##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the fiscal year ended December 31, 2005                                                 
|  
|OR
|  
|o  |  | 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 001-32314





NEW CENTURY FINANCIAL CORPORATION


(Exact name of registrant as specified in its charter)


|                                                                |  |                                              
|--------------------------------------------------------------- |  | ---------------------------------------------
|Maryland                                                        |  | 56-2451736                                   
|(State or other jurisdiction
    incorporation or organization) |  | (I. R. S. Employer
    Identification Number)
|                                                               
|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





Securities registered pursuant to Section 12(b) of the
Act:


|                                                                                     |  |                                          
|------------------------------------------------------------------------------------ |  | -----------------------------------------
|Title of Each Class                                                                  |  | Name of Each Exchange on Which Registered
|                                                                                     |  |                                          
|Common Stock, par value $0.01 per share                                              |  | New York Stock Exchange                  
|9.125% Series A Cumulative Redeemable Preferred Stock,
    par value $0.01 per share |  | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the
Act:


None





þ o


o þ


þ o


S-K 10-K 10-K. o


12b-2


|                           |  |                      |  |                         
|-------------------------- |  | -------------------- |  | ------------------------
|Large accelerated filer  þ |  | Accelerated filer  o |  | Non-accelerated filer  o

12b-2 o þ






Certain information required for Part III of this report
is incorporated herein by reference to the proxy statement for
the 2006 annual meeting of the Companys stockholders.










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##### Table of Contents



PART I




|        |         
|------- | --------
|Item 1. | Business

General










10-K,


Business Strategy






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Delivering consistently strong operating performance,
    including taxable REIT subsidiary (TRS) and mortgage loan
    portfolio earnings. We intend to maintain, if not increase,
    our mortgage loan portfolio by executing securitizations of
    loans originated through our TRS, and structuring those
    securitizations as financings. As we increase our mortgage loan
    portfolio, our interest income will increase and, in turn, we
    will have a larger pool of earnings that can be distributed to
    our stockholders. Alternatively, if we structure such
    securitizations in our TRS, the resulting earnings can be
    retained to strengthen our TRS origination franchise. We expect
    that our capacity to originate loans at our TRS will enable us
    to grow

1



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | our mortgage loan portfolio by providing us with a significant
    volume of loans at a lower cost and with greater reliability
    than if we purchased our mortgage loan portfolio from a third
    party.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Broadening the mortgage products and services available
    through each of our delivery channels. We plan to grow our
    production franchise by expanding our product and service
    offerings through each of our delivery channels, as discussed
    below. As a result of our acquisition of the loan origination
    platform of RBC Mortgage, we now offer non-prime mortgage loan
    products through all of our delivery channels and intend to
    offer prime and Alt-A products through all of our
    delivery channels by mid-2006. By expanding the product lines
    available through each of our delivery channels, we believe we
    can profitably gain market share despite the projected
    contraction of overall mortgage industry volume in 2006.
|
| |  | Increasing productivity while reducing costs to enhance our
    competitive position in the industry. In the fourth quarter
    of 2005, the costs to originate our loans, which we refer to as
    loan acquisition costs, reached a record low as a result of our
    concerted efforts to improve our profitability. In addition, our
    2005 loan production volume was $56.1 billion, our tenth
    consecutive record year of loan production. Our strong and
    scalable origination platform and low loan acquisition costs
    enable us to react to market conditions and allow us the
    opportunity to earn substantial income and build retained
    earnings and liquidity, enhancing our competitive position in
    the industry.                            
|
| |  | Actively managing our mortgage loan portfolio. We seek to
    actively manage the composition, as well as interest rate and
    credit risks relating to our mortgage loan portfolio, in an
    effort to generate an attractive risk-adjusted return to
    stockholders. We continue to use hedge instruments to attempt to
    reduce the interest rate exposure that results from financing
    fixed-rate assets with floating-rate liabilities. We also
    actively monitor our mortgage loan portfolio through early
    detection and management of probable delinquencies.                                                                                                                                                                                            
|
| |  | Maintaining a strong capital and liquidity base. We
    continue to prudently manage our capital and liquidity levels
    and may increase our capital and liquidity by accessing the
    capital markets, when appropriate. We also seek to maintain
    available capacity under our credit facilities and may enhance
    our capital and liquidity positions by retaining some or all of
    our earnings in our TRS.                                                                                                                                                                                                                                                                                                                                                       

Competitive Advantages






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | One of the largest mortgage REIT portfolios. We have one
    of the largest portfolios of residential mortgage loans of any
    REIT. In 2005, our mortgage portfolio provided a significant
    portion of our earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Leading mortgage loan origination franchise. New Century
    Mortgage Corporation and Home123 Corporation, our operating
    taxable REIT subsidiaries, together represent one of the
    nations largest mortgage finance companies when measured
    by loan production volume for the year ended December 31,
    2005. We are authorized to lend in all 50 states and have a
    leading market presence through a wholesale network of more than
    47,000 approved independent mortgage brokers and our retail
    network of 222 branch offices, housing our consumer-direct
    channel and our builder/realtor channel. Our taxable REIT
    subsidiaries have the potential to generate significant earnings
    through our mortgage loan origination franchise.
|
| |  | Low-cost producer. Our ability to originate mortgage
    loans at a low cost allows us to achieve greater profitability
    than many of our competitors. In addition, we are able to build
    our portfolio by retaining self-originated loans, rather than
    engaging in large bulk secondary market purchases, providing us
    with a competitive advantage over REITs without origination
    capabilities.                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Operational flexibility. Our structure and business
    strategy provide us with the flexibility to both securitize a
    portion of our loan originations for our portfolio and sell the
    balance for cash. We believe                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

2



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | that this flexibility allows us to provide a broader product
    offering, better manage our cash flows and respond to changing
    conditions in the secondary market environment, thus enhancing
    returns to our stockholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Long-standing institutional relationships. We have
    developed long-standing relationships with a variety of
    institutional loan buyers, including Credit Suisse First Boston
    (DLJ Mortgage Capital, Inc.), Goldman Sachs, JPMorgan Chase,
    Lehman Brothers, Morgan Stanley, Residential Funding Corporation
    and UBS Real Estate Securities Inc. These loan buyers regularly
    bid on and purchase large loan pools from us, and we frequently
    enter into committed forward loan sale agreements with them. In
    addition, we have developed relationships with a variety of
    institutional lenders who provide reliable and stable sources of
    warehouse financing, including Bank of America NA, Barclays Bank
    PLC, Bear Stearns Mortgage Capital Inc., Citigroup Global
    Markets Realty Corp., Credit Suisse First Boston Mortgage
    Capital LLC, Deutsche Bank Securities Inc., IXIS Real Estate
    Capital Inc. (formerly known as CDC Mortgage Capital Inc.),
    Morgan Stanley Mortgage Capital Inc. and UBS Real Estate
    Securities.
|
| |  | Automated credit grading capability. We have created a
    proprietary automated credit grading and pricing methodology
    that we believe gives us the ability to more effectively
    evaluate credit risk and more efficiently price our products, as
    validated by our historical loan performance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Reputation for high quality customer service. We believe
    our origination process is easier for our borrowers and brokers
    to use than the origination processes of most of our competitors
    because of our ability to provide quick responses and consistent
    and clear procedures, with an emphasis on ease of use through
    technology, including our
    FastQual®
    system, a Web-based underwriting engine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Management experience and depth. The members of our
    senior management team have many years of experience in the
    mortgage finance sector, with substantial experience addressing
    the challenges posed by a variety of interest rate environments,
    including growing an origination franchise, managing credit risk
    and developing strong capital market relationships.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Investment and Operational Policies




| |                   
| | ------------------
| | Portfolio Strategy







3



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| |               
| | --------------
| | Hedging policy





| |                 
| | ----------------
| | Financing Policy





Our Mortgage Loan Origination Franchise


on-site www.newcentury.com,


4



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| |                       
| | ----------------------
| | Our Wholesale Division









www.newcentury.com.






5



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|                                                                               |                    |                        |           |      |          |  |            |               |   |  |              |      |   |  |            |      |  
|------------------------------------------------------------------------------ | ------------------ | ---------------------- | --------- | ---- | -------- |  | ---------- | ------------- | - |  | ------------ | ---- | - |  | ---------- | ---- | -
|                                                                               |                    | For the Quarters Ended |          
|                                                                               |                    |                        |          
|                                                                               |                    | March 31,              |           |      | June 30, |  |            | September 30, |   |  | December 31, |     
|                                                                               |                    | 2005                   |           |      | 2005     |  |            | 2005          |   |  | 2005         |     
|                                                                               |                    |                        |           |      |          |  |            |               |   |  |              |     
|Principal balance of originations and purchases (in thousands)                 |                    | $                      | 9,073,489 |      |          |  | 12,131,216 |               |   |  | 14,859,085   |      |   |  | 13,160,531 |     
|Average principal balance of loans originated and purchased (in
    thousands) |                    | $                      | 185       |      |          |  | 184        |               |   |  | 185          |      |   |  | 187        |     
|Combined weighted average initial loan-to-value ratio(1)                       |                    |                        | 81.3      | %    |          |  | 81.8       | %             |   |  | 81.4         | %    |   |  | 80.8       | %   
|Percent of loans secured by first mortgages                                    |                    |                        | 94.9      | %    |          |  | 93.3       | %             |   |  | 93.0         | %    |   |  | 92.9       | %   
|Property securing mortgage loans:                                              |                    |                        |           |      |          |  |            |               |   |  |              |      |   |  |            |     
|                                                                               | Owner occupied     |                        |           | 92.7 | %        |  |            | 93.9          | % |  |              | 94.4 | % |  |            | 93.7 | %
|                                                                               | Non-owner occupied |                        |           | 7.3  | %        |  |            | 6.1           | % |  |              | 5.6  | % |  |            | 6.3  | %






|    |                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------
|(1) | Weighted average LTV is the LTV of the first lien mortgages and
    combined LTV of the second lien mortgages.



| |                    
| | -------------------
| | Our Retail Division

1-800 SM SM


one-to


6



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one-to








|                                                                               |                    |                        |           |      |          |  |           |               |   |  |              |      |   |  |           |      |  
|------------------------------------------------------------------------------ | ------------------ | ---------------------- | --------- | ---- | -------- |  | --------- | ------------- | - |  | ------------ | ---- | - |  | --------- | ---- | -
|                                                                               |                    | For the Quarters Ended |          
|                                                                               |                    |                        |          
|                                                                               |                    | March 31,              |           |      | June 30, |  |           | September 30, |   |  | December 31, |     
|                                                                               |                    | 2005                   |           |      | 2005     |  |           | 2005          |   |  | 2005         |     
|                                                                               |                    |                        |           |      |          |  |           |               |   |  |              |     
|Principal balance of originations and purchases (in thousands)                 |                    | $                      | 1,178,078 |      |          |  | 1,312,954 |               |   |  | 1,852,513    |      |   |  | 2,540,375 |     
|Average principal balance of loans originated and purchased (in
    thousands) |                    | $                      | 147       |      |          |  | 151       |               |   |  | 154          |      |   |  | 159       |     
|Combined weighted average initial loan-to-value ratio(1)                       |                    |                        | 78.5      | %    |          |  | 78.9      | %             |   |  | 78.8         | %    |   |  | 78.7      | %   
|Percent of loans secured by first mortgages                                    |                    |                        | 98.8      | %    |          |  | 98.2      | %             |   |  | 96.7         | %    |   |  | 94.7      | %   
|Property securing mortgage loans:                                              |                    |                        |           |      |          |  |           |               |   |  |              |      |   |  |           |     
|                                                                               | Owner occupied     |                        |           | 96.6 | %        |  |           | 96.9          | % |  |              | 95.9 | % |  |           | 94.8 | %
|                                                                               | Non-owner occupied |                        |           | 3.4  | %        |  |           | 3.1           | % |  |              | 4.1  | % |  |           | 5.2  | %






|    |                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------
|(1) | Weighted average LTV is the LTV of the first lien mortgages and
    combined LTV of the second lien mortgages.



| |                    
| | -------------------
| | Wholesale Marketing

www.newcentury.com.




| |                 
| | ----------------
| | Retail Marketing

e-mail


7



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| |                       
| | ----------------------
| | Underwriting Standards





FHA-insured VA-guaranteed






| |                     
| | --------------------
| | Income Documentation





| |   |                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Under the full documentation program, we generally require
    applicants to submit two written forms of verification, or 12 or
    more consecutive monthly bank statements on their individual or
    business bank accounts, showing stable income for at least
    12 months.
|
| |  | Under the limited documentation program, we generally require
    applicants to submit six consecutive monthly bank statements on
    their individual bank accounts.                                                                                                            

8



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| |   |                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Under the stated income documentation program, an applicant may
    be qualified based upon monthly income as stated on the mortgage
    loan application if the applicant meets certain criteria.

service-to






| |               
| | --------------
| | Credit History





|                   |  |        |            |           |      |  |       |       |  |  |           |  |  |        |     |  |   |   |            |       |  |  |       |  |  |  |      |  |  |  |     | 
|------------------ |  | ------ | ---------- | --------- | ---- |  | ----- | ----- |  |  | --------- |  |  | ------ | --- |  | - | - | ---------- | ----- |  |  | ----- |  |  |  | ---- |  |  |  | --- | 
|                   |  | 2005   |            |           | 2004 | 
|                   |  |        |            |           |      | 
|                   |  |        |            | Wtd. Avg. |      |  |       |       |  |  | Wtd. Avg. |  |  |       
|                   |  |        |            | LTV(1)    |      |  |       |       |  |  | LTV(1)    |  |  |       
|Risk Grades        |  | Amount |            |           | %    |  |       | Ratio |  |  | FICO      |  |  | Amount |     |  | % |   |            | Ratio |  |  | FICO  | 
|                   |  |        |            |           |      |  |       |       |  |  |           |  |  |        |     |  |   |   |            |       |  |  |       | 
|AA                 |  | $      | 42,194,519 |           |      |  | 75.2  |       |  |  | 82.5      |  |  |        | 641 |  |   | $ | 31,990,160 |       |  |  | 75.8  |  |  |  | 82.7 |  |  |  | 642 | 
|A +                |  |        | 4,919,909  |           |      |  | 8.8   |       |  |  | 79.2      |  |  |        | 597 |  |   |   | 4,225,339  |       |  |  | 10.0  |  |  |  | 79.6 |  |  |  | 598 | 
|A -                |  |        | 2,626,138  |           |      |  | 4.7   |       |  |  | 76.3      |  |  |        | 574 |  |   |   | 2,734,814  |       |  |  | 6.5   |  |  |  | 76.4 |  |  |  | 577 | 
|B                  |  |        | 1,529,765  |           |      |  | 2.7   |       |  |  | 73.7      |  |  |        | 561 |  |   |   | 1,760,102  |       |  |  | 4.2   |  |  |  | 73.9 |  |  |  | 565 | 
|C/ C -             |  |        | 1,291,206  |           |      |  | 2.3   |       |  |  | 67.2      |  |  |        | 556 |  |   |   | 1,336,108  |       |  |  | 3.2   |  |  |  | 68.1 |  |  |  | 555 | 
|                   |  |        |            |           |      |  |       |       |  |  |           |  |  |        |     |  |   |   |            |       |  |  |       | 
|Subtotal           |  |        | 52,561,537 |           |      |  | 93.7  |       |  |  | 81.3      |  |  |        | 629 |  |   |   | 42,046,523 |       |  |  | 99.7  |  |  |  | 81.1 |  |  |  | 627 | 
|Commercial Lending |  |        | 162,912    |           |      |  | 0.3   |       |  |  |          |  |  |        |    |  |   |   | 135,538    |       |  |  | 0.3   |  |  |  |     |  |  |  |    | 
|Prime and Alt-A  |  |        | 3,383,792  |           |      |  | 6.0   |       |  |  | 76.7      |  |  |        | 713 |  |   |   | 17,579     |       |  |  |      |  |  |  |     |  |  |  |    | 
|                   |  |        |            |           |      |  |       |       |  |  |           |  |  |        |     |  |   |   |            |       |  |  |       | 
|Total              |  | $      | 56,108,241 |           |      |  | 100.0 |       |  |  | 81.0      |  |  |        | 634 |  |   | $ | 42,199,640 |       |  |  | 100.0 |  |  |  | 81.1 |  |  |  | 627 | 
|                   |  |        |            |           |      |  |       |       |  |  |           |  |  |        |     |  |   |   |            |       |  |  |       | 






|    |                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------
|(1) | Weighted average LTV is the LTV of the first lien mortgages and
    the combined LTV of the second lien mortgages.

