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                                                                    EXHIBIT 10.3


                       NEW CENTURY FINANCIAL CORPORATION

                      NONQUALIFIED STOCK OPTION AGREEMENT


     THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") dated as of the
17th day of May, 1999, by and between NEW CENTURY FINANCIAL CORPORATION, a
Delaware corporation (the "Company"), and Terrence P. Sandvik (the "Optionee").

                              W I T N E S S E T H

     WHEREAS, the Optionee is a member of the Board of Directors of the Company
(the "BOARD"); and

     WHEREAS, the Company has granted to the Optionee effective as of the 17th
day of May, 1999 (the "GRANT DATE") a nonqualified stock option to purchase all
or any part of 15,000 shares of the Company's Common Stock, par value $0.01 per
share (the "Common Stock"), subject to and upon the terms and conditions set
forth herein;

     NOW, THEREFORE, in consideration of the mutual promises and covenants made
herein and the mutual benefits to be derived herefrom and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
agree as follows:

1.   Grant of Option.  This Agreement evidences the Company's grant to the
     ---------------
     Optionee of the right and option to purchase, subject to and on the terms
     and conditions set forth herein, all or any part of 15,000 shares of the
     Company's Common Stock (the "Shares") at the price of $12.00 per Share (the
     "Option"), exercisable from time to time, subject to the provisions of this
     Agreement, prior to the close of business on the day before the tenth
     anniversary of the Grant Date (the "Expiration Date"), Unless Earlier
     terminated pursuant to Section 4 or 6.  Such price equals not less than the
     fair market value of the Common Stock as of the Grant Date.

2.   Exercisability of Option.  The Option shall vest and become exercisable in
     ------------------------
     installments in accordance with the following schedule:  (i) 5,000 of the
     total number of Shares subject to the Option shall vest and become
     exercisable on the first anniversary of the Grant Date, (ii) an additional
     5,000 of the total number of Shares subject to the Option shall vest and
     become exercisable on the second anniversary of the Grant Date, and (iii)
     the remaining 5,000 Shares subject to the Option shall vest and become
     exercisable on the third anniversary of the Grant Date.

     If the Optionee does not in any year purchase all or any part of the Shares
     to which the Optionee is entitled, the Optionee has the right cumulatively
     thereafter to purchase any Shares not so purchased and such right shall
     continue until the Option terminates or

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     expires. The Option shall only be exercisable in respect of whole Shares,
     and fractional Share interests shall be disregarded. The Option may only be
     exercised as to at least 100 Shares unless the number purchased is the
     total number at the time available for purchase under the Option.

3.   Method of Exercise of Option.  The Option shall be exercisable by the
     ----------------------------
     delivery to the Secretary of the Company of a written notice stating the
     number of Shares to be purchased pursuant to the Option and accompanied by
     (i) delivery of an executed Exercise Agreement in the form attached hereto
     as Exhibit A, (ii) payment of the full purchase price of the Shares to be
     purchased, and (iii) payment in full of any tax withholding obligation
     under federal, state or local law.  Payment shall be made in the form of
     cash, by check payable to the order of the Company, in shares of Common
     Stock valued at their fair market value at the close of trading on the
     trading date next preceding the date of exercise of the Option, or partly
     in such shares and partly in cash.  Any shares of Common Stock used by the
     Optionee to exercise the Option must have been owned by the Optionee for at
     least six months prior to such use.  In addition, the Optionee (or the
     Optionee's beneficiary or personal representative) must furnish any written
     statements required pursuant to Section 9 of this Option Agreement.

4.   Termination of Directorship.  If the Optionee's services as a member of the
     ---------------------------
     Board terminate:  (i) any portion of the Option which is not vested and
     exercisable as of the date of such termination shall terminate; (ii) if
     such termination is due to the Optionee's death or Total Disability, the
     Optionee (or his successor in the event of his death, or personal
     representative in the event of his incapacity) shall have until the date
     that is one year after the date of such termination (subject to the term of
     the Option set forth in Section 1) to exercise the Option to the extent
     that it was vested and exercisable on the date of his termination (the
     vested portion of the Option, to the extent not exercised at the end of
     such one-year period, shall terminate); and (iii) if such termination is
     due to any reason other than the Optionee's death or Total Disability, the
     Optionee shall have until the date that is six months after the date of
     such termination (subject to the term of the Option set forth in Section 1)
     to exercise the Option to the extent that it was vested and exercisable on
     the date of his termination (the vested portion of the Option, to the
     extent not exercisable at the end of such six-month period, shall
     terminate).

