-through
rate on the Certificates plus principal as defined in the servicing agreements.
If the amount of cash required for the above allocations exceeds the amount
collected during the collection period, the shortfall is drawn from the OC
Account. If the cash collected during the period exceeds the amount necessary
for the above allocations, and there is no shortfall in


                                       8
<PAGE>

the related OC Account, the excess is released to the Company. If the OC Account
balance is not at the required credit enhancement level, the excess cash
collected is retained in the OC Account until the specified level is achieved.
The cash and collateral in the OC Account is restricted from use by the Company.
Pursuant to certain servicing agreements, cash held in the OC Accounts may be
used to make accelerated principal paydowns on the Certificates to create
additional excess collateral in the OC Account which is held by the Trusts on
behalf of the Company as the Residual holder. The specified credit enhancement
levels are defined in the servicing agreements as the OC Account balance
expressed generally as a percentage of the current collateral principal balance.

The Annual Percentage Rate (APR) on the mortgage loans is relatively high in
comparison to the pass-through rate on the Certificates. Accordingly, the
Residuals described above are a significant asset of the Company. In
determining the value of the Residuals, the Company must estimate the future
rates of prepayments, prepayment penalties to be received by the Company,
delinquencies, defaults and default loss severity as they affect the amount
and timing of the estimated cash flows. The Company uses an annual default
rate estimate of 0.50% to 1.60% for adjustable rate first trust deeds and
0.45% to 0.65% for fixed rate first trust deeds. The Company's default rate
estimates result in cumulative loss estimates as a percentage of the original
principal balance of the mortgage loans of 2.30% to 3.55% for adjustable rate
first trust deeds and 2.21% to 2.79% for fixed rate first trust deeds. These
estimates are based on current pool performance, historical loss data for
comparable loans and the specific characteristics of the loans originated by
the Company. The Company estimates prepayments by evaluating historical
prepayment performance of comparable mortgage loans and the impact of trends
in the industry. The Company has used a prepayment curve to estimate the
prepayment characteristics of the mortgage loans. The rate of increase,
duration, severity and decrease of the curve depends on the age and nature of
the mortgage loans, primarily whether the mortgage loans are fixed or
adjustable and the interest rate adjustment characteristics of the mortgage
loans (6 month, 1 year, 2 year, 3 year or 5 year adjustment periods). The
Company's prepayment curve and default estimates have resulted in weighted
average lives of between 1.74 to 3.23 years for its adjustable mortgage loans
and 4.24 to 4.56 years for its fixed rate mortgage loans.

Due to the uncertainty associated with estimating future cash flows caused by
the lack of historical performance data on the mortgage loans and the absence
of an active market for the purchase and sale of Residuals, the Company has
historically established a general valuation allowance. The general valuation
allowance is based on the Company's periodic evaluation of the Residuals,
which takes into consideration trends in actual cash flow performance,
industry and economic developments, as well as other relevant factors. The
Company has also historically recorded market value adjustments in the
carrying value of its residual interests as a result of actual prepayment and
loss experience. During the six months ended June 30, 2000, the Company
recorded $26.2 million in valuation adjustments of the carrying value of its
residual interests. These valuation adjustments resulted primarily from the
increase in discount rates applied to expected cash flows from the residuals.
Historically, the Company used a 12% discount rate for Residuals through
securitizations and 14% for Residuals through NIMs transactions.

                                       9
<PAGE>

2.       Loans Receivable Held for Sale, Net

A summary of loans receivable held for sale, at the lower of cost or market at
June 30, 2000 and December 31, 1999 follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                    June 30,    December 31,
                                                      2000          1999
                                                    --------      --------
<S>                                                 <C>         <C>
Mortgage loans receivable.....................      $526,068      $441,803
Net deferred origination costs ...............           150           850
                                                    --------      --------
                                                    $526,218      $442,653
</TABLE>

3.       Residual Interests in Securitizations

Residual interests in securitizations consist of the following components at
June 30, 2000 and December 31, 1999 (dollars in thousands):

<TABLE>
<CAPTION>
                                                    June 30,         December 31,
                                                      2000              1999
                                                    --------          ---------
<S>                                                 <C>              <C>
Over-collateralization account ...........          $215,405          $ 184,545
Net interest receivable (NIR) ............           178,501            185,144
                                                    --------          ---------
                                                     393,906            369,689
General valuation allowance ..............                --             (5,000)
                                                    --------          ---------
                                                    $393,906          $ 364,689
                                                    ========          =========
</TABLE>

The following table summarizes activity in the NIR amounts for the six months
ended June 30, 2000 and 1999 (dollars in thousands):

<TABLE>
<CAPTION>
                                                    2000                1999
                                                  ---------           ---------
<S>                                               <C>                 <C>
Balance, beginning of period ...........          $ 185,144           $ 126,103
Sale of NIR through NIMS ...............                 --             (71,156)
NIR gains ..............................             35,116              75,135
Charge-offs of NIR .....................             (5,000)            (13,000)
Market value adjustment ................            (21,197)                 --
NIR accretion (amortization) ...........            (15,562)              1,611
                                                  ---------           ---------
Balance, end of period .................          $ 178,501           $ 118,693
                                                  =========           =========
</TABLE>

The following table summarizes activity in the OC accounts for the six months
ended June 30, 2000 and 1999 (dollars in thousands):

<TABLE>
<CAPTION>
                                                      2000              1999
                                                    ---------         ---------
<S>                                                 <C>               <C>
Balance, beginning of period ...............        $ 184,545         $  89,792
Initial deposits to OC accounts ............           21,944            36,025
Additional deposits to OC accounts .........           40,416             9,510
Release of cash from OC accounts ...........          (31,500)           (8,475)
                                                    ---------         ---------
Balance, end of period .....................        $ 215,405         $ 126,852
                                                    =========         =========
</TABLE>



                                       10
<PAGE>

The following table summarizes activity in the allowance for NIR losses for the
six months ended June 30, 2000 and 1999 (dollars in thousands):

<TABLE>
<CAPTION>
                                                      2000               1999
                                                     -------           --------
<S>                                                  <C>               <C>
Balance, beginning of period ..............          $ 5,000           $ 10,500
Provision for NIR losses ..................               --             13,000
Charge-offs of NIR ........................           (5,000)           (13,000)
                                                     -------           --------
Balance, end of period ....................             $ --           $ 10,500
                                                     =======           ========
</TABLE>