9



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| |                        
| | -----------------------
| | Geographic Distribution



|              |  |                                  |            |  |      |  |        |      |  |  |            |  |  |  |        |  |  |  |            |  |  |  |        | 
|------------- |  | -------------------------------- | ---------- |  | ---- |  | ------ | ---- |  |  | ---------- |  |  |  | ------ |  |  |  | ---------- |  |  |  | ------ | 
|              |  | For the Years Ended December 31, |           
|              |  |                                  |           
|              |  | 2005                             |            |  | 2004 |  |        | 2003 | 
|              |  |                                  |            |  |      |  |        |      | 
|California    |  | $                                | 20,956,373 |  |      |  | 37.35  | %    |  |  | 17,356,938 |  |  |  | 41.13  |  |  |  | 11,228,322 |  |  |  | 41.01  | 
|Florida       |  |                                  | 4,863,876  |  |      |  | 8.67   |      |  |  | 2,673,481  |  |  |  | 6.33   |  |  |  | 1,653,316  |  |  |  | 6.04   | 
|New York      |  |                                  | 3,179,280  |  |      |  | 5.67   |      |  |  | 2,630,074  |  |  |  | 6.23   |  |  |  | 1,632,744  |  |  |  | 5.96   | 
|Arizona       |  |                                  | 2,228,800  |  |      |  | 3.97   |      |  |  | 810,231    |  |  |  | 1.92   |  |  |  | 326,349    |  |  |  | 1.19   | 
|New Jersey    |  |                                  | 2,203,526  |  |      |  | 3.93   |      |  |  | 1,484,548  |  |  |  | 3.52   |  |  |  | 885,513    |  |  |  | 3.23   | 
|Texas         |  |                                  | 2,145,907  |  |      |  | 3.82   |      |  |  | 1,552,140  |  |  |  | 3.68   |  |  |  | 1,135,005  |  |  |  | 4.15   | 
|Illinois      |  |                                  | 1,841,152  |  |      |  | 3.28   |      |  |  | 1,314,726  |  |  |  | 3.11   |  |  |  | 1,230,530  |  |  |  | 4.49   | 
|Massachusetts |  |                                  | 1,738,268  |  |      |  | 3.10   |      |  |  | 1,303,383  |  |  |  | 3.09   |  |  |  | 943,160    |  |  |  | 3.45   | 
|Nevada        |  |                                  | 1,444,757  |  |      |  | 2.58   |      |  |  | 1,053,166  |  |  |  | 2.50   |  |  |  | 315,799    |  |  |  | 1.15   | 
|Maryland      |  |                                  | 1,315,028  |  |      |  | 2.34   |      |  |  | 843,577    |  |  |  | 2.00   |  |  |  | 488,052    |  |  |  | 1.78   | 
|Other         |  |                                  | 14,191,274 |  |      |  | 25.29  |      |  |  | 11,177,376 |  |  |  | 26.49  |  |  |  | 7,544,048  |  |  |  | 27.55  | 
|              |  |                                  |            |  |      |  |        |      |  |  |            |  |  |  |        |  |  | 
|Total         |  | $                                | 56,108,241 |  |      |  | 100.00 | %    |  |  | 42,199,640 |  |  |  | 100.00 |  |  |  | 27,382,838 |  |  |  | 100.00 | 
|              |  |                                  |            |  |      |  |        |      |  |  |            |  |  |  |        |  |  | 



| |                            
| | ---------------------------
| | Financing Loan Originations





Loan Sales and Securitizations






| |                 
| | ----------------
| | Whole Loan Sales

servicing-released




| |                
| | ---------------
| | Securitizations

Securitizations Structured as Financings


10



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Securitizations Structured as Sale






Our Mortgage Loan Portfolio








11



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|                        |                                       |              |           |      |              |  |           |              |   |  |           |      |   |       |           |      |     |  |   |   |   |  |            |      |  
|----------------------- | ------------------------------------- | ------------ | --------- | ---- | ------------ |  | --------- | ------------ | - |  | --------- | ---- | - | ----- | --------- | ---- | --- |  | - | - | - |  | ---------- | ---- | -
|                        |                                       | 2003 Vintage |           |      | 2004 Vintage |  |           | 2005 Vintage |  
|                        |                                       |              |           |      |              |  |           |              |  
|                        |                                       | REMIC        |           |      | CMO          |  |           | REMIC        |   |  | CMO       |      |   | REMIC |           |      | CMO | 
|                        |                                       |              |           |      |              |  |           |              |   |  |           |      |   |       |           |      |     | 
|Initial collateral pool |                                       | $            | 3,808,887 |      |              |  | 1,137,894 |              |   |  | 1,679,397 |      |   |       | 8,431,735 |      |     |  |  |   |   |  | 10,961,957 |     
|Current collateral pool |                                       | $            | 1,177,971 |      |              |  | 332,200   |              |   |  | 1,105,902 |      |   |       | 4,621,687 |      |     |  |  |   |   |  | 8,946,473  |     
|                        | Delinquency (60+ days)                |              |           | 5.61 | %            |  |           | 9.49         | % |  |           | 2.41 | % |       |           | 4.67 | %   |  |   |  | % |  |            | 2.42 | %
|                        | Cumulative losses-to-date             |              |           | 0.29 | %            |  |           | 0.35         | % |  |           | 0.02 | % |       |           | 0.10 | %   |  |   |  | % |  |            | 0.01 | %
|                        | Projected cumulative losses over life |              |           | 1.24 | %            |  |           | 1.93         | % |  |           | 1.52 | % |       |           | 2.40 | %   |  |   |  | % |  |            | 3.05 | %
|                        | Weighted avg. life in years           |              |           | 2.58 |              |  |           | 2.01         |   |  |           | 3.25 |   |       |           | 1.98 |     |  |   |  |   |  |            | 2.14 |  

Loan Servicing and Delinquencies




| |          
| | ---------
| | Servicing







| |                     
| | --------------------
| | Servicing Operations



12



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13



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##### Table of Contents





| |                      
| | ---------------------
| | Delinquency Reporting



|                                      |  |         |            |          |        |  |      |             |  |  |             |  |  |     |      |   |       |  |      |       |  |  |      |   |  |  |      |  
|------------------------------------- |  | ------- | ---------- | -------- | ------ |  | ---- | ----------- |  |  | ----------- |  |  | --- | ---- | - | ----- |  | ---- | ----- |  |  | ---- | - |  |  | ---- | -
|                                      |  |         |            |          |        |  |      | Delinquency | 
|                                      |  |         |            |          |        |  |      |             | 
|                                      |  |         |            | Weighted |        |  |      |             |  |  | Real Estate |  |  |    
|                                      |  |         |            | Average  |        |  |      |             |  |  | Owned       |  |  |    
|Pool Type                             |  | Balance |            |          | Coupon |  |      | FICO        |  |  | <90 days    |  |  | 90+ |      |   | (REO) |  |      | Total | 
|                                      |  |         |            |          |        |  |      |             |  |  |             |  |  |     |      |   |       |  |      |       | 
|Mortgage loans held for investment(1) |  | $       | 15,150,133 |          |        |  | 7.04 | %           |  |  | 629         |  |  |     | 2.58 | % |       |  | 3.29 | %     |  |  | 0.29 | % |  |  | 6.16 | %
|Mortgage loans held for sale(1)       |  |         | 6,670,715  |          |        |  | 7.97 |             |  |  | 626         |  |  |     | 0.74 |   |       |  | 0.87 |       |  |  | 0.13 |   |  |  | 1.74 |  
|Interim servicing                     |  |         | 7,750,137  |          |        |  | 7.66 |             |  |  | 626         |  |  |     | 0.53 |   |       |  | 0.25 |       |  |  | 0.01 |   |  |  | 0.79 |  
|Servicing rights owned                |  |         | 10,039,803 |          |        |  | 7.22 |             |  |  | 629         |  |  |     | 1.44 |   |       |  | 1.07 |       |  |  | 0.05 |   |  |  | 2.56 |  
|                                      |  |         |            |          |        |  |      |             |  |  |             |  |  |     |      |   |       |  |      |       | 
|Total                                 |  | $       | 39,610,788 |          |        |  | 7.36 | %           |  |  | 628         |  |  |     | 1.58 | % |       |  | 1.72 | %     |  |  | 0.15 | % |  |  | 3.45 | %
|                                      |  |         |            |          |        |  |      |             |  |  |             |  |  |     |      |   |       |  |      |       | 






|    |                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | At December 31, 2005, approximately $1.0 billion of
    our loans held for investment and $1.2 billion of our
    mortgage loans held for sale were serviced by a third party.



|                                      |  |         |            |          |        |  |      |             |  |  |             |  |  |     |      |   |       |  |      |       |  |  |      |   |  |  |      |  
|------------------------------------- |  | ------- | ---------- | -------- | ------ |  | ---- | ----------- |  |  | ----------- |  |  | --- | ---- | - | ----- |  | ---- | ----- |  |  | ---- | - |  |  | ---- | -
|                                      |  |         |            |          |        |  |      | Delinquency | 
|                                      |  |         |            |          |        |  |      |             | 
|                                      |  |         |            | Weighted |        |  |      |             |  |  | Real Estate |  |  |    
|                                      |  |         |            | Average  |        |  |      |             |  |  | Owned       |  |  |    
|Pool Type                             |  | Balance |            |          | Coupon |  |      | FICO        |  |  | <90 days    |  |  | 90+ |      |   | (REO) |  |      | Total | 
|                                      |  |         |            |          |        |  |      |             |  |  |             |  |  |     |      |   |       |  |      |       | 
|Mortgage loans held for investment(1) |  | $       | 11,573,630 |          |        |  | 6.92 | %           |  |  | 631         |  |  |     | 1.22 | % |       |  | 1.04 | %     |  |  | 0.12 | % |  |  | 2.39 | %
|Mortgage loans held for sale          |  |         | 3,884,192  |          |        |  | 7.01 |             |  |  | 630         |  |  |     | 0.20 |   |       |  | 0.52 |       |  |  | 0.03 |   |  |  | 0.75 |  
|Interim servicing                     |  |         | 7,705,367  |          |        |  | 7.35 |             |  |  | 628         |  |  |     | 0.40 |   |       |  | 0.01 |       |  |  |     |   |  |  | 0.41 |  
|Servicing rights owned                |  |         | 1,216,325  |          |        |  | 7.30 |             |  |  | 621         |  |  |     | 1.42 |   |       |  | 1.44 |       |  |  | 0.22 |   |  |  | 3.07 |  
|                                      |  |         |            |          |        |  |      |             |  |  |             |  |  |     |      |   |       |  |      |       | 
|Total                                 |  | $       | 24,379,514 |          |        |  | 7.09 | %           |  |  | 629         |  |  |     | 0.81 | % |       |  | 0.65 | %     |  |  | 0.07 | % |  |  | 1.54 | %
|                                      |  |         |            |          |        |  |      |             |  |  |             |  |  |     |      |   |       |  |      |       | 






|    |                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------
|(1) | At December 31, 2004, approximately $1.6 billion of
    our mortgage loans held for investment were serviced by a third
    party.

Competition


cost-of




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##### Table of Contents







Regulation






| |   |                                                         
| | - | --------------------------------------------------------
| |  | State regulatory authorities;                           
|
| |  | The Department of Housing and Urban Development, or HUD;
|
| |  | The Federal Housing Administration, or the FHA;         
|
| |  | The Department of Veteran Affairs, or the VA;           
|
| |  | Fannie Mae, Freddie Mac and Ginnie Mae; and             
|
| |  | The Federal Home Loan Bank, or the FHLB.                









| |   |                                                        
| | - | -------------------------------------------------------
| |  | Equal Credit Opportunity Act;                          
|
| |  | Federal Truth in Lending Act and Regulation Z;         
|
| |  | Home Ownership and Equity Protection Act;              
|
| |  | Real Estate Settlement Procedures Act and Regulation X;
|
| |  | Fair Credit Reporting Act;                             
|
| |  | Fair Debt Collection Practices Act;                    
|
| |  | Home Mortgage Disclosure Act;                          
|
| |  | Fair Housing Act;                                      
|
| |  | Telephone Consumer Protection Act;                     
|
| |  | Gramm-Leach-Bliley Act;                                
|
| |  | Fair and Accurate Credit Transactions Act;             

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| |   |                        
| | - | -----------------------
| |  | CAN-SPAM Act;          
|
| |  | Sarbanes-Oxley Act; and
|
| |  | USA PATRIOT Act.       





| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | impose licensing obligations and financial requirements on us;                                      
|
| |  | limit the interest rates, finance charges and other fees that we
    may charge;                    
|
| |  | prohibit discrimination;                                                                            
|
| |  | impose underwriting requirements;                                                                   
|
| |  | mandate disclosures and notices to consumers;                                                       
|
| |  | mandate the collection and reporting of statistical data
    regarding our customers;               
|
| |  | regulate our marketing techniques and practices;                                                    
|
| |  | require us to safeguard non-public personal information about
    our customers;                    
|
| |  | regulate our collection practices;                                                                  
|
| |  | require us to prevent money-laundering or the conduct of
    business with suspected terrorists; and
|
| |  | impose corporate governance, internal control and financial
    reporting obligations and standards.





| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | civil and criminal liability;                                                
|
| |  | loss of approved status;                                                     
|
| |  | demands for indemnification or loan repurchases from buyers of
    our loans;
|
| |  | class action lawsuits; and                                                   
|
| |  | administrative enforcement actions.                                          

Compliance, Quality Control and Quality Assurance










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Licensing




Regulatory Developments






| |                          
| | -------------------------
| | Privacy and Data Security







| |                          
| | -------------------------
| | Fair Credit Reporting Act





| |                             
| | ----------------------------
| | Home Mortgage Disclosure Act



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debt-to




| |                                                                                   
| | ----------------------------------------------------------------------------------
| | Controlling the Assault of Non-Solicited Pornography and
    Marketing Act of 2003

e-mail e-mails e-mail.




| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Telephone Consumer Protection Act and Telemarketing
    Consumer Fraud and Abuse Prevention Act





| |                              
| | -----------------------------
| | Predatory Lending Legislation





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##### Table of Contents







American Financial Services
Association vs. The City of Cleveland American Financial Services
Association, et al vs. Montgomery County, Maryland,




Efforts to Avoid Abusive Lending Practices






| |                 
| | ----------------
| | Product Policies



| |   |                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We do not fund or purchase high cost loans as
    defined by HOEPA.                                                                                                                                                                      
|
| |  | We do not make or purchase loans containing single premium
    credit life, disability or accident insurance.                                                                                                                              
|
| |  | We do not make or purchase loans containing mandatory
    arbitration clauses or interest rate increases triggered by
    borrower default. None of the subprime loans we make or purchase
    allow for negative amortization of the loan.
|
| |  | We offer loans with and without prepayment penalties. When a
    borrower opts for a loan with a prepayment charge, the borrower
    benefits from a lower interest rate and/or pays lower upfront
    fees.                               

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| |   |                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our prepayment penalties do not extend beyond three years from
    the origination date. On fixed rate loans, the maximum
    prepayment penalty term is three years. Prepayment penalties on
    adjustable rate subprime loans do not extend beyond the first
    adjustment date.
|
| |  | We do not originate loans that pay off zero interest rate
    mortgages provided by charitable organizations or the government
    without borrower third-party counseling.                                                                                                         



| |                         
| | ------------------------
| | Loan Processing Policies



| |   |                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We only approve subprime loan applications that evidence a
    borrowers ability to repay the loan.                                                                                                                                                                                                                                             
|
| |  | We consider whether a subprime borrowers loan terms are in
    the borrowers best interests and document our belief that
    the loan represents a tangible benefit to the borrower. We are
    currently working to set up a similar system for loans
    originated through our mortgage origination platform acquired
    from RBC Mortgage.
|
| |  | We do not resolicit our borrowers within 12 months of loan
    origination.                                                                                                                                                                                                                                                                      
|
| |  | We price loans commensurate with risk.                                                                                                                                                                                                                                                                                                           
|
| |  | We use an electronic credit grading system for our subprime
    loans to help ensure consistency of grading.                                                                                                                                                                                                                                     
|
| |  | We do not ask appraisers to report a predetermined value or
    withhold disclosure of adverse features.                                                                                                                                                                                                                                         
|
| |  | We employ electronic and manual systems to protect against
    adverse practices like property flipping. Loan
    origination systems are designed to detect red flags such as
    inflated appraisal values, unusual multiple borrower activity or
    rapid loan turnover.                                                                   



| |                                   
| | ----------------------------------
| | Customer Interaction and Education



| |   |                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We market our loans with a view to encouraging a wide range of
    applicants strongly representative of racial, ethnic and
    economic diversity in the markets we serve throughout the nation.                                                                                                                                           
|
| |  | We provide a helpful,
    easy-to-follow brochure
    to all our loan applicants to educate them on the loan
    origination process, explain basic loan terms, help them obtain
    a loan that suits their needs and advise them on how to find a
    U.S Department of Housing and Urban Development, or HUD-approved
    loan counselor.
|
| |  | We distribute our Fair Lending Policy to all newly hired
    employees and hold them accountable for treating borrowers
    fairly and equally.                                                                                                                                                                                             
|
| |  | We provide fair lending training to employees having direct
    contact with borrowers or loan decision-making authority.                                                                                                                                                                                                                   
|
| |  | We require brokers to sign an agreement indicating that they are
    knowledgeable about and will abide by fair lending laws and our
    Broker Code of Conduct.                                                                                                                                                                            
|
| |  | We monitor broker performance and strive to hold brokers
    accountable for fair and equal treatment of borrowers.                                                                                                                                                                                                                         
|
| |  | Our Retail Division conducts regular customer satisfaction
    surveys of all newly funded loans.                                                                                                                                                                                                                                           
|
| |  | We also conduct periodic randomly selected satisfaction surveys
    of customers who receive loans through a mortgage broker.                                                                                                                                                                                                               
|
| |  | Each division is supported by well-trained consumer relations
    staff dedicated to resolving consumer complaints in a timely and
    fair manner.                                                                                                                                                                                         
|
| |  | Our Loan Servicing Department contacts each borrower prior to
    the first payment to confirm that the borrower understands the
    loan payment terms.                                                                                                                                                                                    

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| |   |                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | When appropriate, we also offer loss mitigation counseling to
    borrowers in default and provide opportunities to enter into
    mutually acceptable reasonable repayment plans.
|
| |  | We report borrower monthly payment performance to major credit
    repositories.                                                                                                  



| |                          
| | -------------------------
| | Evaluation and Compliance



| |   |                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We subject a significant statistical sampling of our loans to a
    quality assurance review of borrower qualification, validity of
    information and verified property value determination.                                                               
|
| |  | Our Fair Lending Officer provides an independent means of
    reporting or discussing fair lending concerns through consumer
    and employee hotlines.                                                                                                      
|
| |  | Our Fair Lending Officer monitors production of fair lending
    performance, including loan file analysis and reporting, and
    coordinates community outreach programs.                                                                                   
|
| |  | We periodically engage independent firms to review internal
    controls and operations to help ensure compliance with accepted
    federal and state lending regulations and practices.                                                                     
|
| |  | We adhere to high origination standards in order to sell our
    loan products in the secondary mortgage market.                                                                                                                                             
|
| |  | We treat all customer information as confidential and consider
    it to be nonpublic information. We maintain systems and
    procedures designed to ensure that access to nonpublic consumer
    information is granted only to legitimate and valid users.
|
| |  | We use sophisticated fraud prevention and detection applications
    and techniques that allow us to better protect our customers
    from fraud and identity theft.                                                                                         
|
| |  | We believe that our commitment to responsible lending is good
    business.                                                                                                                                                                                  
|
| |  | We strive to promote highly ethical standards throughout our
    industry.                                                                                                                                                                                   



Environmental




Employees




Available Information


10-K, 10-Q, 8-K,


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##### Table of Contents



MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS


Introduction






Taxation as a REIT


Generally.