     For purposes of the foregoing, "Total Disability" means a "permanent and
     total disability" within the meaning of Section 22(c)(3) of the Internal
     Revenue Code of 1986, as amended.

5.   Option Not Transferable.  The Option May Be Exercised Only By, And Shares
     -----------------------
     issuable pursuant to the Option shall be issued only to the Optionee or, if
     the Optionee has died, his beneficiary or, if the Optionee has suffered a
     permanent and total disability, his personal representative, if any, or if
     there is none, the Optionee or a third party pursuant to such conditions
     and procedures as the Board may establish.  Other than by will or the laws
     of descent and distribution, no right or benefit under the Option shall be
     transferrable by the Optionee or shall be subject in any manner to
     anticipation, alienation,

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     sale, transfer, assignment, pledge, encumbrance or charge and any such
     attempted action shall be void.

6.   Adjustments Upon Changes in Capitalization.
     ------------------------------------------

     If the outstanding shares of Common Stock are changed into or exchanged for
     cash or a different number or kind of shares or securities of the Company
     or of another issuer, or if additional shares or new or different
     securities are distributed with respect to the outstanding shares of the
     Common Stock, through a reorganization or merger to which the Company is a
     party, or through a combination, consolidation, recapitalization,
     reclassification, stock split, stock dividend, reverse stock split, stock
     consolidation or other capital change or adjustment, an appropriate
     adjustment shall be made in the number and kind of shares or other
     consideration that is subject to or may be delivered under the Option.

     Upon the occurrence of an Event, the Option shall become immediately
     exercisable to the full extent theretofore not exercisable.

     If the Option has been fully accelerated as described in the foregoing
     paragraph but is not exercised prior to (i) a dissolution of the Company,
     or (ii) an event described above that the Company does not survive, the
     Option shall thereupon terminate.

     For purposes of this Section 6, "Event" means any of the following:  (i)
     approval by the shareholders of the Company of the dissolution or
     liquidation of the Company; (ii) approval by the shareholders of the
     Company of an agreement to merge or consolidate, or otherwise reorganize,
     with or into one or more entities other than subsidiaries, as a result of
     which less than 50% of the outstanding voting securities of the surviving
     or resulting entity are, or are to be, owned by former shareholders of the
     Company; or (iii) approval by the shareholders of the Company of the sale
     of substantially all of the Company's business assets to a person or entity
     which is not a subsidiary of the Company.

7.   Securities Law Compliance.
     -------------------------

     7.1.  Investment Representations.  The Optionee acknowledges that the
           --------------------------
     Option and Shares are not being registered under the Securities Act of
     1933, as amended (the "Securities Act"), based, in part, on reliance that
     the issuance of the Shares is exempt from registration under Regulation D
     of the Securities Act and exempt from qualification under California
     Corporate Securities Law (S) 25102(f) or other applicable exemption.  The
     Optionee acknowledges that by executing this Agreement he or she makes the
     representations below:

          No Intent to Sell. The Optionee represents that he/she is acquiring
          the Option and if and when he/she exercises the Option will acquire
          any Shares solely for his/her own account, for investment purposes
          only, and not with a view to or an intent to sell, or to offer for
          resale in connection with any unregistered distribution

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          of all or any portion of the Shares within the meaning of the
          Securities Act or applicable state securities laws.

          No Reliance on Company.  In evaluating the merits and risks of an
          investment in the Shares, the Optionee represents that he/she has and
          will rely upon the advice of his/her own legal counsel, tax advisors,
          and/or investment advisors.

          Relationship to and Knowledge About Company.  The Optionee represents
          that he/she is knowledgeable about the Company and has a preexisting
          personal or business relationship with the Company.  As a result of
          such relationship, he/she is familiar with, among other
          characteristics, its business and financial circumstances and has
          access on a regular basis to or may request the Company's condensed
          consolidated balance sheet and condensed consolidated income statement
          setting forth information material to the Company's financial
          condition, operations and prospects.