4.       Mortgage Servicing Assets

Mortgage servicing assets represent the carrying value of the Company's
servicing portfolio. The following table summarizes activity in mortgage
servicing assets for the six months ended June 30, 2000 and 1999 (dollars in
thousands):

<TABLE>
<CAPTION>
                                                      2000              1999
                                                    --------           --------
<S>                                                 <C>                <C>
Balance, beginning of period .............          $ 22,145           $  8,665
Additions ................................             3,138              7,462
Amortization .............................            (2,912)              (992)
                                                    --------           --------
Balance, end of period ...................          $ 22,371           $ 15,135
                                                    ========           ========
</TABLE>

The table below summarizes activity in the Company's mortgage loan servicing
portfolio for the six months ended June 30, 2000 and 1999 (dollars in millions):

<TABLE>
<CAPTION>
                                                       2000              1999
                                                      -------           -------
<S>                                                   <C>               <C>
Balance, beginning of period ...............          $ 5,950           $ 3,786
Loans funded ...............................            2,066             1,851
Payoffs/servicing released sales ...........           (2,044)             (893)
                                                      -------           -------
Balance, end of period .....................          $ 5,972           $ 4,744
                                                      =======           =======
</TABLE>



                                       11
<PAGE>

5.   Warehouse and Aggregation Lines of Credit

Warehouse and aggregation lines of credit consist of the following at June 30,
2000 and December 31, 1999 (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                    June 30,     December 31,
                                                                                      2000          1999
                                                                                    --------       --------
<S>                                                                                 <C>            <C>
         A $265 million line of credit expiring in May 2001 secured by loans
         receivable held for sale, bearing interest based on one month LIBOR
         (7.0% at June 30, 2000)...................................                $245,363       $234,778

         A $600 million master repurchase agreement bearing interest based on
         one month LIBOR (7.0% at June 30, 2000), secured by loans receivable
         held for sale. The agreement may be terminated by the lender giving
         28 days written notice.........................................             152,868        162,653

         A $300 million loan and security agreement bearing interest based on
         one month LIBOR (7.0% at June 30, 2000), secured by loans receivable
         held for sale, expiring in June 2001...........................              93,805         17,682

         A $25 million Master Loan and Security Agreement expiring in
         March 2001, secured by loans receivable held for sale and REO
         properties bearing interest based on one month LIBOR (7.0% at
         June 30, 2000).......................................                         4,079          1,673

         $13 million in warehouse lines of credit from two commercial banks
         bearing interest based on prime rate, secured by loans receivable held
         for sale, which may be terminated by the lender giving written
         notice...............................................                            --             --

         A $295 million loan and security agreement bearing interest based on
         one month LIBOR (7.0% at June 30, 2000), secured by loans receivable
         held for sale......................................................           8,289         11,940
                                                                                    --------       --------
                                                                                    $504,404       $428,726
                                                                                    ========       ========
</TABLE>


The warehouse and aggregation line of credit agreements contain certain
restrictive financial and other covenants which require the Company to, among
other things, restrict dividends, maintain certain net worth and liquidity
levels, remain below specified debt-to-net-worth ratios and comply with
regulatory and investor requirements. At June 30, 2000, the Company was in
compliance with these financial and other covenants.



                                       12
<PAGE>

6.       Earnings (loss) per Share

The following table illustrates the computation of basic and diluted earnings
(loss) per share for the periods indicated (in thousands, except per share
amounts and footnote):

<TABLE>
<CAPTION>
                                                         Three Months Ended June 30,   Six Months Ended June 30,
                                                             2000           1999         2000            1999
                                                           --------       --------     --------        --------
<S>                                                        <C>            <C>           <C>            <C>
BASIC:

Net earnings (loss) .................................      $ (8,603)      $ 10,879      $ (1,330)      $ 20,691
      Less: dividends declared on preferred stock ...          (725)          (375)       (1,450)          (746)
                                                           --------       --------      --------       --------
Earnings (loss) available to common stockholders ....      $ (9,328)      $ 10,504      $ (2,780)      $ 19,945

Weighted average common shares outstanding ..........        14,700         14,353        14,681         14,300
                                                           --------       --------      --------       --------
Earnings (loss) per share ...........................      $  (0.63)      $   0.73      $  (0.19)      $   1.39
                                                           ========       ========      ========       ========
DILUTED:

Net earnings (loss), as adjusted ....................      $ (9,328)      $ 10,879      $ (2,780)      $ 20,691
                                                           ========       ========      ========       ========

Weighted average number of common and
    Common equivalent shares outstanding:
     Weighted average common shares outstanding .....        14,700         14,353        14,681         14,300
      Dilutive effect of convertible preferred stock,
      stock options and warrants, after application .            --          3,815            --          3,769
                                                           --------       --------      --------       --------
                                                             14,700         18,168        14,681         18,069

Earnings (loss) per share ...........................      $  (0.63)      $   0.60      $  (0.19)      $   1.15
                                                           ========       ========      ========       ========
</TABLE>

The antidilutive effect of stock options and warrants outstanding for the
three and six-month periods ended June 30, 2000 was 206,525 and 336,464,
respectively. The antidilutive effect of convertible preferred stock
outstanding for the three and six-month periods ended June 30, 2000 was 4.1
million.

                                       13
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

GENERAL

New Century Financial Corporation (the Company) is a specialty finance company
in the business of originating, purchasing, selling and servicing sub-prime
mortgage loans secured primarily by first mortgages on single family residences.
The Company originates and purchases loans through its Wholesale and Retail
Divisions and through its Primewest subsidiary. The Company's borrowers
generally have substantial equity in the property securing the loan, but have
impaired or limited credit profiles or higher debt-to-income ratios than
traditional mortgage lenders allow. The Company's borrowers also include
individuals who, due to self-employment or other circumstances, have difficulty
verifying their income, as well as individuals who prefer the prompt and
personalized service provided by the Company.

LOAN ORIGINATIONS AND PURCHASES

As of June 30, 2000, the Company's Wholesale Division was operating through
five regional operating centers and 31 additional sales offices. The
Wholesale Division funded $793.2 million in loans during the three months
ended June 30, 2000. As of June 30, 2000, the Company's Retail Division was
operating through 71 sales offices. The Retail Division funded $317.2 million
in loans during the three months ended June 30, 2000, which includes loans
funded through the Company's Primewest and Anyloan.com subsidiaries.