Taxable Income.


Taxable mortgage pools and REMICs.


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| |                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. That portion of our dividend represented by excess
    inclusion income may not be offset by any net operating losses
    otherwise available to the stockholder.                                                                                                                                  
|
| | 2. Stockholders otherwise generally exempt from federal
    income tax as a non-profit organization will, for that portion
    of our dividend represented by excess inclusion income, be
    subject to tax for unrelated business taxable income or
    UBTI.                                     
|
| | 3. For most types of foreign stockholders that portion of
    our dividend represented by excess inclusion income will result
    in the application of U.S. federal income tax withholding
    at the maximum rate (i.e., 30%), without reduction for any
    otherwise applicable income tax treaty.



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EXECUTIVE OFFICERS OF THE REGISTRANT




|                       |  |     |    |  |          |                                                                                                                                                                                                                                                                                                                                                  
|---------------------- |  | --- | -- |  | -------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                   |  | Age |    |  | Position
|                       |  |     |    |  |         
|Executive Officers:    |  |     |    |  |          |                                                                                                                                                                                                                                                                                                                                                  
|Robert K. Cole         |  |     | 59 |  |          | Chairman of the Board of Directors and Chief Executive Officer
    of New Century                                                                                                                                                                                                                                                                
|Brad A. Morrice        |  |     | 49 |  |          | Vice Chairman of the Board of Directors, President and Chief
    Operating Officer of New Century; Chief Executive Officer and
    Director of New Century Mortgage(1); Chairman of the Board of
    Directors and Chief Executive Officer of NC Capital(2); Chairman
    of the Board of Directors and Chief Executive Officer of
    Home123(3)
|Edward F. Gotschall    |  |     | 51 |  |          | Vice Chairman-Finance of the Board of Directors of New Century;
    Chief Financial Officer and Director of NC Capital                                                                                                                                                                                                                           
|Patrick J. Flanagan    |  |     | 40 |  |          | Executive Vice President of New Century                                                                                                                                                                                                                                                                                                          
|Kevin M. Cloyd         |  |     | 35 |  |          | Executive Vice President of New Century and Home123; Executive
    Vice President and Director of New Century Mortgage; President
    and Director of NC Capital                                                                                                                                                                                 
|Patti M. Dodge         |  |     | 45 |  |          | Executive Vice President and Chief Financial Officer of New
    Century and New Century Mortgage; Chief Financial Officer and
    Director of Home123                                                                                                                                                                                            
|Stergios Theologides   |  |     | 39 |  |          | Executive Vice President-Corporate Affairs and General Counsel
    of New Century; Executive Vice President-Corporate Affairs,
    Senior Legal Counsel and Secretary of New Century Mortgage;
    Executive Vice President and Director of NC Capital; Corporate
    Secretary of Home123                                                       
|Joseph F. Eckroth, Jr. |  |     | 47 |  |          | Executive Vice President of New Century and Executive Vice
    President, Chief Information Officer and Chief Operating Officer
    of New Century Mortgage                                                                                                                                                                                      






|    |                                                                                 
|--- | --------------------------------------------------------------------------------
|(1) | New Century Mortgage is a wholly owned direct subsidiary of New
    Century TRS.
|   
|(2) | NC Capital is a wholly owned direct subsidiary of New Century
    Mortgage.     
|   
|(3) | Home123 is a wholly owned indirect subsidiary of New Century TRS.               

Robert K. Cole,


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##### Table of Contents



Brad A. Morrice,


Edward F. Gotschall,


Patrick J. Flanagan


Kevin M. Cloyd


25



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##### Table of Contents





Patti M. Dodge


Stergios Theologides


Joseph F. Eckroth, Jr.


Item 1A.     Risk
Factors


Stockholders and prospective purchasers of our common stock
should carefully consider the risks described below before
making a decision to buy our common stock. If any of the
following risks actually occurs, our business could be harmed.
In that case, the trading price of our common stock could
decline, and you may lose all or part of your investment. When
determining whether to buy our common stock,


26



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##### Table of Contents



stockholders and prospective purchasers should also refer to
the other information in this annual report on Form 10-K,
including our financial statements and the related notes.


Risks Related to Our Business




| |                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are dependent on external sources of financing, and if
    we are unable to maintain adequate financing sources, our
    earnings and our financial position will suffer and jeopardize
    our ability to continue operations.









| |                                                                                   
| | ----------------------------------------------------------------------------------
| | We face intense competition that could harm our market
    share and our revenues.





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| |                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A prolonged economic slowdown or a lengthy or severe
    recession could harm our operations, particularly if it results
    in a decline in the real estate market.



28



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| |                                                                                   
| | ----------------------------------------------------------------------------------
| | Our earnings may decrease because of increases or
    decreases in interest rates.





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | When we securitize mortgage loans, the income we receive and the
    value of the residual interests we retain from the
    securitizations structured as financings are based primarily on
    the London Inter-Bank Offered Rate, or LIBOR. This is because
    the interest on the underlying mortgage loans is based on fixed
    rates payable on the underlying mortgage loans for the first two
    or three years from origination while the holders of the
    applicable securities are generally paid based on an adjustable
    LIBOR-based yield. Therefore, an increase in LIBOR reduces the
    net income we receive from, and the value of, these mortgage
    loans and residual interests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Our adjustable-rate mortgage loans have periodic and lifetime
    interest rate caps above which the interest rate on the mortgage
    loans may not rise. In the event of general interest rate
    increases, the rate of interest on these mortgage loans could be
    limited, while the rate payable on the senior certificates
    representing interests in a securitization trust into which
    these mortgage loans are sold may be uncapped. This would reduce
    the amount of cash we receive over the life of the mortgage
    loans in securitizations structured as financings and our
    residual interests, and could require us to reduce the carrying
    value of our residual interests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Changes in interest rates may affect our net interest income,
    which is the difference between the interest income that we earn
    on our mortgage loans or mortgage-related assets and the
    interest expense that we incur in financing our assets through
    debt, including securitizations. We rely primarily on short-term
    borrowings to acquire assets with long-term maturities.
    Accordingly, increases in short-term interest rates as compared
    to long-term interest rates may negatively affect the value of
    our assets and our ability to realize gains from the sale of
    mortgage loans we originate for resale, which will ultimately
    affect our earnings. In a period of rising interest rates, our
    interest expense could increase in different amounts and at
    different rates and times than the interest that we earn on our
    assets. If the net differential between our interest income on
    our mortgage loan assets and our interest expense to carry such
    mortgage loans was reduced, our net interest income would be
    reduced. Interest rate fluctuations resulting in our interest
    expense exceeding our interest income could result in operating
    losses for us and may limit or eliminate our ability to make
    distributions to our shareholders.
|
| |  | A substantial and sustained increase in interest rates could
    harm our mortgage loan origination volume because refinancings
    of existing mortgage loans, including cash-out refinancings and
    interest rate-driven refinancings, would be less attractive and
    qualifying for a purchase mortgage loan may be more difficult.
    Lower origination volume may harm our earnings by reducing
    origination income, net interest income and gain on sale of
    mortgage loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | During periods of rising interest rates, the value and
    profitability of our mortgage loans may be harmed between the
    date of origination or purchase until the date we sell or
    securitize the mortgage loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | An increase in interest rates could increase the delinquency and
    default rates on the adjustable-rate mortgage loans that we
    originate and hold because the borrowers monthly payments
    under such mortgage loans may increase beyond the
    borrowers ability to pay. Our portfolio of
    mortgage-related assets includes a significant number of
    mortgage loans that were originated in 2004 and 2005 that are
    adjustable-rate mortgage loans. Due to significant increases in
    interest rates since those mortgage loans were originated, the
    borrowers may be facing a larger-than-expected payment increase
    once the initial two or three-year fixed period ends. This may
    result in higher delinquencies and/or faster prepayment speeds,
    both of which could harm our profitability. High delinquencies
    or losses may decrease our cash flows or impair our ability to
    sell or securitize mortgage loans in the future, which could
    harm our results of operations, financial condition and business
    prospects.                                                                                                                                                                                                                                                         



29



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| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our reliance on cash-out refinancings as a significant
    source of our origination volume increases the risk that our
    earnings will be harmed if the demand for this type of
    refinancing declines.





| |                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our accounting policies and methods are fundamental to how
    we report our financial condition and results of operations, and
    they may require management to make estimates about matters that
    are inherently uncertain.





| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Our hedging strategies may not be successful in mitigating
    our risks associated with interest rates.





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| |                                                                                             
| | --------------------------------------------------------------------------------------------
| | An increase in mortgage loan prepayments may negatively
    affect the yields on our assets.







| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | The mortgage loans that we hold are subject to the risks
    of delinquency and foreclosure loss, which could result in
    losses to us.





| |   |                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------
| |  | property location and condition;                                                                                                    
|
| |  | competition and demand for comparable properties;                                                                                   
|
| |  | changes in zoning laws for the property or its surrounding area;                                                                    
|
| |  | environmental contamination at the property;                                                                                        
|
| |  | the occurrence of any uninsured casualty at the property;                                                                           
|
| |  | changes in national, regional or local economic conditions;                                                                         
|
| |  | declines in regional or local real estate values;                                                                                   
|
| |  | increases in interest rates or real estate taxes;                                                                                   
|
| |  | availability and costs of municipal services;                                                                                       
|
| |  | changes in governmental rules, regulations and fiscal policies,
    including environmental legislation and changes in tax laws; and
|
| |  | acts of God, war or other conflict, terrorism, social unrest and
    civil disturbances and natural disasters, such as hurricanes.  



31



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| |                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | The geographic concentration of our mortgage loan
    originations increases our exposure to economic and natural
    hazard risks specific to those areas.









| |                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------
| | An interruption or reduction in the securitization and
    whole loan markets would harm our financial position.





| |                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may not realize all of the expected benefits of, and we
    may incur additional costs related to, the acquisition of a
    mortgage origination platform from RBC Mortgage.



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| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | If we make any additional acquisitions, we will incur a
    variety of costs and may never realize the anticipated
    benefits.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our earnings from holding mortgage-backed securities or
    government securities may be harmed by changes in the level of
    interest rates, changes to the difference between short- and
    longer- term interest rates, changes to the difference between
    interest rates for these securities compared to other debt
    instruments, and an absence of or reduction in the availability,
    at favorable terms, of repurchase financing and other liquidity
    sources typically utilized by mortgage REITs.





| |                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A material difference between the assumptions used in the
    determination of the value of our residual interests and our
    actual experience could harm our financial position.





| |                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------
| | We may be required to conform to the standards of the
    recent Ameriquest settlement, which could harm our
    business.



33



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| |                                                                                                      
| | -----------------------------------------------------------------------------------------------------
| | New legislation could restrict our ability to make
    mortgage loans, which could harm our earnings.







| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | Lawsuits challenging our business practices, our
    competitors and other companies are pending and more may be
    filed in the future.





34



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| |                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The scope of our lending and servicing operations exposes
    us to risks of noncompliance with an increasing and inconsistent
    body of complex laws and regulations at the federal, state and
    local levels.







| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | civil and criminal liability;                                                                      
|
| |  | loss of licensure;                                                                                 
|
| |  | damage to our reputation in the industry;                                                          
|
| |  | inability to sell or securitize our mortgage loans;                                                
|
| |  | demands for indemnification or mortgage loan repurchases from
    purchasers of our mortgage loans;
|
| |  | fines and penalties and litigation, including class action
    lawsuits; or                        
|
| |  | administrative enforcement actions.                                                                





| |                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our interest-only mortgage loans may have a higher risk of
    default than our fully-amortizing mortgage loans and, therefore,
    may be considered less valuable than other types of mortgage
    loans in the sales and securitization process.



35



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| |                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may incur losses on our mortgage loans even if the
    mortgage loans are insured by the Federal Housing Administration
    or guaranteed by the Veterans Administration.





| |                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The loss of our exemption under the Investment Company Act
    would harm us and the market price of our shares of common stock
    and our ability to make distributions to our
    stockholders.







| |                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our inability to realize cash proceeds from mortgage loan
    sales and securitizations in excess of the loan acquisition cost
    could harm our financial position.



36



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| |                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our credit facilities are subject to margin calls based on
    the lenders opinion of the value of our mortgage loan
    collateral. An unanticipated large margin call could harm our
    liquidity.





| |                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------
| | Our origination and servicing systems depend significantly
    on automated controls and any failure of these systems could
    harm our business.









| |                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our efforts to increase our servicing activities may be
    unsuccessful and a decline in the quality of servicing could
    lower the value of our residual interests and our ability to
    sell or securitize mortgage loans and could harm the cash flows
    from our securitizations structured as financings.





37



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| |                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are subject to losses due to fraudulent and negligent
    acts on the part of mortgage loan applicants, mortgage brokers,
    other vendors and our employees.







| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | We may be subject to fines or other penalties based upon
    the conduct of our independent brokers.





| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | We are dependent upon third parties for many of our
    significant administrative and financial processes.





38



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| |                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Changes in the volume and cost of mortgage loans
    originated by our Wholesale Division may decrease our mortgage
    loan production and decrease our earnings.





| |                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If many of our borrowers become subject to the
    Servicemembers Civil Relief Act of 2003, our cash flows from our
    residual securities and our securitizations structured as
    financings may be harmed.





| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | The inability to attract and retain qualified employees
    could significantly harm our business.





| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | An interruption in or breach of our information systems
    may result in lost business.



39



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| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | The success and growth of our business will depend upon
    our ability to adapt to and implement technological
    changes.





| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may be required to repurchase mortgage loans or
    indemnify investors if we breach representations and warranties,
    which could harm our earnings.





| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | We are exposed to risk of environmental liabilities with
    respect to properties to which we take title.





| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | If we do not manage our growth effectively, our financial
    performance could be harmed.



40



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| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | We may change our policies in ways that harm our financial
    condition or results of operations.





| |                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Compliance with the Sarbanes-Oxley Act of 2002 and
    proposed and recently enacted changes in securities laws and
    regulations are likely to increase our costs.



Risks Related to New Century Securities




| |                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The stock price and trading volume of New Century common
    stock may be volatile, which could result in substantial losses
    for stockholders and harm our ability to access the capital
    markets in the future.





| |   |                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | general market and economic conditions;                                                                                                                                                                  
|
| |  | actual or anticipated changes in our future financial
    performance;                                                                                                                                   
|
| |  | changes in market interest rates;                                                                                                                                                                        
|
| |  | competitive developments, including announcements by us or our
    competitors of new products or services or significant
    contracts, acquisitions, strategic partnerships or capital
    commitments;
|
| |  | the operations and stock performance of our competitors;                                                                                                                                                 
|
| |  | developments in the mortgage lending industry or the financial
    services sector generally;                                                                                                            
|
| |  | the impact of new state or federal legislation or court
    decisions restricting the activities of lenders or suppliers of
    credit in our market;                                                    
|
| |  | fluctuations in our quarterly operating results;                                                                                                                                                         
|
| |  | changes in financial estimates by securities analysts;                                                                                                                                                   
|
| |  | additions or departures of senior management and key personnel;
    and                                                                                                                                  
|
| |  | actions by institutional stockholders.                                                                                                                                                                   



41



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| |                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Future sales of shares of New Century common stock,
    including shares of common stock by our insiders, may depress
    the price of New Century common stock.





| |                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our board of directors may authorize the issuance of
    additional securities that may cause dilution and may depress
    the price of New Century securities.





