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                                                                    EXHIBIT 10.4
                                                                    ------------

                                FIRST AMENDMENT
                                     TO THE
                       NEW CENTURY FINANCIAL CORPORATION
                 FOUNDING MANAGERS' INCENTIVE COMPENSATION PLAN
                   (Amended and Restated as of May 24, 1997)

                                        
     WHEREAS,  New Century Financial Corporation (the "Company") maintains the
New Century Financial Corporation Founding Managers' Incentive Compensation Plan
(the "Plan") (capitalized terms shall have the meanings assigned to them in the
Plan);

     WHEREAS, the Plan currently requires that Incentive Awards be paid to
Participants in cash, and that Special Incentive Awards be paid to Participants
in shares of Restricted Stock;

     WHEREAS, the Board of Directors desires to amend the Plan to give the
Committee the discretion to allow a Participant to elect the form or forms of
consideration, cash or Restricted Stock, in which the Participant would receive
an Incentive Award or Special Incentive Award payment under the Plan;

     NOW, THEREFORE, the Plan is hereby amended as follows:

     1. The following subsection (e) is hereby added to Section 4.2 of the Plan:

          "(e) Notwithstanding Sections 4.2(b) and (c), the Committee may, in
               its sole discretion, give any Participant the ability to elect,
               on such rules as the Committee may from time to time prescribe,
               to receive shares of Restricted Stock in lieu of cash for the
               amount of any Incentive Award (or portion thereof) to be
               distributed pursuant to Section 4.2(b) or (c).  The amount of
               Restricted Stock to be issued with respect to an Incentive Award
               shall equal the portion of such award otherwise payable in cash
               that the Participant elects to receive in the form of Restricted
               Stock, divided by the Fair Market Value of a share of Common
               Stock as the last trading day of the financial accounting period
               for which the Incentive Award is being calculated.  Restricted
               Stock issued or delivered pursuant to this Section 4.2(e) shall
               be evidenced and governed by a Restricted Stock Award Agreement
               in substantially the form attached hereto as Exhibit A, and shall
               be subject to the provisions of Sections 4.3(b) and 4.3(c) of
               this Plan.  Only whole shares of Restricted Stock shall be
               issued; fractional shares shall be settled in cash.  If a
               Participant who has received Restricted Stock for some or all of
               the Incentive Award payments made for a Performance Year under
               Section 4.2(c) is required to repay to the Company any amount
               pursuant to Section 4.2(d), the Committee may, in its sole
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               discretion, give the Participant the ability to elect to forfeit
               shares of Incentive Award Restricted Stock as partial or full
               payment of such amounts."

      2.  The following subsection (d) is hereby added to Section 4.3 of the
          Plan:

          "(d) Notwithstanding Section 4.2(a), the Committee may, in its sole
               discretion, give any Participant the ability to elect, on such
               rules as the Committee may from time to time prescribe, to
               receive cash in lieu of Restricted Stock for the amount of any
               Special Incentive Award (or portion thereof) to be distributed
               pursuant to Section 4.3(a).

      3.  The preceding amendments shall be effective immediately, and shall
          apply to the 1997 Performance Year.


          IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed by its duly authorized officer as of March 19, 1998.


                                         NEW CENTURY FINANCIAL CORPORATION

 

                                         By: /s/ BRAD A. MORRICE
                                                 ----------------------------
                                                 Brad A. Morrice

                                         Its:    President