LOAN SALES AND SECURITIZATIONS

LOAN SALE STRATEGY. The Company's loan sale strategy includes both
securitizations and whole loan sales in order to advance the Company's goal of
enhancing profits while managing cash flows. Loan sales through securitizations
permit the Company to enhance operating profits and to benefit from future cash
flows generated by the residual interests retained by the Company. Whole loan
sale transactions enable the Company to generate current cash flow, protect
against the potential volatility of the securitization market and reduce the
risks inherent in retaining residual interests in securitizations.

One of the Company's primary sources of revenue is the recognition of gains from
the sale of its loans through whole loan sales and securitizations. In a whole
loan sale, the Company recognizes and receives a cash gain upon sale. In a
securitization, the Company recognizes a gain on sale at the time the loans are
sold, but receives corresponding cash flows, represented by the
over-collateralization amount (OC) and the Net Interest Receivable (NIR)
(combined, the Residuals), over the actual life of the loans. As a result of
timing differences in receiving cash from whole loan sales versus
securitizations, the relative percentage of whole loan sales to securitizations
will affect the Company's operating cash flow. For the quarter ended June 30,
2000, $823.7 million, or 79.3%, of the Company's loan sales were in the form of
whole loan sales. Based on current liquidity and profit projections and current
market conditions, the Company anticipates that in the remainder of 2000 more
than 60% of its sales will be in the form of whole loan sales.


                                       14
<PAGE>

The Company has, to date, elected to fund the required OC at the closing of most
of its securitizations. The over-collateralization requirement ranges from two
to five percent of the initial securitization bond debt principal balance or
four to nine percent of the remaining principal balance after thirty to
thirty-six months of principal amortization. When funding all of the OC Account
up front, the Company begins to receive cash flow from the Residual immediately.
In those cases where only a portion of the OC Account is funded up front, the
Company will begin to receive cash flow from the Residual more quickly than in
cases where no initial funding is undertaken. Cash flows from the Residuals are
subject to certain delinquency or credit loss tests, as defined by the rating
agencies or the bond insurance companies. Over time, the Company will also
receive the OC, subject to the performance of the mortgage loans in each
securitization.

In connection with the origination and purchase of loans, the Company may either
receive or pay origination fees. These fees, referred to as "points" or
"premiums" in the mortgage industry, are dependent on the source of loan
production. Typically, they correspond to the amount of further processing
required for a loan to be funded and are determined as a percentage of the loan
amount. The points received from the origination of loans and the premiums paid
to originate and acquire loans are included in the gain recognized from the sale
of loans in the income statement.

The following table sets forth loan sales for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
                                   For the Six Months           For the Three Months
                                      Ended June 30,                Ended June 30,
                                  2000            1999            2000           1999
                               ----------      ----------      ----------      --------
<S>                            <C>             <C>             <C>             <C>
Whole loan sales ........      $1,320,462      $  672,630      $  823,686      $376,619
Securitizations .........         644,454       1,140,633         214,774       563,764
                               ----------      ----------      ----------      --------
         Total loan sales      $1,964,916      $1,813,263      $1,038,460      $940,383
                               ==========      ==========      ==========      ========
</TABLE>


CONDITION OF SECONDARY MARKET. For the past several quarters, whole loan
prices have remained at levels significantly lower than the prices the
Company received in earlier periods. Although prices have increased somewhat
in the first and second quarters of 2000, prices still remain significantly
below levels achieved in 1997 and early 1998. In addition, buyers in the
whole loan market are confining their purchases to loans having very specific
attributes. Unlike 1997 and early 1998, the Company has found it to be more
difficult to identify buyers willing to purchase a pool of loans representing
a cross section of the Company's entire loan production. Likewise, buyers in
recent quarters have tended to perform much more rigorous due diligence
reviews of loan pools, and have elected to exclude a significant percentage
of the loans from the pool on various bases. These factors will affect the
Company's secondary marketing strategy, cash flow and profitability and may
require the Company to adjust its business model to originate loans more
closely aligned to the guidelines of its principal whole loan buyers.

THIRD QUARTER STRATEGY. Based on current liquidity and profit projections and
current market conditions, the Company expects that in the remainder of 2000
more than 60% of its sales will be in the form of whole loan sales. The Company
has received bids and is finalizing documentation on two



                                       15
<PAGE>

forward commitments to sell an aggregate of $700 million in whole loans
during the third quarter at a weighted average price of 103.7% of the
outstanding principal balance. The commitments are subject to customary
contingencies, including the Company's ability to deliver loans having the
characteristics specified by the buyers.

RESULTS OF OPERATIONS

As of June 30, 2000, the Company's Wholesale Division operated through 31
sales offices and five regional operating centers located in 24 states. The
number of account executives in the Wholesale Division increased slightly to
138 at June 30, 2000, compared to 134 at June 30, 1999. The Company's Retail
Division operates through 71 sales offices located in 27 states. The number
of loan officers in the Retail Division, including the Primewest and
Anyloan.com subsidiaries, increased to 379 at June 30, 2000, from 332 at June
30, 1999.

SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

The Company originated and purchased $2.1 billion in loans for the six months
ended June 30, 2000, compared to $1.9 billion for the six months ended June
30, 1999. Loans originated and purchased through the Company's Wholesale
Division were $1.5 billion, or 72.7%, of total originations and purchases for
the six months ended June 30, 2000. Loans originated through the Company's
Retail Division, including its Primewest and Anyloan.com subsidiaries, were
$564.2 million, or 27.3%, of total originations and purchases for the six
month period. For the same period in 1999, Wholesale and Retail originations
and purchases totaled $1.3 billion, or 71.0% and $536.2 million, or 29.0%,
respectively, of total originations and purchases.

Total revenues for the six months ended June 30, 2000 decreased to $96.3
million, from $110.2 million for the six months ended June 30, 1999.
Servicing income increased to 39.8% of total revenues, from 19.6% in 1999.
Gain on sale of loans decreased to 22.0% of total revenues, from 54.1% in
1999. The decrease in gain on sale of loans was the result of the $21.2
million market valuation adjustment of the residual securities as well as a
significant decrease in the percent of loans sold through securitization in
the six months ended June 30, 2000, compared to the six months ended June 30,
1999. Servicing income increased primarily as a result of the increase in
interest earned on residual interests in securitizations. Residual interests
in securitizations increased from $235.0 million at June 30, 1999 to $393.9
million at June 30, 2000.