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | authorize the issuance of additional common stock or preferred
    stock in connection with future equity offerings or acquisitions
    of securities or other assets of companies; and                                                                                                                                                                                                                                                                                                         
|
| |  | classify or reclassify any unissued common stock or preferred
    stock and to set the preferences, rights and other terms of the
    classified or reclassified shares, including the issuance of
    shares of preferred stock that have preference rights over the
    common stock and existing preferred stock with respect to
    dividends, liquidation, voting and other matters or shares of
    common stock that have preference rights over common stock with
    respect to voting.





| |                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Future offerings of debt securities, which would be senior
    to New Century common stock and preferred stock in liquidation,
    or equity securities, which would dilute our existing
    stockholders interests and may be senior to New Century
    common stock or existing preferred stock for the purposes of
    distributions, may harm the market price of New Century
    securities.



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| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | The stock ownership limit imposed by our charter may
    inhibit market activity in our stock and may restrict our
    business combination opportunities.







| |   |                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------
| |  | will consider the transfer to be null and void;                                                            
|
| |  | will not reflect the transaction on our books;                                                             
|
| |  | may institute legal action to enjoin the transaction;                                                      
|
| |  | will not pay dividends or other distributions with respect to
    those shares;                            
|
| |  | will not recognize any voting rights for those shares; and                                                 
|
| |  | will consider the shares held in trust for the benefit of a
    charitable beneficiary as designated by us.





| |                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) the price paid by the transferee;                                                                                                                                                                                                                                     
|
| | (2) if the transferee did not purchase the excess shares,
    the closing price for the shares on the national securities
    exchange on which the New Century securities are listed or
    quoted on the day of the event causing the shares to be held in
    trust; or
|
| | (3) the price received by the trustee from the sale of the
    shares.                                                                                                                                                                                                    





| |                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------
| | Certain provisions of Maryland law and our charter and
    bylaws could hinder, delay or prevent a change in
    control.





| |   |                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Classified board of directors.Our board of directors is
    divided into three classes with staggered terms of office of
    three years each. The classification and staggered terms of
    office of our directors make it more difficult for a third party
    to gain control of our board of directors. At least two annual
    meetings of

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | stockholders, instead of one, generally would be required to
    effect a change in a majority of our board of directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Removal of directors.Under our charter, subject to the
    rights of one or more classes or series of preferred stock to
    elect one or more directors, a director may be removed only for
    cause and only by the affirmative vote of at least two-thirds of
    all votes entitled to be cast by our stockholders generally in
    the election of directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Number of directors, board vacancies, term of office.Under our bylaws, we have elected to be subject to certain
    provisions of Maryland law which vest in the board of directors
    the exclusive right to determine the number of directors and the
    exclusive right, by the affirmative vote of a majority of the
    remaining directors, to fill vacancies on the board of directors
    even if the remaining directors do not constitute a quorum.
    These provisions of Maryland law, which are applicable even if
    other provisions of Maryland law or the charter or bylaws
    provide to the contrary, also provide that any director elected
    to fill a vacancy shall hold office for the remainder of the
    full term of the class of directors in which the vacancy
    occurred, rather than the next annual meeting of stockholder as
    would otherwise be the case, and until his or her successor is
    elected and qualified.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Limitation on stockholder requested special meetings.Our
    bylaws provide that our stockholders have the right to call a
    special meeting only upon the written request of our
    stockholders entitled to cast not less than a majority of all
    the votes entitled to be cast by our stockholders at such
    meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Advance notice provisions for stockholder nominations and
    proposals.Our bylaws require advance written notice for our
    stockholders to nominate persons for election as directors at,
    or to bring other business before, any meeting of our
    stockholders. This bylaw provision limits the ability of our
    stockholders to make nominations of persons for election as
    directors or to introduce other proposals unless we are notified
    in a timely manner prior to the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Exclusive authority of our board to amend our bylaws.Our
    bylaws provide that the board of directors has the exclusive
    power to adopt, alter or repeal any provision of our bylaws or
    to make new bylaws. Thus, our stockholders may not effect any
    changes to our bylaws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Preferred stock.Under our charter, the board of
    directors has authority to issue preferred stock from time to
    time in one or more series and to establish the terms,
    preferences and rights of any such series of preferred stock,
    all without approval of our stockholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Duties of directors with respect to unsolicited takeovers.Maryland law provides protection for Maryland corporations
    against unsolicited takeovers by limiting, among other things,
    the duties of the directors in unsolicited takeover situations.
    The duties of directors of Maryland corporations do not require
    them to (i) accept, recommend or respond to any proposal by
    a person seeking to acquire control of the corporation,
    (ii) authorize the corporation to redeem any rights under,
    or modify or render inapplicable, any stockholders rights plan,
    (iii) make a determination under the Maryland Business
    Combination Act or the Maryland Control Share Acquisition Act,
    or (iv) act or fail to act solely because of the effect of an
    act or failure to act may have on an acquisition or potential
    acquisition of control of the corporation or the amount or type
    of consideration that may be offered or paid to the stockholders
    in an acquisition. Moreover, under Maryland law the act of the
    directors of a Maryland corporation relating to or affecting an
    acquisition or potential acquisition of control is not subject
    to any higher duty or greater scrutiny than is applied to any
    other act of a director. Maryland law also contains a statutory
    presumption that an act of a director of a Maryland corporation
    satisfies the applicable standards of conduct for directors
    under Maryland law.
|
| |  | Ownership limit.In order for us to maintain our
    qualification as a REIT under the Code, our charter, with
    certain exceptions, authorizes our board of directors to take
    such actions as are necessary and desirable to preserve our
    qualification as a REIT and provide that, unless exempted by our
    board of directors, no single stockholder, or any group of
    affiliated stockholders, may beneficially owning more than 9.8%,
    as such percentage may be modified by the Board of Directors
    from time to time, in value or number of shares, whichever is
    more restrictive, of the aggregate of the outstanding shares of
    any                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | class or series of our capital stock. Our board of directors
    also has authority under our charter to impose a similar
    ownership limitation as to any separate class or series of
    preferred stock we may issue in the future. Our board of
    directors may grant an exemption from that ownership limit in
    its sole discretion, subject to such conditions, representations
    and undertakings as it may determine and as are consistent with
    ensuring compliance with the REIT provisions of the Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Maryland Business Combination Act.The Maryland Business
    Combination Act provides that unless exempted, a Maryland
    corporation may not engage in business combinations, including
    mergers, dispositions of 10% or more of its assets, certain
    issuances of shares of stock and other specified transactions,
    with an interested stockholder or an affiliate of an
    interested stockholder for five years after the most recent date
    on which the interested stockholder became an interested
    stockholder, and thereafter unless specified criteria are met.
    An interested stockholder is generally a person owning or
    controlling, directly or indirectly, 10% or more of the voting
    power of the outstanding stock of a Maryland corporation. Our
    board of directors has adopted a resolution exempting it from
    this statute. However, our board of directors may repeal or
    modify this resolution in the future, in which case the
    provisions of the Maryland Business Combination Act will be
    applicable to business combinations between us and other persons.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Maryland Control Share Acquisition Act.Maryland law
    provides that control shares of a corporation
    acquired in a control share acquisition shall have
    no voting rights except to the extent approved by a vote of
    two-thirds of the votes eligible to be cast on the matter under
    the Maryland Control Share Acquisition Act. Control
    shares means shares of stock that, if aggregated with all
    other shares of stock previously acquired by the acquiror, would
    entitle the acquiror to exercise voting power in electing
    directors within one of the following ranges of the voting
    power: one tenth or more but less than one third, one third or
    more but less than a majority or a majority or more of all
    voting power. A control share acquisition means the
    acquisition of control shares, subject to certain exceptions. If
    voting rights or control shares acquired in a control share
    acquisition are not approved at a stockholders meeting,
    then subject to certain conditions and limitations, the issuer
    may redeem any or all of the control shares for fair value. If
    voting rights of such control shares are approved at a
    stockholders meeting and the acquiror becomes entitled to
    vote a majority of the shares of stock entitled to vote, all
    other stockholders may exercise appraisal rights. Our bylaws
    contain a provision exempting acquisitions of our shares from
    the Maryland Control Share Acquisition Act. However, our board
    of directors may amend our bylaws in the future to repeal or
    modify this exemption, in which case any control shares acquired
    in a control share acquisition will be subject to the Maryland
    Control Share Acquisition Act.



| |                                                              
| | -------------------------------------------------------------
| | We may be contractually prohibited from paying
    dividends.





Federal Income Tax Risks and Risks Associated with Being a
REIT




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##### Table of Contents





| |                                                                                 
| | --------------------------------------------------------------------------------
| | If we fail to qualify as a REIT, it could adversely affect
    our stockholders.







| |                                                                            
| | ---------------------------------------------------------------------------
| | REIT distribution requirements could adversely affect our
    stockholders.





| |                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------
| | Complying with REIT requirements may cause us to forego
    otherwise attractive opportunities, including certain
    acquisitions.





| |                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The tax imposed on REITs engaging in prohibited
    transactions will limit our ability to engage in
    transactions, including certain methods of securitizing mortgage
    loans, that would be treated as sales for federal income tax
    purposes.



46



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##### Table of Contents







| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | We will incur excess inclusion income that will increase
    the tax liability of our stockholders.







| |                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Even if we continue to qualify as a REIT, the income
    earned by our taxable REIT subsidiaries will be subject to
    federal income tax and we could be subject to an excise tax on
    non-arms-length transactions with our taxable REIT
    subsidiaries.







47



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##### Table of Contents





| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | We may be harmed by changes in tax laws applicable to
    REITs, or the reduced 15% tax rate on certain corporate
    dividends.





Item 1B.     Unresolved
Staff Comments




Item 2.     Properties




Item 3.     Legal
Proceedings


Overman.


48



---



##### Table of Contents





England. Klas vs. New Century Financial
Corporation, et al


Lum.


DOL Investigation.


Rubio.


49



---



##### Table of Contents





Bonner.


Phillips. Murray v.
GMAC Mortgage Corporation


Jeppesen.


Forrest.




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




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##### Table of Contents



PART II


Item 5.     Market for the
Registrants Common Equity and Related Stockholder
Matters




|        |  |      |       |          |      |  |       |           |          |  |      |  |  |     |       |  |           |  |       |  |  |  |      | 
|------- |  | ---- | ----- | -------- | ---- |  | ----- | --------- | -------- |  | ---- |  |  | --- | ----- |  | --------- |  | ----- |  |  |  | ---- | 
|        |  | 2005 |       |          | 2004 | 
|        |  |      |       |          |      | 
|        |  |      |       | Dividend |      |  |       |           | Dividend | 
|Quarter |  | High |       |          | Low  |  |       | Per Share |          |  | High |  |  | Low |       |  | Per Share | 
|        |  |      |       |          |      |  |       |           |          |  |      |  |  |     |       |  |           | 
|Fourth  |  | $    | 40.70 |          |      |  | 30.22 |           |          |  | 1.65 |  |  | $   | 66.95 |  |           |  | 50.95 |  |  |  | 0.23 | 
|Third   |  |      | 53.55 |          |      |  | 34.50 |           |          |  | 1.60 |  |  |     | 63.30 |  |           |  | 43.27 |  |  |  | 0.20 | 
|Second  |  |      | 54.00 |          |      |  | 41.45 |           |          |  | 1.55 |  |  |     | 50.76 |  |           |  | 38.50 |  |  |  | 0.20 | 
|First   |  |      | 64.38 |          |      |  | 43.99 |           |          |  | 1.50 |  |  |     | 52.28 |  |           |  | 37.91 |  |  |  | 0.16 | 









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|               |       |              |         |         |                    |                  |                     |                |                   |                        |                     |         |  |  |           |           | 
|-------------- | ----- | ------------ | ------- | ------- | ------------------ | ---------------- | ------------------- | -------------- | ----------------- | ---------------------- | ------------------- | ------- |  |  | --------- | --------- | 
|               |       |              |         |         |                    | Total Number of  |                     |                |                  
|               |       |              |         |         |                    | Shares Purchased |                     |                | Maximum Number of |                       
|               |       | Total Number |         |         |                    |                  | as Part of Publicly |                |                   | Shares That May Yet Be |                    
|               |       | of Shares    |         |         | Average Price Paid |                  |                     | Announced Plan |                   |                        | Purchased Under the |        
|Calendar Month |       | Purchased(1) |         |         | per Share          |                  |                     | or Program(1)  |                   |                        | Plan or Program(1)  |        
|               |       |              |         |         |                    |                  |                     |                |                   |                        |                     |        
|October        |       |              |        |         |                    | $                |                    |                |                   |                        |                    |         |  |  | 5,000,000 |          
|November       |       |              | 879,200 |         |                    | $                | 33.52               |                |                   |                        | 879,200             |         |  |  | 4,120,800 |          
|December       |       |              |        |         |                    | $                |                    |                |                   |                        |                    |         |  |  | 4,120,800 |          
|               |       |              |         |         |                    |                  |                     |                |                   |                        |                     |        
|               | Total |              |         | 879,200 |                    |                  | $                   | 33.52          |                   |                        |                     | 879,200 |  |  |           | 4,120,800 | 
|               |       |              |         |         |                    |                  |                     |                |                   |                        |                     |        






|    |                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | On November 3, 2005, we publicly announced that our board
    of directors had approved a stock repurchase program for up to
    5 million shares of our common stock over the following
    12 months.

Recent Sales of Unregistered Securities




Equity Compensation Plan Information




Item 6.     Selected
Financial Data




52



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|                                                           |                                |                                                |           |         |         |  |          |         |         |  |          |         |         |      |         |         |         |  |         |         |         | 
|---------------------------------------------------------- | ------------------------------ | ---------------------------------------------- | --------- | ------- | ------- |  | -------- | ------- | ------- |  | -------- | ------- | ------- | ---- | ------- | ------- | ------- |  | ------- | ------- | ------- | 
|                                                           |                                | Years Ended December 31,                       |          
|                                                           |                                |                                                |          
|                                                           |                                | 2005                                           |           |         | 2004    |  |          | 2003    |         |  | 2002     |         |         | 2001 |        
|                                                           |                                |                                                |           |         |         |  |          |         |         |  |          |         |         |      |        
|                                                           |                                | (Dollars in thousands, except per share data)  |          
|Statement of income data:                                  |                                |                                                |           |         |         |  |          |         |         |  |          |         |         |      |         |         |         |  |         |        
|Interest income                                            |                                | $                                              | 1,759,567 |         |         |  | 898,647  |         |         |  | 353,691  |         |         |      | 154,054 |         |         |  | 99,062  |        
|Interest expense                                           |                                |                                                | (988,123  | )       |         |  | (367,094 | )       |         |  | (117,575 | )       |         |      | (50,588 | )       |         |  | (54,127 | )      
|                                                           |                                |                                                |           |         |         |  |          |         |         |  |          |         |         |      |        
|                                                           |                                | Net interest income                            |           |         | 771,444 |  |          |         | 531,553 |  |          |         | 236,116 |      |         |         | 103,466 |  |         |         | 44,935  | 
|Provision for losses on mortgage loans held for investment |                                |                                                | (140,233  | )       |         |  | (70,250  | )       |         |  | (26,304  | )       |         |      |        |         |         |  |        |        
|                                                           |                                |                                                |           |         |         |  |          |         |         |  |          |         |         |      |        
|                                                           |                                | Net interest income after provision for losses |           |         | 631,211 |  |          |         | 461,303 |  |          |         | 209,812 |      |         |         | 103,466 |  |         |         | 44,935  | 
|Other operating income:                                    |                                |                                                |           |         |         |  |          |         |         |  |          |         |         |      |         |         |         |  |         |        
|                                                           | Gain on sale of mortgage loans |                                                |           | 622,617 |         |  |          | 800,609 |         |  |          | 611,136 |         |      |         | 451,744 |         |  |         | 182,612 |        
|                                                           | Servicing income               |                                                |           | 38,514  |         |  |          | 28,896  |         |  |          | 11,139  |         |      |         | 432     |         |  |         | 10,616  |        
|                                                           | Other income                   |                                                |           | 22,400  |         |  |          | 4,415   |         |  |          |        |         |      |         | 16      |         |  |         | 1,046   |        
|                                                           |                                |                                                |           |         |         |  |          |         |         |  |          |         |         |      |        
|                                                           |                                | Total other operating income                   |           |         | 683,531 |  |          |         | 833,920 |  |          |         | 622,275 |      |         |         | 452,192 |  |         |         | 194,274 | 
|                                                           |                                | Other operating expenses                       |           |         | 871,365 |  |          |         | 684,082 |  |          |         | 408,835 |      |         |         | 249,322 |  |         |         | 155,725 | 
|                                                           |                                |                                                |           |         |         |  |          |         |         |  |          |         |         |      |        
|                                                           |                                | Earnings before income taxes                   |           |         | 443,377 |  |          |         | 611,141 |  |          |         | 423,252 |      |         |         | 306,336 |  |         |         | 83,484  | 
|Income taxes                                               |                                |                                                | 26,834    |         |         |  | 235,570  |         |         |  | 177,769  |         |         |      | 126,636 |         |         |  | 35,464  |        
|                                                           |                                |                                                |           |         |         |  |          |         |         |  |          |         |         |      |        
|                                                           |                                | Net earnings                                   |           | $       | 416,543 |  |          |         | 375,571 |  |          |         | 245,483 |      |         |         | 179,700 |  |         |         | 48,020  | 
|                                                           |                                |                                                |           |         |         |  |          |         |         |  |          |         |         |      |        
|Basic earnings per share                                   |                                | $                                              | 7.42      |         |         |  | 10.20    |         |         |  | 7.26     |         |         |      | 5.19    |         |         |  | 1.83    |        
|Diluted earnings per share                                 |                                |                                                | 7.17      |         |         |  | 8.29     |         |         |  | 6.32     |         |         |      | 4.73    |         |         |  | 1.54    |        
|Book value per share(1)                                    |                                |                                                | 35.94     |         |         |  | 39.73    |         |         |  | 16.37    |         |         |      | 10.92   |         |         |  | 6.99    |        
|Book value per share(2)                                    |                                |                                                | 35.17     |         |         |  | 32.90    |         |         |  | 17.96    |         |         |      | 10.20   |         |         |  | 6.70    |        