          Risk of Loss.  The Optionee represents that he/she is aware that the
          Option may be of no practical value, that any value it may have
          depends on its vesting and exercisability as well as an increase in
          the fair market value of the underlying Shares from the date of grant
          to the date of exercise.

          Restrictions on Shares.  The Optionee represents that he/she
          understands that any Shares acquired on exercise of the Option will be
          characterized as "restricted securities" under the federal securities
          laws since the Shares are being acquired from the Company in a
          transaction not involving a public offering and that under such laws
          and applicable regulations such securities may be resold without
          registration under the Securities Act only in certain limited
          circumstances.  The Optionee acknowledges receiving a copy of Rule 144
          promulgated under the Securities Act, as presently in effect, and
          represents that he/she is familiar with such rule, and understands the
          resale limitations imposed thereby and by the Securities Act and
          applicable state securities laws.

          Additional Restrictions.  The Optionee represents that he/she has read
          and understands the restrictions and limitations imposed on the Option
          and any Shares which may be acquired thereunder, including, but not
          limited to, the non-transferability provisions of Section 5.

          No Company Representations.  The Optionee represents that at no time
          was an oral representation made to him/her relating to the Option or
          the purchase of Shares and that he/she was not presented with or
          solicited by any promotional meeting or material relating to the
          Option or the Shares.

          Share Certificate Legend.  The Optionee represents that he/she
          understands and acknowledges that any certificate evidencing the
          Shares (or evidencing any other securities issued with respect thereto
          pursuant to any stock split, stock dividend,

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          merger or other form of reorganization or recapitalization) if and
          when issued shall bear, in addition to any other legends which may be
          required by applicable state securities laws, the legend set forth in
          Section 8.2.

     7.2. Stock Certificate Legend.  The Optionee understands and acknowledges
          ------------------------
     that the certificate evidencing the shares (or evidencing any other
     securities issued with respect thereto pursuant to any stock split, stock
     dividend, merger or other form of reorganization or recapitalization) if
     and when issued shall bear, in addition to any other legends which may be
     required by the Exercise Agreement or applicable state securities laws, the
     following legends:

               "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933, BUT ARE ISSUED IN RELIANCE ON
     THE REPRESENTATION THAT THEY ARE TAKEN FOR INVESTMENT AND NOT FOR
     REDISTRIBUTION.  AS A CONDITION OF ANY TRANSFER HEREOF, THE COMPANY MAY
     REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO IT THAT ALL STATUTORY
     REGISTRATION PROVISIONS HAVE BEEN MET OR DO NOT APPLY."

8.   Assignment.  This Agreement and all of the provisions hereof shall be
     ----------
     binding upon and inure to the benefit of the parties hereto and their
     respective successors and permitted assignees.  Neither this Agreement nor
     any of the rights, interests or obligations hereunder shall be assigned
     (except as otherwise expressly provided herein) by either party without the
     prior written consent of the other.

9.   Privileges of Stock Ownership.  Except as otherwise expressly authorized by
     -----------------------------
     the Board, the Optionee shall not be entitled to any privilege of stock
     ownership as to any Shares not actually delivered to and held of record by
     him.  No adjustment will be made for dividends or other rights as a
     shareholder for which a record date is prior to such date of delivery.

10.  Notices.  Any notice to be given under the terms of this Agreement shall be
     -------
     in writing and addressed to the Company at its principal office to the
     attention of the Secretary, and to the Employee at the address given
     beneath the Employee's signature hereto, or at such other address as either
     party may hereafter designate in writing to the other.  Any such notice
     shall be deemed to have been duly given when enclosed in a properly sealed
     envelope addressed as aforesaid, registered or certified, and deposited
     (postage and registry or certification fee prepaid) in a post office or
     branch post office regularly maintained by the United States Government.

11.  Entire Agreement.  This Agreement and the Exercise Agreement, together,
     ----------------
     constitute the entire agreement and supersede all prior understandings and
     agreements, written or oral, of the parties hereto with respect to the
     subject matter hereof.  This Agreement and the Exercise Agreement may be
     amended only by mutual agreement of the parties.  Such amendment must be in
     writing and signed by both parties.  The Company may, however,

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     unilaterally waive any provision hereof in writing to the extent such
     waiver does not adversely affect the interests of the Optionee hereunder,
     but no such waiver shall operate as or be construed to be a subsequent
     waiver of the same provision or a waiver of any other provision hereof.