                                       16
<PAGE>

The components of the gain on sale of loans are illustrated in the following
table (dollars in thousands):

<TABLE>
<CAPTION>
                                           Six Months Ended June 30,
                                              2000           1999
                                            --------       --------
<S>                                         <C>            <C>
Gain from whole loan sale transactions      $ 33,136       $ 23,261
Non-cash gain from securitizations ...        35,116         75,134
Non-cash gain from servicing asset ...         3,138          7,462
Cash loss from securitizations/NIMS ..            --         (3,702)
Securitization expenses ..............        (3,050)        (6,430)
Accrued interest .....................        (3,804)        (6,853)
Provision for losses .................        (5,850)        (3,589)
General valuation provision for NIR ..            --        (13,000)
Market valuation adjustment of
    residual securities ..............       (21,197)            --
Non-refundable loan fees .............        29,969         25,267
Premiums paid ........................       (14,753)        (8,987)
Origination costs ....................       (31,500)       (28,700)
Hedging losses .......................            --           (248)
                                            --------       --------
Gain on sale of loans ................      $ 21,205       $ 59,615
                                            ========       ========
</TABLE>

Whole loan sales increased to $1.3 billion for the six months ended June 30,
2000, from $672.6 million for the corresponding period in 1999. This increase is
the result of a change in the mix of whole loan sales versus securitizations.
Loans sold through whole loan sales increased to 67.2% of total loan sales in
the six months ended June 30, 2000, compared to 37.1% for the corresponding
period in 1999.

Interest income increased to $36.2 million for the six months ended June 30,
2000, from $29.0 million for the same period in 1999, primarily due to increased
interest income from loans held for sale. Interest income is earned on loans
held in inventory for sale. Such interest income accrues during periods when
loans are accumulated for future sales, and increases as loan originations and
purchases increase. The increase in interest income for the six months ended
June 30, 2000 is the result of a higher average inventory of loans held for sale
compared to the corresponding period in 1999, primarily as a result of increased
loan originations and purchases.

Servicing income increased to $38.4 million for the six months ended June 30,
2000, from $21.6 million for the six months ended June 30, 1999. This increase
resulted from the increase in securitizations, pursuant to which the Company
retains ownership of the servicing rights and the residual interests. Servicing
income reflects servicing fees received on loans sold or securitized by the
Company, net of amortization of mortgage servicing assets, as well as income
recognized on residual cash flows from securitizations. As of June 30, 2000, the
Company had securitized over $7 billion in loans and retained the servicing
rights. As of June 30, 1999, the Company had securitized $4.5 billion in loans.
The portfolio of residual interests in securitizations grew from $235.0 million
at June 30, 1999 to $393.9 million at June 30, 2000.

Total expenses increased to $98.3 million for the six months ended June 30,
2000, from $74.9 million for the six months ended June 30, 1999. Interest
expense increased due to



                                       17
<PAGE>

the higher level of loan inventory and corresponding warehouse and aggregation
borrowings, as well as the increase in interest rates on warehouse borrowings.
All other expense components increased from 1999 to 2000 due to (i) higher loan
origination volume in the six months ended June 30, 2000, compared to the same
period in 1999; and (ii) the costs incurred to develop the Company's
internet-based lending initiatives.

THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999

The Company originated and purchased $1.1 billion in loans for the three
months ended June 30, 2000, compared to $959.0 million for the three months
ended June 30, 1999. Loans originated and purchased through the Company's
Wholesale Division were $793.2 million, or 71.4%, of total originations and
purchases for the three months ended June 30, 2000. Loans originated through
the Company's Retail Division, including its Primewest and Anyloan.com
subsidiaries, were $317.2 million, or 28.6%, of total originations and
purchases for the three month period. For the same period in 1999, Wholesale
and Retail originations and purchases totaled $668.6 million, or 69.7% and
$290.4 million, or 30.3%, respectively, of total originations and purchases.

Total revenues for the three months ended June 30, 2000 decreased to $35.9
million, from $56.0 million for the three months ended June 30, 1999. This
decrease was due to a $21.2 million market valuation adjustment of residual
securities as well as a decrease in the percentage of loans sold through
securitization versus whole loans sales in 2000. The decrease was partially
offset by an increase in servicing revenues due to growth in the mortgage
loan servicing portfolio and the portfolio of residual interests. The Company
experienced a loss on sale of loans of $1.6 million for the three months
ended June 30, 2000, compared to a gain on sale of $30.2 million for the
three months ended June 30, 1999, due to the writedown mentioned above as
well as the decrease in the percentage of securitizations and decreases in
whole loan prices and securitization gains recorded in 2000.


                                       18
<PAGE>

The components of the gain (loss) on sale of loans are illustrated in the
following table (dollars in thousands):

<TABLE>
<CAPTION>
                                           Three Months Ended June 30,
                                              2000           1999
                                            --------       --------
<S>                                         <C>            <C>
Gain from whole loan sale transactions      $ 20,425       $ 12,863
Non-cash gain from securitizations ...        10,093         34,198
Non-cash gain from servicing asset ...         1,076          2,943
Cash gain from securitizations/NIMS ..            --            957
Securitization expenses ..............          (887)        (3,004)
Accrued interest .....................          (990)        (2,979)
Provision for losses .................        (3,583)          (120)
General valuation provision for NIR ..            --         (9,000)
Market valuation adjustment of
    residual securities ..............       (21,197)            --
Non-refundable loan fees .............        16,397         13,816
Premiums paid ........................        (6,939)        (4,787)
Origination costs ....................       (16,000)       (14,700)
                                            --------       --------
Gain (loss) on sale of loans .........      $ (1,605)      $ 30,187
                                            ========       ========
</TABLE>

Whole loan sales increased to $823.7 million for the three months ended June 30,
2000, from $376.6 million for the corresponding period in 1999. This increase is
the result of a change in the mix of whole loan sales versus securitizations.
Loans sold through whole loan sales increased to 79.3% of total loan sales in
the three months ended June 30, 2000, compared to 40.0% for the corresponding
period in 1999.

Interest income increased to $17.8 million for the three months ended June 30,
2000, from $13.7 million for the same period in 1999, primarily due to increased
interest income from loans held for sale. Interest income is earned on loans
held in inventory for sale. Such interest income accrues during periods when
loans are accumulated for future sales, and increases as loan originations and
purchases increase. The increase in interest income for the three months ended
June 30, 2000 is the result of a higher average inventory of loans held for sale
compared to the corresponding period in 1999, primarily as a result of increased
loan originations and purchases.