|                                                        |  |                        |            |  |      |  |            |      |  |  |           |  |  |      |           |  |  |  |           | 
|------------------------------------------------------- |  | ---------------------- | ---------- |  | ---- |  | ---------- | ---- |  |  | --------- |  |  | ---- | --------- |  |  |  | --------- | 
|                                                        |  | As of December 31,     |           
|                                                        |  |                        |           
|                                                        |  | 2005                   |            |  | 2004 |  |            | 2003 |  |  | 2002      |  |  | 2001 |          
|                                                        |  |                        |            |  |      |  |            |      |  |  |           |  |  |      |          
|                                                        |  | (Dollars in thousands) |           
|Balance sheet data:                                     |  |                        |            |  |      |  |            |      |  |  |           |  |  |      |           |  |  |  |           | 
|Cash and cash equivalents                               |  | $                      | 503,723    |  |      |  | 842,854    |      |  |  | 278,598   |  |  |      | 176,669   |  |  |  | 100,263   | 
|Restricted cash                                         |  |                        | 726,697    |  |      |  | 454,035    |      |  |  | 116,883   |  |  |      | 6,255     |  |  |  | 6,416     | 
|Mortgage loans held for sale at lower of cost or market |  |                        | 7,825,175  |  |      |  | 3,922,865  |      |  |  | 3,422,211 |  |  |      | 1,920,396 |  |  |  | 1,011,122 | 
|Mortgage loans held for investment, net                 |  |                        | 16,143,865 |  |      |  | 13,195,324 |      |  |  | 4,745,937 |  |  |      |          |  |  |  |          | 
|Residual interests in securitizations                   |  |                        | 234,930    |  |      |  | 148,021    |      |  |  | 179,498   |  |  |      | 246,964   |  |  |  | 306,908   | 
|Total assets                                            |  |                        | 26,147,090 |  |      |  | 19,051,944 |      |  |  | 8,943,938 |  |  |      | 2,402,928 |  |  |  | 1,451,318 | 
|Credit facilities on mortgage loans held for sale       |  |                        | 7,439,685  |  |      |  | 3,704,268  |      |  |  | 3,311,837 |  |  |      | 1,885,498 |  |  |  | 987,568   | 
|Financing on mortgage loans held for investment, net    |  |                        | 16,045,459 |  |      |  | 13,105,973 |      |  |  | 4,686,323 |  |  |      |          |  |  |  |          | 
|Convertible senior notes, net                           |  |                        | 4,943      |  |      |  | 5,392      |      |  |  | 204,858   |  |  |      |          |  |  |  |          | 
|Subordinated debt                                       |  |                        |           |  |      |  |           |      |  |  |          |  |  |      |          |  |  |  | 40,000    | 
|Residual financing                                      |  |                        |           |  |      |  |           |      |  |  |          |  |  |      |          |  |  |  | 79,941    | 
|Other liabilities                                       |  |                        | 547,303    |  |      |  | 357,746    |      |  |  | 198,909   |  |  |      | 130,880   |  |  |  | 96,048    | 
|Total stockholders equity                              |  |                        | 2,109,700  |  |      |  | 1,878,565  |      |  |  | 542,011   |  |  |      | 386,550   |  |  |  | 247,761   | 






|    |                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------
|(1) | Book value per share is calculated by dividing ending common
    equity by average basic shares for the most recent quarterly
    period.

53



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|    |                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Book value per share is calculated by dividing ending common
    equity by average diluted shares for the most recent quarterly
    period.

|                                                |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |            |            |            |  |           |           |           | 
|----------------------------------------------- | ---------------------------------------- | ------------------------------------- | ---------- | ---------- | ---------- |  | ---------- | ---------- | ---------- |  | ---------- | ---------- | ---------- | ---- | ---------- | ---------- | ---------- |  | --------- | --------- | --------- | 
|                                                |                                          | For the Years Ended December 31,      |           
|                                                |                                          |                                       |           
|                                                |                                          | 2005                                  |            |            | 2004       |  |            | 2003       |            |  | 2002       |            |            | 2001 |           
|                                                |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |           
|                                                |                                          | (Dollars in thousands)                |           
|Operating Statistics:                           |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |            |            |            |  |           |          
|Loan origination and purchase activities:       |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |            |            |            |  |           |          
|                                                | Wholesale                                |                                       | $          | 49,224,321 |            |  |            | 38,126,322 |            |  |            | 25,187,569 |            |      |            | 12,392,562 |            |  |           | 5,068,466 |          
|                                                | Retail                                   |                                       |            | 6,883,920  |            |  |            | 4,073,318  |            |  |            | 2,195,269  |            |      |            | 1,808,934  |            |  |           | 1,176,505 |          
|                                                |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |           
|                                                |                                          | Total loan originations and purchases |            | $          | 56,108,241 |  |            |            | 42,199,640 |  |            |            | 27,382,838 |      |            |            | 14,201,496 |  |           |           | 6,244,971 | 
|                                                |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |           
|Average principal balance per loan              |                                          | $                                     | 181        |            |            |  | 174        |            |            |  | 167        |            |            |      | 151        |            |            |  | 138       |          
|Percent of loans secured by first mortgages     |                                          |                                       | 93.8       | %          |            |  | 95.9       | %          |            |  | 98.6       | %          |            |      | 99.6       | %          |            |  | 99.3      | %        
|Weighted average initial loan-to-value ratio(1) |                                          |                                       | 81.0       | %          |            |  | 81.1       | %          |            |  | 80.4       | %          |            |      | 78.7       | %          |            |  | 77.8      | %        
|Originations by product type:                   |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |            |            |            |  |           |          
|                                                | ARMs                                     |                                       |            | 41,101,125 |            |  |            | 31,113,241 |            |  |            | 19,185,517 |            |      |            | 10,492,558 |            |  |           | 5,101,783 |          
|                                                | Fixed-rate mortgages                     |                                       |            | 15,007,116 |            |  |            | 11,086,399 |            |  |            | 8,197,321  |            |      |            | 3,708,938  |            |  |           | 1,143,188 |          
|Weighted average interest rates:                |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |            |            |            |  |           |          
|                                                | Fixed-rate mortgages                     |                                       |            | 7.6        | %          |  |            | 7.3        | %          |  |            | 7.3        | %          |      |            | 8.2        | %          |  |           | 9.5       | %        
|                                                | ARMs  initial rate                      |                                       |            | 7.2        | %          |  |            | 6.9        | %          |  |            | 7.3        | %          |      |            | 8.3        | %          |  |           | 9.4       | %        
|                                                | ARMs  margin over index                 |                                       |            | 5.8        | %          |  |            | 5.5        | %          |  |            | 5.8        | %          |      |            | 6.6        | %          |  |           | 6.6       | %        
|Secondary Market transactions:                  |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |            |            |            |  |           |          
|Loans sold through whole loan transactions      |                                          |                                       | 35,314,781 |            |            |  | 30,329,278 |            |            |  | 20,835,105 |            |            |      | 12,419,687 |            |            |  | 4,723,350 |          
|Securitizations structured as sales             |                                          |                                       | 6,442,201  |            |            |  |           |            |            |  |           |            |            |      | 845,477    |            |            |  | 898,244   |          
|                                                |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |           
|                                                |                                          | Total sales                           |            |            | 41,756,982 |  |            |            | 30,329,278 |  |            |            | 20,835,105 |      |            |            | 13,265,164 |  |           |           | 5,621,594 | 
|                                                | Securitizations structured as financings |                                       |            | 10,961,658 |            |  |            | 10,111,131 |            |  |            | 4,946,781  |            |      |            |           |            |  |           |          |          
|                                                |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |           
|                                                |                                          | Total secondary market transactions   |            | $          | 52,718,640 |  |            |            | 40,440,409 |  |            |            | 25,781,886 |      |            |            | 13,265,164 |  |           |           | 5,621,594 | 
|                                                |                                          |                                       |            |            |            |  |            |            |            |  |            |            |            |      |           






|    |                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------
|(1) | Weighted average LTV is the LTV of the first lien mortgages and
    the combined LTV of the second lien mortgages.

Item 7.     Managements
Discussion and Analysis of Financial Condition and Results of
Operations


The following discussion and analysis of our financial
condition and results of operations should be read in
conjunction with our consolidated financial statements and
related notes contained elsewhere herein. As used herein, except
where the context suggests otherwise, for time periods before
October 1, 2004, the terms the Company,
our, its, we, the
group, and us mean New Century TRS Holdings,
Inc. and its consolidated subsidiaries, and for time periods on
and after October 1, 2004, the terms the
Company, our, its, we,
the group, and us refer to New Century
Financial Corporation and its consolidated subsidiaries.


General




54



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| |                                                          
| | ---------------------------------------------------------
| | Acquisition of RBC Mortgage Loan Origination
    Platform







Executive Summary




55



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##### Table of Contents









Overview


Our two key business components are:




| |                                      
| | -------------------------------------
| | REIT and TRS Mortgage Loan Portfolios











56



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| |                       
| | ----------------------
| | Originations and Sales







Net interest income on mortgage loans held for
sale


Gain on sale of mortgage loans


Loan origination or acquisition cost






57



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| |                                
| | -------------------------------
| | Loan originations and purchases









40-year




58



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59



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|                                                              |                                               |                                  |                                  |            |            |            |      |       |      |       |            |            |            |            |      |      |      |       | 
|------------------------------------------------------------- | --------------------------------------------- | -------------------------------- | -------------------------------- | ---------- | ---------- | ---------- | ---- | ----- | ---- | ----- | ---------- | ---------- | ---------- | ---------- | ---- | ---- | ---- | ----- | 
|                                                              |                                               | For the Years Ended December 31, |                                 
|                                                              |                                               |                                  |                                 
|                                                              |                                               | 2005                             |                                  |            | 2004       |           
|                                                              |                                               |                                  |                                  |            |            |           
|                                                              |                                               | Total                            |                                  |            | %          |            |      | Total |      |       | %          |           
|                                                              |                                               |                                  |                                  |            |            |            |      |       |      |       |            |           
|Wholesale                                                     |                                               | $                                | 49,224,321                       |            |            |            | 87.7 |       |      |       | 38,126,322 |            |            |            | 90.3 |     
|Retail                                                        |                                               |                                  | 6,883,920                        |            |            |            | 12.3 |       |      |       | 4,073,318  |            |            |            | 9.7  |     
|                                                              |                                               |                                  |                                  |            |            |            |      |       |      |       |            |           
|                                                              |                                               |                                  | Total originations and purchases |            |            | 56,108,241 |      |       |      | 100.0 |            |            |            | 42,199,640 |      |      |      | 100.0 | 
|Fixed-rate mortgages:                                         |                                               |                                  |                                  |            |            |            |      |       |      |       |            |            |            |            |      |     
|                                                              | Traditional                                   |                                  |                                  | 13,845,595 |            |            |      | 24.6  |      |       |            | 11,086,399 |            |            |      | 26.3 |     
|                                                              | Interest-Only                                 |                                  |                                  | 671,824    |            |            |      | 1.2   |      |       |            |           |            |            |      |     |     
|                                                              | 40-Year                                       |                                  |                                  | 489,697    |            |            |      | 0.9   |      |       |            |           |            |            |      |     |     
|                                                              |                                               |                                  |                                  |            |            |            |      |       |      |       |            |           
|                                                              |                                               | Sub-total Fixed                  |                                  |            | 15,007,116 |            |      |       | 26.7 |       |            |            | 11,086,399 |            |      |      | 26.3 |      
|Adjustable-rate mortgages:                                    |                                               |                                  |                                  |            |            |            |      |       |      |       |            |            |            |            |      |     
|                                                              | Traditional                                   |                                  |                                  | 21,194,109 |            |            |      | 37.8  |      |       |            | 22,969,212 |            |            |      | 54.4 |     
|                                                              | Interest-Only                                 |                                  |                                  | 16,580,514 |            |            |      | 29.6  |      |       |            | 8,144,029  |            |            |      | 19.3 |     
|                                                              | 40-Year                                       |                                  |                                  | 3,298,913  |            |            |      | 5.9   |      |       |            |           |            |            |      |     |     
|                                                              | HELOC                                         |                                  |                                  | 27,589     |            |            |      |      |      |       |            |           |            |            |      |     |     
|                                                              |                                               |                                  |                                  |            |            |            |      |       |      |       |            |           
|                                                              |                                               | Sub-total ARM                    |                                  |            | 41,101,125 |            |      |       | 73.3 |       |            |            | 31,113,241 |            |      |      | 73.7 |      
|                                                              |                                               |                                  |                                  |            |            |            |      |       |      |       |            |           
|                                                              |                                               |                                  | Total originations and purchases |            |            | 56,108,241 |      |       |      | 100.0 |            |            |            | 42,199,640 |      |      |      | 100.0 | 
|Purchases                                                     |                                               |                                  | 23,571,645                       |            |            |            | 42.0 |       |      |       | 14,880,034 |            |            |            | 35.3 |     
|Refinances:                                                   |                                               |                                  |                                  |            |            |            |      |       |      |       |            |            |            |            |      |     
|                                                              | Cash-out refinances                           |                                  |                                  | 27,130,520 |            |            |      | 48.4  |      |       |            | 25,121,511 |            |            |      | 59.5 |     
|                                                              | Rate/term refinances                          |                                  |                                  | 5,406,076  |            |            |      | 9.6   |      |       |            | 2,198,095  |            |            |      | 5.2  |     
|                                                              |                                               |                                  |                                  |            |            |            |      |       |      |       |            |           
|                                                              |                                               |                                  | Total originations and purchases |            |            | 56,108,241 |      |       |      | 100.0 |            |            |            | 42,199,640 |      |      |      | 100.0 | 
|Full documentation                                            |                                               |                                  | 30,438,822                       |            |            |            | 54.2 |       |      |       | 21,530,191 |            |            |            | 51.0 |     
|Limited documentation                                         |                                               |                                  | 1,501,367                        |            |            |            | 2.7  |       |      |       | 2,014,253  |            |            |            | 4.8  |     
|Stated documentation                                          |                                               |                                  | 24,168,052                       |            |            |            | 43.1 |       |      |       | 18,655,196 |            |            |            | 44.2 |     
|                                                              |                                               |                                  |                                  |            |            |            |      |       |      |       |            |           
|                                                              |                                               |                                  | Total originations and purchases |            | $          | 56,108,241 |      |       |      | 100.0 |            |            |            | 42,199,640 |      |      |      | 100.0 | 
|Average principal balance of loans originated and purchased   |                                               | $                                | 181                              |            |            |            |      |       |      |       | 174        |            |            |            |      |     
|Weighted average FICO score of loans originated and purchased |                                               |                                  | 634                              |            |            |            |      |       |      |       | 627        |            |            |            |      |     
|Percent of loans secured by first mortgages                   |                                               |                                  | 93.8                             | %          |            |            |      |       |      |       | 93.2       | %          |            |            |      |     
|Weighted average loan-to-value ratio(1)                       |                                               |                                  | 81.0                             | %          |            |            |      |       |      |       | 81.1       | %          |            |            |      |     
|Weighted average interest rates:                              |                                               |                                  |                                  |            |            |            |      |       |      |       |            |            |            |            |      |     
|                                                              | Fixed-rate mortgages                          |                                  |                                  | 7.6        | %          |            |      |       |      |       |            | 7.3        | %          |            |      |      |     
|                                                              | Adjustable-rate mortgages  initial rate      |                                  |                                  | 7.2        | %          |            |      |       |      |       |            | 6.9        | %          |            |      |      |     
|                                                              | Adjustable-rate mortgages  margin over index |                                  |                                  | 5.8        | %          |            |      |       |      |       |            | 5.5        | %          |            |      |      |     
|                                                              |                                               |                                  | Total originations and purchases |            |            | 7.3        | %    |       |      |       |            |            |            | 7.0        | %    |      |      |       | 
|Percentage of loans originated in top two credit grades       |                                               |                                  | 84.0                             | %          |            |            |      |       |      |       | 85.8       | %          |            |            |      |     
|Percentage of loans originated in bottom two credit grades    |                                               |                                  | 2.3                              | %          |            |            |      |       |      |       | 3.2        | %          |            |            |      |     






|    |                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------
|(1) | Weighted average LTV is the LTV of the first lien mortgages and
    combined LTV of the second lien mortgages.