12.  Governing Law.  This Agreement shall be governed by and construed and
     -------------
     enforced in accordance with the laws of the State of Delaware without
     regard to conflict of law principles thereunder.

13.  Rights of Optionee.
     ------------------

     Nothing contained in this Agreement or in any other documents related to
     this Agreement shall confer upon the Optionee any right to continue in the
     service or employ of the Company or constitute any contract or agreement of
     service or employment, or interfere in any way with the right of the
     Company to reduce the Optionee's compensation or other benefits or to
     terminate the services or employment of the Optionee, with or without
     cause, but nothing contained in this Agreement or any document related
     thereto shall affect any independent contractual right of the Optionee.
     Nothing contained in this Agreement or any document related hereto shall
     influence the construction or interpretation of the Company's Certificate
     of Incorporation or Bylaws regarding service on the Board.

     The Option shall be payable in shares of Common Stock (subject to
     adjustment as described above) and no special or separate reserve, fund or
     deposit shall be made to assure payment of the Option.  Neither the
     Optionee nor any other person shall have any right, title or interest in
     any fund or in any specific asset (including shares of Common Stock) of the
     Company by reason of the Option.  Neither the provisions of this Agreement
     (or of any documents related hereto), nor the grant of the Option shall
     create, or be construed to create, a trust of any kind or a fiduciary
     relationship between the Company and the Optionee or other person.

14.  Compliance With Laws.  Notwithstanding anything else contained herein to
     --------------------
     the contrary, this Agreement, the granting and vesting of the Option and
     the offer, issuance and delivery of Shares under this Agreement are subject
     to compliance with all applicable federal and state laws, rules and
     regulations (including but not limited to state and federal securities laws
     and federal margin requirements) and to such approvals by any listing,
     regulatory or governmental authority as may, in the opinion of counsel for
     the Company, be necessary or advisable in connection therewith.  Any
     securities delivered in respect of this Agreement will be subject to such
     restrictions, and to any restrictions the Company may require to preserve a
     pooling of interests under generally accepted accounting principles, and
     the person acquiring such securities will, if requested by the Company,
     provide such assurances and representations to the Company as the Company
     may deem necessary or desirable to assure compliance with all applicable
     legal requirements.

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     No holder of any Shares shall sell, pledge or otherwise transfer Shares
     acquired pursuant to the Option or any interest in such Shares except in
     accordance with the express terms of this Agreement.  Any attempted
     transfer in violation of this Agreement shall be void and of no effect.
     Without in any way limiting the provisions set forth above and subject to
     further limitations set forth herein, no holder of Shares shall make any
     disposition of all or any portion of Shares acquired pursuant to an Option,
     except in compliance with all applicable federal and state securities laws
     and unless and until:

          (a)  there is then in effect a registration statement under the
          Securities Act covering such proposed disposition and such disposition
          is made in accordance with such registration statement; or

          (b)  such disposition is made in accordance with Rule 144 under the
          Securities Act; or

          (c)  such holder notifies the Company of the proposed disposition and
          furnishes the Company with a statement of the circumstances
          surrounding the proposed disposition, and, if requested by the
          Company, such holder furnishes the Company with an opinion of counsel
          acceptable to the Company's counsel, that such disposition will not
          require registration under the Securities Act and will be in
          compliance with all applicable state securities laws.

                 (Remainder of Page Intentionally Left Blank)

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by a duly authorized officer and the Optionee has hereunto set his or
her hand as of the date first written above.

                            NEW CENTURY FINANCIAL CORPORATION
                            a Delaware corporation

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

                            Its: President
                                 -----------------------------


                            OPTIONEE

                            /s/ Terreence P. Sandvik
                            ----------------------------------
                            Signature

                            Terreence P. Sandvik
                            ----------------------------------
                            Print Name


                            2751 Shepard Road- MNRB0164
                            ----------------------------------
                            Address

                            Saint Paul, MN 55116
                            ----------------------------------
                            City, State, Zip Code



                               CONSENT OF SPOUSE

          In consideration of the execution of the foregoing Nonqualified Stock
Option Agreement by New Century Financial Corporation, I, Ann M Sandvik, the
                                                          -------------
spouse of the Optionee herein named, do hereby agree to be bound by all of the
terms and provisions thereof.