Servicing income increased to $19.2 million for the three months ended June 30,
2000, from $12.1 million for the three months ended June 30, 1999. This increase
resulted from the increase in securitizations, pursuant to which the Company
retains ownership of the servicing rights and the residual interests. Servicing
income reflects servicing fees received on loans sold or securitized by the
Company, net of amortization of mortgage servicing assets, as well as income
recognized on residual cash flows from securitizations. As of June 30, 2000, the
Company had securitized over $7 billion in loans and retained the servicing
rights. As of June 30, 1999, the Company had securitized $4.5 billion in loans.
The portfolio of residual interests in securitizations grew from $235.0 million
at June 30, 1999 to $393.9 million at June 30, 2000.

Total expenses increased to $50.6 million for the three months ended June 30,
2000, from $37.4 million for the three months ended June 30, 1999. Interest
expense increased due to the higher level of loan inventory and corresponding
warehouse and aggregation



                                       19
<PAGE>

borrowings, as well as an increase in interest rates on warehouse borrowings.
All other expense components increased from 1999 to 2000 due to (i) higher loan
origination volume in the three months ended June 30, 2000 compared to the same
period in 1999; and (ii) the costs incurred to develop the Company's
internet-based lending initiatives.

RESIDUAL SECURITIES

The carrying value of the Company's residual securities at June 30, 2000 and
December 31, 1999 is summarized below (dollars in thousands):

<TABLE>
<CAPTION>
                                               June 30,     December 31,
                                                 2000           1999
                                               --------      ---------
<S>                                            <C>             <C>
Carrying value of securities ............      $393,906        369,689
Less: general valuation allowance for NIR            --         (5,000)
                                               --------      ---------
         Net book value .................      $393,906      $ 364,689
                                               ========      =========
</TABLE>

In establishing the net book value of the residual securities, management
reviews on a quarterly basis the underlying assumptions used to value each
residual security and adjusts the carrying value of the securities based on
actual experience and trends in the industry. During the second quarter of
2000, the Company recorded a market value adjustment to its residual
interests in securities of $26.2 million, $5.0 million of which was a
charge-off of the general valuation allowance for NIRs. The market value
adjustment resulted from (i) increases in interest rates which decreased the
excess spread cash flow in the adjustable rate securities; and (ii) the
Company's decision to increase, by 1%, the discount rate used to establish
the carrying value of the securities.

LIQUIDITY AND CAPITAL RESOURCES

FINANCING SOURCES. The Company requires access to short-term warehouse and
aggregation credit facilities in order to fund loan originations and purchases
pending the securitization and sale of such loans. In May 2000, the Company
renewed its $265.0 million warehouse line of credit led by U.S. Bank National
Association, with an expiration date in May 2001 and an interest rate equal to
the one month LIBOR plus 1.25%. At June 30, 2000, the balance outstanding under
the warehouse line of credit was $245.4 million.

Borrowings under the warehouse line are secured by first and second mortgages
funded through the facility. Within seven days of funding, the Company is
required to deposit the mortgage note and file with U.S. Bank to be held as
collateral. If the file is incomplete, U.S. Bank ceases to count the loan as
valid collateral in calculating the Company's available borrowing capacity. As a
consequence, the Company is essentially forced to use its own cash to carry the
loan until the file defect can be cured and the loan can be resubmitted under
the warehouse line. As of June 30, 2000, the Company's "zero-collateral" balance
was not material, and did not affect the Company's liquidity.

As of June 30, 2000, the Company also had a $600.0 million aggregation facility
with Salomon Smith Barney (Salomon), which is subject to renewal by Salomon on a
monthly basis and bears interest at a rate generally equal to the one month
LIBOR plus 1.25%. The Company also had a $25.0 million Master Loan and Security
Agreement with Salomon secured by delinquent or problem mortgages and REO
properties. The facility


                                       20
<PAGE>

expires in March 2001 and bears interest at a rate equal to the one month LIBOR
plus 2.00%. The balance of the combined Salomon facilities as of June 30, 2000
was $156.9 million.

During the second quarter of 2000, the Company renewed its aggregation and
residual financing facility with Greenwich Capital Markets (Greenwich). The
aggregation facility totals $300.0 million, and bears interest at a rate equal
to the one-month LIBOR plus 1.25%. The facility is structured as a loan and
security agreement and consists of a $200 million committed portion and a $100
million uncommitted portion. It expires in June 2001. At June 30, 2000, the
balance outstanding under the aggregation facility was $93.8 million.

As of June 30, 2000, the Company also had an aggregation and residual financing
facility with PaineWebber Real Estate Securities, Inc. (PaineWebber). The $300
million facility is structured as a loan and security agreement and bears
interest at a rate based on the one month LIBOR. The facility has an indefinite
term, and the entire amount is uncommitted. As of June 30, 2000, the balance
outstanding under the aggregation portion of this facility was $8.3 million.

At present, the Company utilizes the U.S. Bank warehouse line to finance the
actual funding of its loan originations and purchases. After loans are funded
by the Company using the warehouse line and all loan documentation is
complete, the loans are generally transferred to the Salomon, Greenwich or
PaineWebber aggregation facilities. The aggregation facilities are paid down
with the proceeds of loan sales and securitizations.

As of June 30, 2000, the Company had residual financing arrangements with
Salomon, Greenwich and PaineWebber, whereby the respective lender provides
financing of the Company's residual interests in securitizations as well as its
residual interest from NIM transactions. The amount of residual financing
provided upon each securitization is determined pursuant to formulas set forth
in the respective agreements and is generally subject to repayment as a result
of changes in the market value of the residual interests or the formula used by
the lead underwriter to determine the market value of the residual interest
(which the lead underwriter may adjust in its discretion). The Greenwich
residual financing facility has an aggregate limit of $21 million and expires in
September 2000. The Company intends to complete a NIM transaction in August 2000
that will result in the payoff of the $8.5 million in borrowings currently
outstanding under the Greenwich residual financing facility. The PaineWebber
facility is uncommitted, and is built into the overall $300 million limit for
that facility. The Salomon facility is structured as a repurchase arrangement,
and does not have a specified limit. The facilities bear interest at a rate
based on the one month LIBOR. At June 30, 2000, the balance outstanding under
these facilities was $205.3 million. In July 2000, the Company also established
a residual financing facility with Countrywide Securities Corporation. The
facility is structured as a rolling monthly repurchase agreement bearing
interest at a rate based on the one month LIBOR. At July 31, 2000 the
outstanding balance under the Countrywide facility was $2.4 million.