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| |                              
| | -----------------------------
| | Secondary Market Transactions





|                                         |  |                                  |            |  |            |  |       |        |  |  |            |  |  |        |       |  |            |  |            |  |  |  |       | 
|---------------------------------------- |  | -------------------------------- | ---------- |  | ---------- |  | ----- | ------ |  |  | ---------- |  |  | ------ | ----- |  | ---------- |  | ---------- |  |  |  | ----- | 
|                                         |  | For the Years Ended December 31, |           
|                                         |  |                                  |           
|                                         |  | 2005                             |            |  | 2004       |  |       | 2003   | 
|                                         |  |                                  |            |  |            |  |       |        | 
|                                         |  | Amount                           |            |  | % of Sales |  |       | Amount |  |  | % of Sales |  |  | Amount |       |  | % of Sales | 
|                                         |  |                                  |            |  |            |  |       |        |  |  |            |  |  |        |       |  |            | 
|Subprime whole loan sales                |  | $                                | 32,816,911 |  |            |  | 62.2  |        |  |  | 30,181,150 |  |  |        | 74.6  |  |            |  | 20,587,888 |  |  |  | 79.8  | 
|Prime and Alt-A whole loan sales       |  |                                  | 2,251,335  |  |            |  | 4.3   |        |  |  |           |  |  |        |      |  |            |  |           |  |  |  |      | 
|Securitizations structured as sales      |  |                                  | 6,442,201  |  |            |  | 12.2  |        |  |  |           |  |  |        |      |  |            |  |           |  |  |  |      | 
|                                         |  |                                  |            |  |            |  |       |        |  |  |            |  |  |        |       |  |            | 
|Total premium sales                      |  |                                  | 41,510,447 |  |            |  | 78.7  |        |  |  | 30,181,150 |  |  |        | 74.6  |  |            |  | 20,587,888 |  |  |  | 79.8  | 
|Discounted whole loan sales              |  |                                  | 246,535    |  |            |  | 0.5   |        |  |  | 148,128    |  |  |        | 0.4   |  |            |  | 247,217    |  |  |  | 1.0   | 
|                                         |  |                                  |            |  |            |  |       |        |  |  |            |  |  |        |       |  |            | 
|Total sales                              |  |                                  | 41,756,982 |  |            |  | 79.2  |        |  |  | 30,329,278 |  |  |        | 75.0  |  |            |  | 20,835,105 |  |  |  | 80.8  | 
|Securitizations structured as financings |  |                                  | 10,961,958 |  |            |  | 20.8  |        |  |  | 10,111,131 |  |  |        | 25.0  |  |            |  | 4,946,781  |  |  |  | 19.2  | 
|                                         |  |                                  |            |  |            |  |       |        |  |  |            |  |  |        |       |  |            | 
|Total secondary market transactions      |  | $                                | 52,718,940 |  |            |  | 100.0 |        |  |  | 40,440,409 |  |  |        | 100.0 |  |            |  | 25,781,886 |  |  |  | 100.0 | 
|                                         |  |                                  |            |  |            |  |       |        |  |  |            |  |  |        |       |  |            | 





| |           
| | ----------
| | Loan Sales





61



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##### Table of Contents







| |                                         
| | ----------------------------------------
| | Securitizations Structured as Financings





| |                                    
| | -----------------------------------
| | Securitizations Structured as Sales











62



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##### Table of Contents







| |                      
| | ---------------------
| | Discounted Loan Sales



Critical Accounting Policies








| |                                         
| | ----------------------------------------
| | Securitizations Structured as Financings







| |                                                               
| | --------------------------------------------------------------
| | Allowance for Losses on Mortgage Loans Held for
    Investment



63



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##### Table of Contents









| |                                                               
| | --------------------------------------------------------------
| | Residual Interests and Securitizations Structured as
    Sales





(6-month, 1-year, 2-year, 3-year, 5-year




64



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##### Table of Contents











| |                                
| | -------------------------------
| | Allowance for Repurchase Losses





| |                      
| | ---------------------
| | Gain on Sale of Loans







| |             
| | ------------
| | Income Taxes



65



---



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| |                                            
| | -------------------------------------------
| | Derivative Instruments Designated as Hedges



Results of Operations




66



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##### Table of Contents





|                                            |                                                            |                                  |            |           |      |  |      |       |    |  |            |           |   |  |      |       |    |  |            |         |   |  |      |       |   
|------------------------------------------- | ---------------------------------------------------------- | -------------------------------- | ---------- | --------- | ---- |  | ---- | ----- | -- |  | ---------- | --------- | - |  | ---- | ----- | -- |  | ---------- | ------- | - |  | ---- | ----- | --
|                                            |                                                            | For the Years Ended December 31, |           
|                                            |                                                            |                                  |           
|                                            |                                                            | 2005                             |            |           | 2004 |  |      | 2003  |   
|                                            |                                                            |                                  |            |           |      |  |      |       |   
|Interest income:                            |                                                            |                                  |            |           |      |  |      |       |    |  |            |           |   |  |      |       |    |  |            |         |   |  |      |      
|                                            | Net interest income                                        |                                  | $          | 771,444   |      |  |      | 58.7  | %  |  |            | 531,553   |   |  |      | 41.1  | %  |  |            | 236,116 |   |  |      | 28.4  | % 
|                                            | Provision for losses on mortgage loans held for investment |                                  |            | (140,233  | )    |  |      | (10.7 | )% |  |            | (70,250   | ) |  |      | (5.4  | )% |  |            | (26,304 | ) |  |      | (3.2  | %)
|Other operating income:                     |                                                            |                                  |            |           |      |  |      |       |    |  |            |           |   |  |      |       |    |  |            |         |   |  |      |      
|                                            | Gain on sale of mortgage loans                             |                                  |            | 622,617   |      |  |      | 47.4  | %  |  |            | 800,609   |   |  |      | 61.8  | %  |  |            | 611,136 |   |  |      | 73.5  | % 
|                                            | Servicing income                                           |                                  |            | 38,514    |      |  |      | 2.9   | %  |  |            | 28,896    |   |  |      | 2.2   | %  |  |            | 11,139  |   |  |      | 1.3   | % 
|                                            | Other income                                               |                                  |            | 22,400    |      |  |      | 1.7   | %  |  |            | 4,415     |   |  |      | 0.3   | %  |  |            |        |   |  |      | 0.0   | % 
|                                            |                                                            |                                  |            |           |      |  |      |       |    |  |            |           |   |  |      |       |    | 
|                                            | Total net interest income and other operating income       |                                  |            | 1,314,742 |      |  |      | 100.0 | %  |  |            | 1,295,223 |   |  |      | 100.0 | %  |  |            | 832,087 |   |  |      | 100.0 | % 
|Total operating expenses                    |                                                            |                                  | 871,365    |           |      |  | 66.3 | %     |    |  | 684,082    |           |   |  | 52.8 | %     |    |  | 408,835    |         |   |  | 49.1 | %    
|                                            |                                                            |                                  |            |           |      |  |      |       |    |  |            |           |   |  |      |       |    | 
|                                            | Earnings before income taxes                               |                                  |            | 443,377   |      |  |      | 33.7  | %  |  |            | 611,141   |   |  |      | 47.2  | %  |  |            | 423,252 |   |  |      | 50.9  | % 
|                                            | Income taxes                                               |                                  |            | 26,834    |      |  |      | 2.0   | %  |  |            | 235,570   |   |  |      | 18.2  | %  |  |            | 177,769 |   |  |      | 21.4  | % 
|                                            |                                                            |                                  |            |           |      |  |      |       |    |  |            |           |   |  |      |       |    | 
|                                            | Net earnings                                               |                                  | $          | 416,543   |      |  |      | 31.7  | %  |  |            | 375,571   |   |  |      | 29.0  | %  |  |            | 245,483 |   |  |      | 29.5  | % 
|                                            |                                                            |                                  |            |           |      |  |      |       |    |  |            |           |   |  |      |       |    | 
|Basic earnings per share                    |                                                            | $                                | 7.42       |           |      |  |      |       |    |  | 10.20      |           |   |  |      |       |    |  | 7.26       |         |   |  |      |      
|Diluted earnings per share                  |                                                            | $                                | 7.17       |           |      |  |      |       |    |  | 8.29       |           |   |  |      |       |    |  | 6.32       |         |   |  |      |      
|Basic weighted average shares outstanding   |                                                            |                                  | 55,430,666 |           |      |  |      |       |    |  | 36,807,298 |           |   |  |      |       |    |  | 33,835,127 |         |   |  |      |      
|Diluted weighted average shares outstanding |                                                            |                                  | 57,323,991 |           |      |  |      |       |    |  | 46,214,837 |           |   |  |      |       |    |  | 39,234,833 |         |   |  |      |      



67



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Year Ended December 31, 2005 Compared to Year Ended
December 31, 2004




| |                           
| | --------------------------
| | Originations and Purchases



|                                                              |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |           |           |           |            |            |            |            |      |      |      |       | 
|------------------------------------------------------------- | --------------------------------------------- | ------------------------------------ | -------------------------------- | ---------- | ------------------------------------ | ---------- | --------- | --------- | --------- | --------- | ---------- | ---------- | ---------- | ---------- | ---- | ---- | -------- | ----- | ---------- | ---------- | ---------- | ---------- | --------- | --------- | --------- | --------- | ---------- | ---------- | ---------- | ---------- | ---- | ---- | ---- | ----- | 
|                                                              |                                               | For the Year Ended December 31, 2005 |                                  |            | For the Year Ended December 31, 2004 |           
|                                                              |                                               |                                      |                                  |            |                                      |           
|                                                              |                                               | Wholesale                            |                                  |            | Retail                               |            |           |           |           | Wholesale |            |            | Retail     |            |      |     
|                                                              |                                               | Division                             |                                  |            | Division                             |            |           | Total     |           |           | %          |            |            | Division   |      |      | Division |       |            | Total      |            |            | %         |          
|                                                              |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |          
|Fixed-rate mortgages:                                         |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |           |           |           |            |            |            |            |      |     
|                                                              | Traditional                                   |                                      | $                                | 10,647,365 |                                      |            |           | 3,198,230 |           |           |            | 13,845,595 |            |            |      | 24.6 |          |       | $          | 9,343,706  |            |            |           | 1,742,693 |           |           |            | 11,086,399 |            |            |      | 26.3 |     
|                                                              | Interest-Only                                 |                                      |                                  | 378,587    |                                      |            |           | 293,237   |           |           |            | 671,824    |            |            |      | 1.2  |          |       |            |           |            |            |           |          |           |           |            |           |            |            |      |     |     
|                                                              | 40-Year                                       |                                      |                                  | 386,570    |                                      |            |           | 103,127   |           |           |            | 489,697    |            |            |      | 0.9  |          |       |            |           |            |            |           |          |           |           |            |           |            |            |      |     |     
|                                                              |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |          
|                                                              |                                               | Sub-total Fixed                      |                                  |            | 11,412,522                           |            |           |           | 3,594,594 |           |            |            | 15,007,116 |            |      |      | 26.7     |       |            |            | 9,343,706  |            |           |           | 1,742,693 |           |            |            | 11,086,399 |            |      |      | 26.3 |      
|Adjustable-rate mortgages:                                    |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |           |           |           |            |            |            |            |      |     
|                                                              | Traditional                                   |                                      |                                  | 19,176,400 |                                      |            |           | 2,017,709 |           |           |            | 21,194,109 |            |            |      | 37.8 |          |       |            | 20,924,569 |            |            |           | 2,044,643 |           |           |            | 22,969,212 |            |            |      | 54.4 |     
|                                                              | Interest-Only                                 |                                      |                                  | 15,622,152 |                                      |            |           | 958,362   |           |           |            | 16,580,514 |            |            |      | 29.6 |          |       |            | 7,858,047  |            |            |           | 285,982   |           |           |            | 8,144,029  |            |            |      | 19.3 |     
|                                                              | 40-Year                                       |                                      |                                  | 3,005,506  |                                      |            |           | 293,407   |           |           |            | 3,298,913  |            |            |      | 5.9  |          |       |            |           |            |            |           |          |           |           |            |           |            |            |      |     |     
|                                                              | HELOC                                         |                                      |                                  | 7,741      |                                      |            |           | 19,848    |           |           |            | 27,589     |            |            |      |     |          |       |            |           |            |            |           |          |           |           |            |           |            |            |      |     |     
|                                                              |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |          
|                                                              |                                               | Sub-total ARM                        |                                  |            | 37,811,799                           |            |           |           | 3,289,326 |           |            |            | 41,101,125 |            |      |      | 73.3     |       |            |            | 28,782,616 |            |           |           | 2,330,625 |           |            |            | 31,113,241 |            |      |      | 73.7 |      
|                                                              |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |          
|                                                              |                                               |                                      | Total originations and purchases |            |                                      | 49,224,321 |           |           |           | 6,883,920 |            |            |            | 56,108,241 |      |      |          | 100.0 |            |            |            | 38,126,322 |           |           |           | 4,073,318 |            |            |            | 42,199,640 |      |      |      | 100.0 | 
|                                                              |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |          
|                                                              |                                               |                                      | Purchases                        |            |                                      | 21,820,914 |           |           |           | 1,750,731 |            |            |            | 23,571,645 |      |      |          | 42.0  |            |            |            | 14,702,067 |           |           |           | 177,967   |            |            |            | 14,880,034 |      |      |      | 35.3  | 
|Refinances:                                                   |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |           |           |           |            |            |            |            |      |     
|                                                              | Cash-out refinances                           |                                      |                                  | 23,175,478 |                                      |            |           | 3,955,042 |           |           |            | 27,130,520 |            |            |      | 48.4 |          |       |            | 21,775,187 |            |            |           | 3,346,324 |           |           |            | 25,121,511 |            |            |      | 59.5 |     
|                                                              | Rate/term refinances                          |                                      |                                  | 4,227,929  |                                      |            |           | 1,178,147 |           |           |            | 5,406,076  |            |            |      | 9.6  |          |       |            | 1,649,068  |            |            |           | 549,027   |           |           |            | 2,198,095  |            |            |      | 5.2  |     
|                                                              |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |          
|                                                              |                                               |                                      | Total originations and purchases |            |                                      | 49,224,321 |           |           |           | 6,883,920 |            |            |            | 56,108,241 |      |      |          | 100.0 |            |            |            | 38,126,322 |           |           |           | 4,073,318 |            |            |            | 42,199,640 |      |      |      | 100.0 | 
|                                                              |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |          
|Full documentation                                            |                                               |                                      | 25,406,403                       |            |                                      |            | 5,032,419 |           |           |           | 30,438,822 |            |            |            | 54.2 |      |          |       | 18,554,650 |            |            |            | 2,975,541 |           |           |           | 21,530,191 |            |            |            | 51.0 |     
|Limited documentation                                         |                                               |                                      | 1,355,655                        |            |                                      |            | 145,712   |           |           |           | 1,501,367  |            |            |            | 2.7  |      |          |       | 1,814,807  |            |            |            | 199,446   |           |           |           | 2,014,253  |            |            |            | 4.8  |     
|Stated documentation                                          |                                               |                                      | 22,462,263                       |            |                                      |            | 1,705,789 |           |           |           | 24,168,052 |            |            |            | 43.1 |      |          |       | 17,756,865 |            |            |            | 898,331   |           |           |           | 18,655,196 |            |            |            | 44.2 |     
|                                                              |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |          
|                                                              |                                               |                                      | Total originations and purchases |            | $                                    | 49,224,321 |           |           |           | 6,883,920 |            |            |            | 56,108,241 |      |      |          | 100.0 |            |            |            | 38,126,322 |           |           |           | 4,073,318 |            |            |            | 42,199,640 |      |      |      | 100.0 | 
|                                                              |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |          
|Average principal balance of loans originated and purchased   |                                               | $                                    | 185                              |            |                                      |            | 154       |           |           |           | 181        |            |            |            |      |      |          |       | 178        |            |            |            | 142       |           |           |           | 174        |            |            |            |      |     
|Weighted average FICO score of loans originated and purchased |                                               |                                      | 633                              |            |                                      |            | 641       |           |           |           | 634        |            |            |            |      |      |          |       | 629        |            |            |            | 607       |           |           |           | 627        |            |            |            |      |     
|Weighted average loan-to-value ratio(1)                       |                                               |                                      | 81.3                             | %          |                                      |            | 78.7      | %         |           |           | 81.0       | %          |            |            |      |      |          |       | 81.4       | %          |            |            | 78.3      | %         |           |           | 81.1       | %          |            |            |      |     
|Weighted average interest rates:                              |                                               |                                      |                                  |            |                                      |            |           |           |           |           |            |            |            |            |      |      |          |       |            |            |            |            |           |           |           |           |            |            |            |            |      |     
|                                                              | Fixed-rate mortgages                          |                                      |                                  | 7.9        | %                                    |            |           | 6.7       | %         |           |            | 7.6        | %          |            |      |      |          |       |            | 7.4        | %          |            |           | 6.8       | %         |           |            | 7.3        | %          |            |      |      |     
|                                                              | Adjustable-rate mortgages  initial rate      |                                      |                                  | 7.2        | %                                    |            |           | 7.1       | %         |           |            | 7.2        | %          |            |      |      |          |       |            | 6.9        | %          |            |           | 6.9       | %         |           |            | 6.9        | %          |            |      |      |     
|                                                              | Adjustable-rate mortgages  margin over index |                                      |                                  | 5.8        | %                                    |            |           | 5.5       | %         |           |            | 5.8        | %          |            |      |      |          |       |            | 5.5        | %          |            |           | 5.7       | %         |           |            | 5.5        | %          |            |      |      |     
|                                                              |                                               |                                      | Total originations and purchases |            |                                      | 7.4        | %         |           |           | 6.9       | %          |            |            | 7.3        | %    |      |          |       |            |            |            | 7.1        | %         |           |           | 6.9       | %          |            |            | 7.0        | %    |      |      |       | 






|    |                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------
|(1) | Weighted average LTV is the LTV of the first lien mortgages and
    combined LTV of the second lien mortgages.