DATED: ___________, 1999                /s/ Ann M. Sandvik
                                        -------------------
                                        Signature of Spouse

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EXHIBIT A


                       NEW CENTURY FINANCIAL CORPORATION

                              EXERCISE AGREEMENT

          THIS EXERCISE AGREEMENT (this "Agreement") dated as of the ____ day of
______________, _____, by and between NEW CENTURY FINANCIAL CORPORATION, a
Delaware corporation (the "Company"), and Terrence P. Sandvik (the "Purchaser").


                                R E C I T A L S

          WHEREAS, the Company has granted to the Purchaser a nonqualified stock
option (the "Option") to purchase all or any part of a designated amount of
authorized but unissued shares of common stock of the Company and in connection
therewith, the Company and the Purchaser entered into that certain Nonqualified
Stock Option Agreement dated as of May 17, 1999 (the "Option Agreement") of
which this Agreement is a part and incorporated therein;

          WHEREAS, the Purchaser desires to exercise the Option and purchase
from the Company and the Company wishes to issue and sell to the Purchaser
_______ shares of its common stock, par value $0.01 per share (the "Common
Stock"), to be sold at a price of $12.00 per share, in accordance with and
subject to the terms and conditions set forth in this Agreement.

          NOW, THEREFORE, in consideration of the above premises and the
representations, warranties, covenants and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:

1.   Purchase and Sale of Common Stock.  The Company shall deliver to the
     ---------------------------------
     Purchaser a stock certificate representing the shares of Common Stock
     against delivery to the Company by the Purchaser of the purchase price in
     the sum of $____________ (which represents the product of the $12.00 price
     per share and the number of shares, the "Purchase Price").

2.   Investment Representations.  The Purchaser acknowledges that the shares of
     --------------------------
     Common Stock are not being registered under the Securities Act of 1933, as
     amended (the "Securities Act").  The Purchaser hereby affirms as made as of
     the date hereof the representations made in Section 8.1 of the Option
     Agreement and such representations are incorporated herein by this
     reference.  The Purchaser has no need for liquidity in this investment, has
     the ability to bear the economic risk of this investment, and can afford a
     complete loss of the Purchase Price.  The Purchaser has received the
     Company's consolidated financial information which includes information
     material to the Company's financial condition, operations and prospects.
     The Purchaser also understands and

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     acknowledges the restrictive legend provision contained in Section 8.2 of
     the Option Agreement.

3.   Restrictions on Shares.  The shares of Common Stock acquired pursuant to
     ----------------------
     Section 1 hereof are subject to and the Purchaser agrees to be bound by the
     provisions of Section 15 of the Option Agreement, incorporated herein by
     this reference.

4.   Miscellaneous.  This Agreement shall be governed by and construed and
     -------------
     enforced in accordance with the laws of the state of Delaware.  This
     Agreement and the Option Agreement, together constitute the entire
     agreement and supersede all prior understandings and agreements, written or
     oral, of the parties hereto with respect to the subject matter hereof.
     This Agreement may be amended by mutual agreement of the parties.  Such
     amendment must be in writing and signed by the Company.  The Company may,
     however, unilaterally waive any provision hereof in writing to the extent
     such waiver does not adversely affect the interests of the Purchaser
     hereunder, but no such waiver shall operate as or be construed to be a
     subsequent waiver of the same provision or a waiver of any other provision
     hereof.

(Remainder of Page Intentionally Left Blank)

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     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.

                            NEW CENTURY FINANCIAL CORPORATION
                            a Delaware corporation


                            By:_____________________________________


                            Its:____________________________________


                            OPTIONEE

                            ________________________________________
                            Signature


                            ________________________________________
                            Print Name


                            ________________________________________
                            Address


                            ________________________________________
                            City, State, Zip Code


                               CONSENT OF SPOUSE

          In consideration of the execution of the foregoing Exercise Agreement
by New Century Financial Corporation, I, ___________________________, the spouse
of the Optionee herein named, do hereby agree to be bound by all of the terms
and provisions thereof.



DATED:______________, ______       _________________________________
                                   Signature of Spouse

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