The Company's business requires substantial cash to support its operating
activities and growth plans. As a result, the Company is dependent on the U.S.
Bank warehouse facility, the aggregation lines and the residual financing
facilities in order to finance its



                                       21
<PAGE>

continued operations. If any of Salomon, U.S. Bank, Greenwich or PaineWebber
decided not to renew its credit facility with the Company or significantly
curtailed its lending to the Company, the loss of borrowing capacity could
have a material adverse impact on the Company's results of operations,
business and financial condition unless the Company found a suitable
alternative source.

In addition, the amount of financing the Company receives under its
warehouse, aggregation and residual financing facilities depends on the
lender's valuation of the mortgage loans or residual interests securing the
borrowings. Each lender has the right to reevaluate the collateral securing
the borrowings at any time and, if it determines that the collateral value
has decreased, to initiate a margin call. In the case of the Company's
residual financing, the residual values are ordinarily reevaluated monthly,
although the lenders have the discretion to revalue the collateral at any
time. As interest rates have risen over the last few quarters, the Company
has received a number of relatively small "margin calls" that have required
the Company to repay a portion of its residual borrowings within 24 hours. In
addition, in late July 2000, Salomon required the Company to make a mandatory
prepayment of approximately $5 million on its residual financing. As a
result, for four days the Company failed to comply with the requirement in
its U.S. Bank warehouse credit agreement that it must maintain cash and
liquidity of not less than $10 million both before and after giving effect to
any mandatory prepayment of principal under any residual financing agreement.
The Company has received a waiver of the covenant violation from the
warehouse lenders, and was in compliance with the covenant by the end of
July. Any future margin call under any of the Company's financing
arrangements could have a material adverse effect on the Company's results of
operations, financial condition and business prospects.

The Company's warehouse and aggregation lenders also have substantial
authority to determine the characteristics of the loans that will qualify as
collateral under their agreements. In the past few quarters, consistent with
industry trends, those guidelines have tightened to exclude certain high-cost
mortgages, loans to borrowers at the extreme low end of the credit spectrum,
smaller loans and other loans perceived to be riskier by the lenders.
Consequently, it is much more difficult for the Company to originate those
loans. To the extent the Company cannot originate the full spectrum of
non-prime mortgage loans for its key brokers, those relationships could be
strained and some brokers may elect to curtail their business with the
Company. This in turn could have a material adverse effect on the Company's
results of operations, financial condition and business prospects.

In addition to the warehouse, aggregation and residual financing facilities, the
Company also has a discretionary, non-revolving $5.0 million line of credit with
an affiliate of U.S. Bank secured by the Company's furniture and equipment.
Advances under this facility are made periodically at the discretion of the
lender, and bear interest at a fixed rate established at the time of each
advance for a term of three years. As of June 30, 2000, the balance outstanding
under this facility was $2.1 million, and the weighted-average interest rate
was 9.24%.

The Company has various non-revolving operating lease agreements totaling $19.1
million at June 30, 2000, for purposes of financing office property and
equipment. Advances under these facilities are made periodically and a financing
rate is established at the time of each advance.

INDUSTRY LIQUIDITY ENVIRONMENT. Although the Company has access to numerous
financing sources, the financing environment for sub-prime mortgage lenders in
general remains unfavorable by historical standards. Some large non-prime
lenders have gone out of business while others have reported losses and have
drastically decreased their operations. In this environment, lenders who have
historically been active in this sector have been much more conservative in
their decisions to extend credit to non-prime



                                       22
<PAGE>

originators. In addition, as whole loan prices have fallen, lenders have
gradually reduced the levels at which they will lend against mortgage loans and
residual interests. This reduction in advance rates has had a negative effect on
the Company's cash flow. If the lower advance rates persist, it may affect the
Company's secondary marketing strategy, and may have a material adverse effect
on the Company's results of operations, business and financial condition.

STRATEGY. The Company has employed a variety of strategies to deal with the
more difficult financing environment and to permit the Company to pursue its
desired secondary marketing strategy. In order to reduce its reliance on
single sources of aggregation, warehouse and residual financing, the Company
established the Greenwich and PaineWebber facilities. To further diversify
its funding sources the Company is exploring adding another aggregation and
residual financing relationship. The Company has also adjusted its secondary
marketing strategy to sell a greater portion of its production for cash. In
addition, the Company has devoted significant efforts to reducing its
origination costs. The "all-in acquisition cost" per loan - defined as the
sum of fees paid to wholesale brokers and correspondents, direct loan
origination costs, including commissions and corporate overhead costs, net of
points and fees received from borrowers, all divided by total production
volume - decreased in the second quarter of 2000 to 2.88%. The Company plans
to further decrease the all-in acquisition cost during the remainder of 2000.

As an additional cost savings measure, the Company has decided to combine its
retail branch operations with its Primewest and Anyloan.com centralized
retail origination units. The Company expects that this consolidation will
reduce overhead and marketing expenses for these operations.

PAINEWEBBER ENGAGEMENT. Another element of the Company's liquidity strategy is
to raise additional capital. In June 2000, the Company announced that it had
retained PaineWebber Incorporated to explore strategic options including raising
additional equity and/or debt capital or a possible sale of the Company. The
Company is currently in preliminary discussions with several parties for a
variety of potential capital transactions. There can be no assurance that the
Company will be able to raise capital or consummate a sale, or that any such
transaction would be at a price equal to or higher than the current market price
for the Company's Common Stock. Likewise, there can be no assurance that any
such transaction could be negotiated and completed in time to address the
Company's short-term capital needs. The Company's failure to raise additional
capital or complete a sale in the near term could have a material adverse effect
on the Company's results of operations, financial condition and business
prospects.

In addition, the uncertainty stemming from the Company's announcement of the
PaineWebber engagement has raised concerns among some of the Company's loan
buyers and other business counterparties. A few of these parties are insisting
on more restrictive business terms than in the past. For instance, some loan
buyers are insisting on holding back part of the purchase price on loan sales
until after the loan files and servicing have been transferred or until after
the Company has satisfied its obligation to repurchase loans that are found to
breach representations or warranties in the loan purchase agreement. These
restrictive terms place additional stress on the Company's cash flow, and could
have a material adverse effect on the Company's results of operations, financial
condition and business prospects.