68



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®




| |                              
| | -----------------------------
| | Secondary Market Transactions





| |                
| | ---------------
| | Interest Income





| |                 
| | ----------------
| | Interest Expense







| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | the average balance of our mortgage loans held for investment,
    held for sale, cash, and the liabilities financing our assets;
|
| |  | the average interest rates earned or paid;                                                                                       
|
| |  | the actual amount of interest income and expense; and                                                                            
|
| |  | the overall interest margin earned on our balance sheet.                                                                         

69



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|                         |                                       |         |   |            |       |  |  |        |   |         |         |           |      |       |   |            |        |  |  |       |   |  |   |         | 
|------------------------ | ------------------------------------- | ------- | - | ---------- | ----- |  |  | ------ | - | ------- | ------- | --------- | ---- | ----- | - | ---------- | ------ |  |  | ----- | - |  | - | ------- | 
|                         |                                       | 2005    |   |            | 2004  | 
|                         |                                       |         |   |            |       | 
|                         |                                       | Average |   |            | Avg.  |  |  |        |   | Average |         |           | Avg. |       |   |           
|                         |                                       | Balance |   |            | Yield |  |  | Income |   |         | Balance |           |      | Yield |   |            | Income | 
|                         |                                       |         |   |            |       |  |  |        |   |         |         |           |      |       |   |            |        | 
|Interest-earning assets: |                                       |         |   |            |       |  |  |        |   |         |         |           |      |       |   |            |        |  |  |       |   |  |   |        
|                         | Mortgage loans held for investment    |         | $ | 17,141,462 |       |  |  | 7.14   | % |         | $       | 1,223,478 |      |       | $ | 7,737,094  |        |  |  | 6.84  | % |  | $ | 528,933 | 
|                         | Mortgage loans held for sale          |         |   | 7,143,827  |       |  |  | 7.12   |   |         |         | 508,878   |      |       |   | 4,985,628  |        |  |  | 7.03  |   |  |   | 350,562 | 
|                         | Residual interests in securitizations |         |   | 159,987    |       |  |  | 10.61  |   |         |         | 16,969    |      |       |   | 162,442    |        |  |  | 10.88 |   |  |   | 17,673  | 
|                         | Cash and investments                  |         |   | 1,003,829  |       |  |  | 1.02   |   |         |         | 10,242    |      |       |   | 403,377    |        |  |  | 0.37  |   |  |   | 1,479   | 
|                         |                                       |         |   |            |       |  |  |        |   |         |         |           |      |       |   |            |        | 
|                         | Total                                 |         | $ | 25,449,105 |       |  |  | 6.91   | % |         | $       | 1,759,567 |      |       | $ | 13,288,541 |        |  |  | 6.76  | % |  | $ | 898,647 | 

|                              |                                                    |         |   |            |      |  |  |         |   |         |         |         |      |      |   |            |         |  |  |      |   |  |   |         | 
|----------------------------- | -------------------------------------------------- | ------- | - | ---------- | ---- |  |  | ------- | - | ------- | ------- | ------- | ---- | ---- | - | ---------- | ------- |  |  | ---- | - |  | - | ------- | 
|                              |                                                    | Average |   |            | Avg. |  |  |         |   | Average |         |         | Avg. |      |   |           
|                              |                                                    | Balance |   |            | Cost |  |  | Expense |   |         | Balance |         |      | Cost |   |            | Expense | 
|                              |                                                    |         |   |            |      |  |  |         |   |         |         |         |      |      |   |            |         | 
|Interest-bearing liabilities: |                                                    |         |   |            |      |  |  |         |   |         |         |         |      |      |   |            |         |  |  |      |   |  |   |        
|                              | Financing on mortgage loans held for investment(1) |         | $ | 16,784,275 |      |  |  | 3.91    | % |         | $       | 655,757 |      |      | $ | 7,635,930  |         |  |  | 2.91 | % |  | $ | 222,522 | 
|                              | Credit Facilities                                  |         |   | 6,916,033  |      |  |  | 4.46    |   |         |         | 308,357 |      |      |   | 4,892,586  |         |  |  | 2.55 |   |  |   | 124,547 | 
|                              | Convertible senior notes(2)                        |         |   | 5,249      |      |  |  | 4.78    |   |         |         | 251     |      |      |   | 208,901    |         |  |  | 5.91 |   |  |   | 12,337  | 
|                              | Notes payable                                      |         |   | 37,859     |      |  |  | 6.15    |   |         |         | 2,330   |      |      |   | 27,739     |         |  |  | 5.38 |   |  |   | 1,492   | 
|                              | Other interest(3)                                  |         |   |           |      |  |  |        |   |         |         | 21,428  |      |      |   |           |         |  |  |     |   |  |   | 6,196   | 
|                              |                                                    |         |   |            |      |  |  |         |   |         |         |         |      |      |   |            |         | 
|                              | Total                                              |         | $ | 23,743,416 |      |  |  | 4.16    |   |         |         | 988,123 |      |      | $ | 12,765,156 |         |  |  | 2.88 |   |  |   | 367,094 | 
|                              |                                                    |         |   |            |      |  |  |         |   |         |         |         |      |      |   |            |         | 
|                              | Net interest spread/income                         |         |   |            |      |  |  | 2.75    | % |         | $       | 771,444 |      |      |   |            |         |  |  | 3.88 | % |  | $ | 531,553 | 
|                              |                                                    |         |   |            |      |  |  |         |   |         |         |         |      |      |   |            |         | 






|    |                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Interest expense includes impact of derivative instruments
    accounted for as hedges of $82.2 million for 2005. Such
    amounts are immaterial for 2004.                
|   
|(2) | Expense includes accelerated amortization of $4.1 million
    for 2004 related to the conversion of the convertible senior
    notes. Such amounts are immaterial for 2005.
|   
|(3) | Other interest is comprised of interest related costs associated
    with our servicing operation.                                                                         





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| |                                                               
| | --------------------------------------------------------------
| | Provision for losses on mortgage loans held for
    investment





|                  |  |      |         |   |      |  |        |  
|----------------- |  | ---- | ------- | - | ---- |  | ------ | -
|                  |  | 2005 |         |   | 2004 | 
|                  |  |      |         |   |      | 
|Beginning balance |  | $    | 90,227  |   |      |  | 26,251 |  
|Additions         |  |      | 140,233 |   |      |  | 70,250 |  
|Charge-offs, net  |  |      | (32,329 | ) |      |  | (6,274 | )
|                  |  |      |         |   |      | 
|                  |  | $    | 198,131 |   |      |  | 90,227 |  
|                  |  |      |         |   |      | 



| |                      
| | ---------------------
| | Non-Performing Assets





| |                       
| | ----------------------
| | Other Operating Income

Gain on sale.


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|                                                                  |  |                     |          |   |      |  |           |  
|----------------------------------------------------------------- |  | ------------------- | -------- | - | ---- |  | --------- | -
|                                                                  |  | For the Years Ended |         
|                                                                  |  | December 31,        |         
|                                                                  |  |                     |         
|                                                                  |  | 2005                |          |   | 2004 | 
|                                                                  |  |                     |          |   |      | 
|Cash gain from whole loan sale transactions                       |  | $                   | 656,672  |   |      |  | 1,068,021 |  
|Gain from securitization of loans                                 |  |                     | 141,136  |   |      |  |          |  
|Non-cash gain from servicing assets related to securitizations    |  |                     | 24,744   |   |      |  |          |  
|Cash gain on sale of servicing rights related to securitizations  |  |                     | 24,877   |   |      |  |          |  
|Non-cash gain from servicing assets related to whole loan sales   |  |                     | 45,499   |   |      |  | 7,923     |  
|Cash gain on sale of servicing rights related to whole loan sales |  |                     |         |   |      |  | 214       |  
|Securitization expenses                                           |  |                     | (49,250  | ) |      |  |          |  
|Fair value adjustment of residual securities                      |  |                     | (9,983   | ) |      |  | (7,697    | )
|Provision for repurchase losses                                   |  |                     | (17,524  | ) |      |  | (2,736    | )
|Non-refundable loan fees(1)                                       |  |                     | 314,597  |   |      |  | 213,207   |  
|Premiums paid(2)                                                  |  |                     | (325,068 | ) |      |  | (272,754  | )
|Origination costs                                                 |  |                     | (203,000 | ) |      |  | (203,900  | )
|Derivative gains (losses)                                         |  |                     | 19,917   |   |      |  | (1,669    | )
|                                                                  |  |                     |          |   |      | 
|Gain on sale of mortgage loans                                    |  | $                   | 622,617  |   |      |  | 800,609   |  
|                                                                  |  |                     |          |   |      | 






|    |                                                                                                
|--- | -----------------------------------------------------------------------------------------------
|(1) | Non-refundable loan fees represent points and fees collected
    from borrowers.               
|   
|(2) | Premiums paid represent fees paid to brokers for wholesale loan
    originations and purchases.

Servicing income.




| |                         
| | ------------------------
| | Other Operating Expenses







72



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| |             
| | ------------
| | Income Taxes



Year Ended December 31, 2004 Compared to Year Ended
December 31, 2003




| |                           
| | --------------------------
| | Originations and Purchases





| |                              
| | -----------------------------
| | Secondary Market Transactions





| |                
| | ---------------
| | Interest Income



73



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| |                 
| | ----------------
| | Interest Expense







| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | the average balance of our mortgage loans held for investment,
    held for sale, cash, and the liabilities financing our assets;
|
| |  | the average interest rates earned or paid;                                                                                       
|
| |  | the actual amount of interest income and expense; and                                                                            
|
| |  | the overall interest margin earned on our balance sheet.                                                                         



|                                      |  |         |            |  |       |  |       |        |  |         |         |  |      |       |           |  |        |  |       |   |  |   |         | 
|------------------------------------- |  | ------- | ---------- |  | ----- |  | ----- | ------ |  | ------- | ------- |  | ---- | ----- | --------- |  | ------ |  | ----- | - |  | - | ------- | 
|                                      |  | 2004    |            |  | 2003  | 
|                                      |  |         |            |  |       | 
|                                      |  | Average |            |  | Avg.  |  |       |        |  | Average |         |  | Avg. |       |           | 
|                                      |  | Balance |            |  | Yield |  |       | Income |  |         | Balance |  |      | Yield |           |  | Income | 
|                                      |  |         |            |  |       |  |       |        |  |         |         |  |      |       |           |  |        | 
|Interest-earning assets:              |  |         |            |  |       |  |       |        |  |         |         |  |      |       |           |  |        |  |       |   |  |   |         | 
|Mortgage loans held for investment    |  | $       | 7,737,094  |  |       |  | 6.84  | %      |  | $       | 528,933 |  |      | $     | 1,418,632 |  |        |  | 7.38  | % |  | $ | 104,706 | 
|Mortgage loans held for sale          |  |         | 4,985,628  |  |       |  | 7.03  |        |  |         | 350,562 |  |      |       | 3,132,206 |  |        |  | 7.17  |   |  |   | 224,650 | 
|Residual interests in securitizations |  |         | 162,442    |  |       |  | 10.88 |        |  |         | 17,673  |  |      |       | 211,125   |  |        |  | 11.48 |   |  |   | 24,228  | 
|Cash and investments                  |  |         | 403,377    |  |       |  | 0.37  |        |  |         | 1,479   |  |      |       | 84,795    |  |        |  | 0.13  |   |  |   | 107     | 
|                                      |  |         |            |  |       |  |       |        |  |         |         |  |      |       |           |  |        | 
|Total                                 |  | $       | 13,288,541 |  |       |  | 6.76  | %      |  | $       | 898,647 |  |      | $     | 4,846,758 |  |        |  | 7.30  | % |  | $ | 353,691 | 

|                                                   |  |         |            |  |      |  |      |         |  |         |         |  |      |      |           |  |         |  |      |   |  |   |         | 
|-------------------------------------------------- |  | ------- | ---------- |  | ---- |  | ---- | ------- |  | ------- | ------- |  | ---- | ---- | --------- |  | ------- |  | ---- | - |  | - | ------- | 
|                                                   |  | Average |            |  | Avg. |  |      |         |  | Average |         |  | Avg. |      |           | 
|                                                   |  | Balance |            |  | Cost |  |      | Expense |  |         | Balance |  |      | Cost |           |  | Expense | 
|                                                   |  |         |            |  |      |  |      |         |  |         |         |  |      |      |           |  |         | 
|Interest-bearing liabilities:                      |  |         |            |  |      |  |      |         |  |         |         |  |      |      |           |  |         |  |      |   |  |   |         | 
|Financing on mortgage loans held for investment(1) |  | $       | 7,635,930  |  |      |  | 2.91 | %       |  | $       | 222,522 |  |      | $    | 1,410,794 |  |         |  | 2.61 | % |  | $ | 36,836  | 
|Credit Facilities                                  |  |         | 4,892,586  |  |      |  | 2.55 |         |  |         | 124,547 |  |      |      | 2,870,001 |  |         |  | 2.56 |   |  |   | 73,532  | 
|Convertible senior notes(2)                        |  |         | 208,901    |  |      |  | 5.91 |         |  |         | 12,337  |  |      |      | 99,355    |  |         |  | 4.08 |   |  |   | 4,049   | 
|Notes payable                                      |  |         | 27,739     |  |      |  | 5.38 |         |  |         | 1,492   |  |      |      | 16,055    |  |         |  | 6.96 |   |  |   | 1,117   | 
|Other interest(3)                                  |  |         |           |  |      |  |     |         |  |         | 6,196   |  |      |      |          |  |         |  |     |   |  |   | 2,041   | 
|                                                   |  |         |            |  |      |  |      |         |  |         |         |  |      |      |           |  |         | 
|Total                                              |  | $       | 12,765,156 |  |      |  | 2.88 |         |  | $       | 367,094 |  |      | $    | 4,396,205 |  |         |  | 2.67 |   |  | $ | 117,575 | 
|                                                   |  |         |            |  |      |  |      |         |  |         |         |  |      |      |           |  |         | 
|Net interest spread/income                         |  |         |            |  |      |  | 3.88 | %       |  | $       | 531,553 |  |      |      |           |  |         |  | 4.63 | % |  | $ | 236,116 | 
|                                                   |  |         |            |  |      |  |      |         |  |         |         |  |      |      |           |  |         | 






|    |                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes impact of derivative instruments accounted for as
    hedges. Such amounts are not material.                            
|   
|(2) | 2004 expense includes accelerated amortization of
    $4.1 million related to the conversion of the convertible
    senior notes.
|   
|(3) | Other interest is comprised of interest related costs associated
    with our servicing operation.                               

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| |                                                               
| | --------------------------------------------------------------
| | Provision for losses on mortgage loans held for
    investment





|                  |  |      |        |   |      |  |        |  
|----------------- |  | ---- | ------ | - | ---- |  | ------ | -
|                  |  | 2004 |        |   | 2003 | 
|                  |  |      |        |   |      | 
|Beginning balance |  | $    | 26,251 |   |      |  |       |  
|Additions         |  |      | 70,250 |   |      |  | 26,304 |  
|Charge-offs, net  |  |      | (6,274 | ) |      |  | (53    | )
|                  |  |      |        |   |      | 
|                  |  | $    | 90,227 |   |      |  | 26,251 |  
|                  |  |      |        |   |      | 



| |                      
| | ---------------------
| | Non-Performing Assets





| |                       
| | ----------------------
| | Other Operating Income

Gain on sale.