CASH FLOW. For the six months ended June 30, 2000, the Company's operations
used approximately $40.8 million in cash, which is primarily attributable to
cash invested in OC accounts, as well as over $10 million in available
borrowing capacity not drawn down as of June 30, 2000. The Company records a
residual interest in securitization and recognizes a gain on sale when it
effects a securitization, but only receives the cash representing such gain
over the life of the loans securitized. In order to support its loan
origination,

                                       23
<PAGE>

purchase, securitization and servicing programs, the Company is required to make
significant cash investments that include the funding of: (i) fees paid to
brokers and correspondents in connection with generating loans through wholesale
lending activities; (ii) fees and expenses incurred in connection with the
securitization and sale of loans including over-collateralization requirements
for securitization; (iii) commissions paid to sales employees to originate
loans; (iv) any difference between the amount funded per loan and the amount
advanced under the current warehouse facility; (v) principal and interest
payments on residual financing secured by the NIM residual bonds, for which the
Company does not expect to receive cash flows during the next few quarters; (vi)
income tax payments arising from the recognition of gain on sale of loans, and
(vii) advances of delinquent principal and interest payments to the
securitization trusts for which the Company acts as servicer. The Company also
requires cash to fund ongoing operating and administrative expenses, including
capital expenditures and debt service. The Company's sources of operating cash
flow include: (i) the premium advance component of the aggregation facilities;
(ii) premiums obtained in whole loan sales; (iii) mortgage origination income
and fees; (iv) interest income on loans held for sale; (v) excess cash flow from
securitization trusts; and (vi) servicing income.

At current cash usage levels, in the near term the Company's month-end liquidity
level may dip below the $10 million covenant in the Company's U.S. Bank
warehouse agreement. If this occurs, the Company intends to seek appropriate
waivers from U.S. Bank and its other lenders. However, there can be no assurance
that such waivers would be obtained. If such waivers were not obtained, the
warehouse line and the Company's other principal financing facilities could be
terminated. Unless the Company were able to secure replacement facilities, this
would have a material adverse effect on the Company's results of operations,
financial condition and business prospects, and could negatively affect the
Company's ability to continue to operate as a going concern.

In addition, based on the Company's present cash usage rate, the Company's
current liquidity, credit facilities and capital resources may not be fully
adequate to fund its continuing operations at current production levels.
Accordingly, the Company has engaged PaineWebber to seek additional capital
or a possible purchase of the Company. In the event the Company cannot
consummate such a transaction in the near term or find additional sources of
cash, the Company may have to change its business model in order to operate
on a cash-positive basis. This would have a material adverse effect on the
Company's results of operations, financial condition and business prospects.

If the Company's liquidity position tightens, the Company believes that
(assuming current whole loan pricing levels continue, servicing cash flows
remain strong and the Company can maintain its financing relationships) the
Company would be able to improve its cash flows by selling 100% of its
production in whole loan sales and by tailoring its production to conform to
the guidelines of whole loan buyers.

U.S. BANCORP INVESTMENT AND STRATEGIC ALLIANCE

U.S. Bancorp, a bank holding company with total assets of approximately $83
billion, or its affiliates hold convertible preferred stock, common stock and
warrants in the Company that, if exercised, would total over 27% of the
Company's outstanding common stock. Prior to the second quarter, the Company
had also received $30 million in subordinated debt from U.S. Bank National
Association, an affiliate of U.S. Bancorp.

During the second quarter of 2000, the Company received an additional $5.0
million in subordinated debt from U.S. Bank, as part of U.S. Bank's agreement to
provide $10 million in subordinated debt in the second through fourth quarters
of 2000. The subordinated debt bears interest at 12% and matures in June 2002.



                                       24
<PAGE>

As of June 30, 2000, the Company had achieved the milestones necessary to
receive the second installment of subordinated debt, totaling $2.5 million, in
the third quarter. The Company borrowed these funds in July 2000. Provided that
the Company achieves specified milestones during the third quarter, the Company
will have the right to receive an additional $2.5 million in subordinated debt
in the fourth quarter.

As part of its 1998 Preferred Stock Purchase Agreement with the Company, U.S.
Bancorp has certain preemptive and first refusal rights with respect to future
stock issuances by the Company. The Agreement also contains certain restrictions
regarding the Company's ability to pursue the sale, merger or recapitalization
of the Company. The Company has received informal indication from U.S. Bancorp
that it does not object to the Company's engagement of PaineWebber to seek
additional capital or a possible sale of the Company. Similarly, although the
Company has not formally requested a waiver of U.S. Bancorp's right of first
refusal, U.S. Bancorp has given the Company informal, non-binding indications
that if a third party were to express interest in acquiring the Company, U.S.
Bancorp would be willing to waive its right of first refusal.

In July 2000, the Company entered into an agreement with U.S. Bank to receive an
additional $10 million secured by certain servicing advance receivables and
delinquent mortgage loans not covered by the Company's other secured financing
arrangements. The facility is structured as a weekly rolling repurchase
agreement, with the repurchase premium based on an interest rate of 12.0%.
The facility expires in October 2000. The inability to renew this facility, find
a suitable substitute facility or otherwise raise funds to repay the borrowings
at maturity would result in a cross-default under the Company's U.S. Bank
warehouse credit agreement and other principal financing arrangements. Unless
the Company were able to obtain waivers or secure replacement facilities, this
could have a material adverse effect on the Company's results of operations,
financial condition and business prospects, and could negatively affect the
Company's ability to continue to operate as a going concern.

LEGISLATIVE AND REGULATORY DEVELOPMENTS

There are a wide variety of proposed laws and regulations at the federal, state
and local levels designed to curb predatory lending practices. Although the
proposals are well-intentioned, many of them go far beyond curbing predatory
practices to restrict legitimate lending activities including some of the
Company's activities. For example, some of these proposals would prohibit
prepayment charges. Others would restrict a borrower's ability to elect to
finance fees and points in the loan amount. If adopted in their current form,
these proposed laws and regulations would reduce the Company's loan origination
volume, which in turn would have a material adverse impact on the Company's
results of operation, financial condition and business prospects.


                                       25
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of June 30, 2000, the Company had $393.6 million in residual interests in
securitizations and $22.4 million in mortgage servicing assets which subject the
Company to market risk. These assets are carried at fair value on the Company's
balance sheet. The Company determines the fair value of these assets using
significant assumptions (See "Notes to Consolidated Financial Statements - Basis
of Presentation"). In future periods, if cash flows are greater than projected,
the value of the assets will increase. Alternatively, if cash flows are less
than projected, the value of the assets will decrease. The Company also has
loans receivable held for sale and outstanding borrowings which subject the
Company to market risk. Loans receivable held for sale are generally sold, and
the related borrowings repaid, within three months.


                                       26
<PAGE>

PART II - OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS

                  The Company occasionally becomes involved in litigation
                  arising in the normal course of business. Management believes
                  that any liability with respect to such legal actions,
                  individually or in the aggregate, will not have a material
                  adverse effect on the Company.

ITEM 2.           CHANGE IN SECURITIES AND USE OF PROCEEDS

                  None.

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

                  None.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  The Company held its Annual Meeting of Stockholders on May 15,
                  2000. At the meeting, the stockholders approved the following
                  matters:

                  1.       Re-election of three directors for three-year terms
                           ending in 2003;

                  2.       Approval of KPMG LLP as the Company's independent
                           auditors for 2000; and

                  3.       Approval of an amendment to the Company's 1995 Stock
                           Option Plan to increase the number of shares
                           authorized to be issued under the Plan by 500,000
                           shares, from 3,000,000 shares to 3,500,000 shares.

                  The number of votes cast for or withheld and the number of
                  abstentions and broker non-votes cast as to each matter voted
                  upon at the meeting are as follows:

                              ELECTION OF DIRECTORS

<TABLE>
<CAPTION>
------------------------------ ----------------------- -----------------------------------
            NAME                        FOR                         WITHHELD
------------------------------ ----------------------- -----------------------------------
<S>                            <C>                     <C>
John C. Bentley                      11,516,923                     768,751
------------------------------ ----------------------- -----------------------------------
Robert K. Cole                       11,516,923                     768,751
------------------------------ ----------------------- -----------------------------------
Steven G. Holder                     11,516,923                     768,751
------------------------------ ----------------------- -----------------------------------
</TABLE>


                  APPROVAL OF KPMG LLP AS INDEPENDENT AUDITORS

<TABLE>
<CAPTION>
 ------------------------------ ----------------------- -----------------------------------
              FOR                      AGAINST                       ABSTAIN
 ------------------------------ ----------------------- -----------------------------------
 <S>                            <C>                     <C>
 12,270,730                             12,844                        2,100
 ------------------------------ ----------------------- -----------------------------------
</TABLE>



                                       27
<PAGE>

                 APPROVAL OF AMENDMENT TO 1995 STOCK OPTION PLAN

<TABLE>
<CAPTION>
------------------------------ ----------------------- -----------------------------------
             FOR                      AGAINST                       ABSTAIN
------------------------------ ----------------------- -----------------------------------
 <S>                            <C>                     <C>
11,170,666                           1,082,950                       32,058
------------------------------ ----------------------- -----------------------------------
</TABLE>


ITEM 5.           OTHER INFORMATION

                  None.

ITEM 6.  (A)      EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K

                  See "Exhibit Index."

         (B)      REPORTS ON FORM 8-K

                  None.


                                       28
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                            NEW CENTURY FINANCIAL CORPORATION

DATE:       August 13, 2000                 By: /s/ Brad A. Morrice
                                                --------------------------------
                                                Brad A. Morrice
                                                President


DATE:   August 13, 2000                     By:  /s/ Edward F. Gotschall
                                                --------------------------------
                                                Edward F. Gotschall
                                                Chief Financial Officer
                                                (Principal Financial and
                                                 Accounting Officer)


                                       29
<PAGE>

                                  EXHIBIT INDEX

Exhibit             Description of
Number                 Exhibit
-------             --------------

*3.1              First Amended and Restated Certificate of Incorporation of
                  the Company

**3.2             Certificate of Designation for Series 1998A Convertible
                  Preferred Stock

***3.3            Certificate of Designation for Series 1999A Convertible
                  Preferred Stock

*3.4              First Amended and Restated Bylaws of the Company

****3.5           Amended Certificate of Designation for Series 1999A
                  Convertible Preferred Stock

*4.1              Specimen Stock Certificate

*****4.2          Specimen Series 1998A Convertible Preferred Stock Certificate

***4.3            Specimen Series 1999A Convertible Preferred Stock Certificate

10.1              Third Amendment to Fourth Amended and Restated Credit
                  Agreement, dated May 24, 2000 by and among New Century
                  Mortgage Corporation and U.S. Bank National Association

10.2              Fourth Amendment to Fourth Amended and Restated Credit
                  Agreement, dated June 29, 2000 by and among NC Capital
                  Corporation and Greenwich Capital Financial Products, Inc.

10.3              Amendment Number Two to the Master Loan and Security
                  Agreement, dated June 23, 2000 by and among NC Capital
                  Corporation and Greenwich Capital Financial Products, Inc.

10.4              Amendment Number One to the Residual Financing Facility
                  Agreement, dated June 23, 2000 by and among NC Capital
                  Corporation and Greenwich Capital Financial Products, Inc.

10.5              Intercreditor Letter Agreement, dated June 30, 2000 by and
                  among NC Capital Corporation and Greenwich Capital Financial
                  Products, Inc.

10.6              Purchase Agreement dated July 20, 2000 by and among New
                  Century Mortgage Corporation and U.S. Bank National
                  Association



                                       30
<PAGE>

10.7              Restated Purchase Agreement dated July 31, 2000 by and among
                  New Century Mortgage Corporation and U.S. Bank National
                  Association

27.1              Financial Data Schedule

*        Incorporated by reference from the Company's Form S-1 Registration
         Statement (No. 333-25483) as filed with the SEC on June 23, 1997.

**       Incorporated by reference from the Company's Form 8-K as filed with the
         SEC on December 8, 1998.

***      Incorporated by reference from the Company's Quarterly Report on Form
         10-Q as filed with the SEC on August 16, 1999.

****     Incorporated by reference from the Company's Quarterly Report on form
         10-Q as filed with the SEC on May 15, 2000.

*****    Incorporated by reference from the Company's Annual Report on form 10-K
         for the year ended December 31, 1998 as filed with the SEC.

                                       31