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|                                                                  |  |                     |           |   |      |  |          |  
|----------------------------------------------------------------- |  | ------------------- | --------- | - | ---- |  | -------- | -
|                                                                  |  | For the Years Ended |          
|                                                                  |  | December 31,        |          
|                                                                  |  |                     |          
|                                                                  |  | 2004                |           |   | 2003 | 
|                                                                  |  |                     |           |   |      | 
|Cash gain from whole loan sale transactions                       |  | $                   | 1,068,021 |   |      |  | 861,310  |  
|Non-cash gain from servicing assets related to whole loan sales   |  |                     | 7,923     |   |      |  | 7,777    |  
|Cash gain on sale of servicing rights related to whole loan sales |  |                     | 214       |   |      |  |         |  
|Fair value adjustment of residual securities                      |  |                     | (7,697    | ) |      |  | (19,363  | )
|Provision for repurchase losses                                   |  |                     | (2,736    | ) |      |  | (5,868   | )
|Non-refundable loan fees(1)                                       |  |                     | 213,207   |   |      |  | 142,745  |  
|Premiums paid(2)                                                  |  |                     | (272,754  | ) |      |  | (182,765 | )
|Origination costs                                                 |  |                     | (203,900  | ) |      |  | (182,100 | )
|Derivative losses                                                 |  |                     | (1,669    | ) |      |  | (10,600  | )
|                                                                  |  |                     |           |   |      | 
|Gain on sale of mortgage loans                                    |  | $                   | 800,609   |   |      |  | 611,136  |  
|                                                                  |  |                     |           |   |      | 






|    |                                                                                                
|--- | -----------------------------------------------------------------------------------------------
|(1) | Non-refundable loan fees represent points and fees collected
    from borrowers.               
|   
|(2) | Premiums paid represent fees paid to brokers for wholesale loan
    originations and purchases.

Servicing income.




| |                         
| | ------------------------
| | Other Operating Expenses







76



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| |             
| | ------------
| | Income Taxes



Inflation




Seasonality




Liquidity and Capital Resources




| |                  
| | -----------------
| | Credit Facilities





debt-to debt-to


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Asset-backed commercial paper facility.


Bank of America line of credit.


Bank of America line of credit.


Barclays line of credit.


Bear Stearns line of credit.


Citigroup warehouse line of credit.


Citigroup aggregation line of credit.


Citigroup line of credit for delinquent and problem
loans.


Credit Suisse First Boston line of credit.


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Deutsche Bank line of credit.


IXIS line of credit.


Morgan Stanley line of credit.


UBS Real Estate Securities line of credit.




| |                         
| | ------------------------
| | Convertible Senior Notes





| |                
| | ---------------
| | Preferred Stock



79



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| |                                         
| | ----------------------------------------
| | Securitizations Structured as Financings







| |                 
| | ----------------
| | Other Borrowings







| |                               
| | ------------------------------
| | Off-Balance Sheet Arrangements





80



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| |                        
| | -----------------------
| | Contractual Obligations



|                                                  |  |       |            |                       |        |  |           |       |  |        |           |  |           |         |           |  |  |  |           | 
|------------------------------------------------- |  | ----- | ---------- | --------------------- | ------ |  | --------- | ----- |  | ------ | --------- |  | --------- | ------- | --------- |  |  |  | --------- | 
|                                                  |  |       |            | Payment Due By Period |       
|                                                  |  |       |            |                       |       
|                                                  |  |       |            | Less Than             |        |  | 1 to 3    |       |  | 3 to 5 |           |  | More Than |        
|                                                  |  | Total |            |                       | 1 Year |  |           | Years |  |        | Years     |  |           | 5 Years |          
|                                                  |  |       |            |                       |        |  |           |       |  |        |           |  |           |         |          
|Notes payable                                     |  | $     | 39,140     |                       |        |  | 20,999    |       |  |        | 18,141    |  |           |         |          |  |  |  |          | 
|Operating leases                                  |  |       | 194,117    |                       |        |  | 34,292    |       |  |        | 65,348    |  |           |         | 43,692    |  |  |  | 50,785    | 
|Credit facilities on mortgage loans held for sale |  |       | 7,439,685  |                       |        |  | 7,439,685 |       |  |        |          |  |           |         |          |  |  |  |          | 
|Financing on mortgage loans held for investment   |  |       | 16,045,459 |                       |        |  | 5,207,914 |       |  |        | 6,029,869 |  |           |         | 2,291,616 |  |  |  | 2,516,060 | 



| |                  
| | -----------------
| | Stock Repurchases









| |          
| | ---------
| | Cash Flow





81



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| |                   
| | ------------------
| | Liquidity Strategy



82



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| |                           
| | --------------------------
| | Access Lending Acquisition





| |                         
| | ------------------------
| | RBC Mortgage Acquisition





83



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##### Table of Contents







| |                   
| | ------------------
| | Quarterly Dividend





Recent Accounting Developments






84



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##### Table of Contents



FORWARD-LOOKING STATEMENTS






| |   |                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our business strategy, including our investment of capital to
    maintain a portfolio of mortgage loans;                                                                                                                                                                                              
|
| |  | our ability to manage risk, including credit risk;                                                                                                                                                                                                                                                     
|
| |  | our understanding of our competition;                                                                                                                                                                                                                                                                  
|
| |  | market trends;                                                                                                                                                                                                                                                                                         
|
| |  | projected sources and uses of funds from operations;                                                                                                                                                                                                                                                   
|
| |  | potential liability with respect to legal proceedings;                                                                                                                                                                                                                                                 
|
| |  | potential effects of proposed legislation and regulatory action;                                                                                                                                                                                                                                       
|
| |  | our expectation that our decisions regarding secondary marketing
    transactions in 2006 will be based on market conditions and our
    ability to access external sources of capital;                                                                                                                
|
| |  | our current intention that we will not structure any
    securitizations as sales in 2006;                                                                                                                                                                                                             
|
| |  | our intention to maintain, if not increase, our mortgage loan
    portfolio by executing securitizations of loans originated
    through our TRS, and structuring those securitizations as
    financings;                                                                                             
|
| |  | our belief that as we increase our mortgage loan portfolio, our
    interest income will increase and, in turn, we will have a
    larger pool of earnings that can be distributed to stockholders;                                                                                                    
|
| |  | our expectation that our capacity to originate loans at our TRS
    will enable us to grow our mortgage loan portfolio by providing
    us with a significant volume of loans at a lower cost and with
    greater reliability than if we purchased our mortgage loan
    portfolio from a third party;
|
| |  | our plan to grow our production franchise by expanding our
    product and service offerings through each of our delivery
    channels;                                                                                                                                                                
|
| |  | our intention to offer prime and Alt-A products
    through all of our delivery channels by mid-2006;                                                                                                                                                                                                
|
| |  | our belief that we can profitably gain market share despite the
    projected contraction of overall mortgage industry volume in
    2006 by expanding the product lines available through each of
    our delivery channels;                                                                          
|
| |  | our expectation that we may increase our capital and liquidity
    by accessing the capital markets, when appropriate;                                                                                                                                                                                 
|
| |  | our belief that our competitive strengths distinguish our
    business model from those of other mortgage REITs and
    residential mortgage lenders and enable us to implement our
    business strategy;                                                                                             
|
| |  | our belief that our taxable REIT subsidiaries have the potential
    to generate significant earnings through our mortgage loan
    origination franchise;                                                                                                                                             
|
| |  | our belief that the flexibility of our structure and business
    strategy allows us to provide a broader product offering, better
    manage our cash flows and respond to changing conditions in the
    secondary market environment, thus enhancing returns to our
    stockholders;               

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| |   |                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our belief that our proprietary automated credit grading and
    pricing methodology gives us the ability to more effectively
    evaluate credit risk and more efficiently price our products;                                                                                                                                   
|
| |  | our belief that our origination process is easier for our
    borrowers and brokers to use than the origination processes of
    most of our competitors because of our ability to provide quick
    responses and consistent and clear procedures;                                                                               
|
| |  | our intention to use a variety of risk management strategies to
    monitor and address interest rate risk;                                                                                                                                                                                                                       
|
| |  | our belief that our risk management strategies will allow us to
    monitor and evaluate our exposure to interest rates and manage
    the risk profile of our mortgage loans held for investment,
    mortgage loans held for sale and our residual interests in
    securitizations in response to changes in market conditions;
|
| |  | our expectation that we may continue to use derivative financial
    instruments such as Euro Dollar futures contracts, interest rate
    cap agreements and interest rate swap agreements and may start
    using Treasury futures and options on interest rates;                                                                
|
| |  | our expectation that we may use other hedging instruments
    including mortgage derivative securities, as necessary;                                                                                                                                                                                                             
|
| |  | our expectation that, if our board of directors determines that
    additional financing is required, we may raise funds through
    additional equity offerings, debt financings, retention of cash
    flow or a combination of these methods;                                                                                  
|
| |  | our expectations with respect to our future financing activities;                                                                                                                                                                                                                                                                 
|
| |  | our expectation that we will grow our Retail Division through
    the value proposition of the Home123 brand supported by our
    other retail marketing efforts;                                                                                                                                                                 
|
| |  | our expectation that we will continue to retain the servicing
    rights on a portion of the mortgage loans sold to third parties
    in whole mortgage loan sales transactions and on all of the
    mortgage loans that we hold in our portfolio in the future;                                                                 
|
| |  | our expectation that a significant source of our revenue will
    continue to be interest income generated from our portfolio of
    mortgage loans held by our REIT and our qualified REIT
    subsidiaries;                                                                                                                     
|
| |  | our expectation that we will continue to generate revenue
    through our taxable REIT subsidiaries from the sale of loans,
    servicing income and loan origination fees;                                                                                                                                                       
|
| |  | our beliefs regarding our legal proceedings;                                                                                                                                                                                                                                                                                      
|
| |  | our expectation that the primary components of our expenses will
    be (i) interest expense on our credit facilities,
    securitizations and other borrowings, (ii) general and
    administrative expenses and (iii) payroll and related expenses
    arising from our origination and servicing businesses;                   
|
| |  | our belief that offering a broader range of mortgage products
    allows us to build upon the success of our national Home123
    branding and marketing campaign;                                                                                                                                                                
|
| |  | our intention that we will increase our interest rates to keep
    pace with, or exceed, the growth in underlying rates with a view
    toward preserving or expanding our overall operating margin;                                                                                                                              
|
| |  | our efforts to manage our cost structure to remain efficient
    even if loan origination volume declines;                                                                                                                                                                                                                        
|
| |  | our expectation that we will continue to focus on maximizing the
    net execution of our whole loan sales and continue our
    cost-cutting strategies;                                                                                                                                                                          
|
| |  | our expectation that the acquisition of the origination platform
    of RBC Mortgage will ultimately allow us to offer a wider range
    of products to all of our customers and add strong builder and
    realtor relationships to our loan origination business;                                                               
|
| |  | our belief that, in light of our current strategy to raise
    interest rates, our loan production volume may decrease as a
    result of these higher interest rates on the mortgages we
    originate;                                                                                                                          

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our belief that the positive impact of our steps to
    strategically increase our interest rates in an effort to
    improve operating margins will most likely occur in the first
    and second quarters of 2006;                                                                                                                                                                                                                                                                              
|
| |  | our expectation that the origination platform recently acquired
    from RBC Mortgage will be profitable in 2006;                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | our belief that our current product mix is sustainable and that
    our origination strategies and initiatives are consistent with
    that belief;                                                                                                                                                                                                                                                                                                                                               
|
| |  | our belief that if we are successful in maintaining our current
    product mix, our exposure to interest rate cyclicality will be
    reduced;                                                                                                                                                                                                                                                                                                                                                   
|
| |  | our belief that our strict underwriting guidelines and the
    stronger credit characteristics of our interest only loans
    mitigate their perceived higher risk;                                                                                                                                                                                                                                                                                                                               
|
| |  | our estimates with respect to our loan loss and repurchase
    allowances and the underlying assumptions we use to value our
    residual interests;                                                                                                                                                                                                                                                                                                                                              
|
| |  | our beliefs, estimates and assumptions with respect to our
    critical accounting policies;                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | our estimates and assumptions relating to the interest rate
    environment, the economic environment, secondary market
    conditions and the performance of the loans underlying our
    residual assets and mortgage loans held for investment;                                                                                                                                                                                                                                                
|
| |  | our use of a prepayment curve to estimate the prepayment
    characteristics of our mortgage loans;                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | our intention to retain 20 to 25 percent of our mortgage
    loan production on our balance sheet;                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | our principal strategies to effectively manage our liquidity and
    capital;                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | our intention to execute our stock repurchase program while
    maintaining our targeted cash and liquidity levels;                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | our expectation that we will continue to manage the percentage
    of loans sold through whole loan sales transactions, off-balance
    sheet securitizations, and securitizations structured as
    financings, including the use of NIM structures as appropriate,
    giving consideration to whole loan prices, the amount of cash
    required to finance securitizations structured as financings,
    the expected returns on such securitizations and REIT
    qualification requirements;
|
| |  | our expectation that our liquidity, credit facilities and
    capital resources will be sufficient to fund our operations for
    the foreseeable future, while enabling us to maintain our
    qualification as a REIT under the requirements of the Code; and                                                                                                                                                                                                                                   
|
| |  | our expectation that any future declarations of dividends on our
    common stock will be subject to our earnings, financial
    position, capital requirements, contractual restrictions and
    other relevant factors.                                                                                                                                                                                                                                                                         





| |   |                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------
| |  | those identified under the Risk Factors section of
    this annual report on Form 10-K;                    
|
| |  | those identified from time to time in the our public filings
    with the Securities and Exchange Commission;

87



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| |   |                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the negative impact of economic slowdowns or recessions;                                                                                                                                       
|
| |  | the effect of changes in interest rates;                                                                                                                                                       
|
| |  | the condition of the secondary markets for our products;                                                                                                                                       
|
| |  | our ability to expand origination volume while maintaining low
    overhead;                                                                                                                   
|
| |  | our access to funding sources and our ability to renew, replace
    or add to our existing repurchase arrangements and existing
    credit facilities on terms comparable to the current terms;
|
| |  | the initiation of a margin call under our credit facilities;                                                                                                                                   
|
| |  | the assumptions underlying our residual values and repurchase
    and loan loss allowances, including our loan loss assumptions
    with respect to Hurricanes Katrina, Rita and Wilma;        
|
| |  | the impact of new state or federal legislation or court
    decisions on our operations;                                                                                                       
|
| |  | the impact of more vigorous and aggressive enforcement actions
    by federal or state regulators;                                                                                             
|
| |  | the impact of new state or federal legislation or court
    decisions restricting the activities of lenders or suppliers of
    credit in our market;                                          
|
| |  | an increase in the prepayment speed or default rate of our
    borrowers;                                                                                                                      
|
| |  | the effect of competition from finance and mortgage banking
    companies and from Internet-based lending companies;                                                                           
|
| |  | our ability to adequately hedge our residual values, cash flows
    and fair values;                                                                                                           
|
| |  | the assumptions required by our critical accounting policies;                                                                                                                                  
|
| |  | the performance of the loans underlying our residual assets and
    mortgage loans held for investment;                                                                                        
|
| |  | the ability of our servicing operations to maintain high
    performance standards;                                                                                                            
|
| |  | our limited experience managing a REIT;                                                                                                                                                        
|
| |  | our ability to maintain REIT status;                                                                                                                                                           
|
| |  | our ability to attract and retain qualified employees,
    including, in particular, our senior executives;                                                                                    
|
| |  | the stability of residential property values;                                                                                                                                                  
|
| |  | our ability to adapt to and implement technological changes;                                                                                                                                   
|
| |  | our ability to close our forward sale commitments;                                                                                                                                             
|
| |  | managements ability to manage our growth and planned
    expansion; and                                                                                                                       
|
| |  | the outcome of litigation or regulatory actions pending against
    us.                                                                                                                        





|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk

General




88



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|                                                                                                   |  |     |         |   |      |  |          |     |  |  |         |   |  |  |          |  
|-------------------------------------------------------------------------------------------------- |  | --- | ------- | - | ---- |  | -------- | --- |  |  | ------- | - |  |  | -------- | -
|As of December 31, 2005:                                                                           |  |     |         |   |      |  |          |    
|Hypothetical Change in Interest Rate (basis points)                                                |  | +50 |         |   | +100 |  |          | -50 |  |  | -100    |  
|                                                                                                   |  |     |         |   |      |  |          |     |  |  |         |  
|Change in fair value of residual interests in securitizations                                      |  | $   | (15,440 | ) |      |  | (30,801  | )   |  |  | 14,457  |   |  |  | 28,716   |  
|Change in fair value of derivatives related to residual
    interests in securitizations           |  |     | 12,913  |   |      |  | 25,825   |     |  |  | (12,913 | ) |  |  | (25,825  | )
|Change in fair value of mortgage loans held for investment                                         |  |     | (86,166 | ) |      |  | (169,337 | )   |  |  | 89,367  |   |  |  | 176,368  |  
|Change in fair value of derivatives related to financing on
    mortgage loans held for investment |  |     | 82,038  |   |      |  | 164,075  |     |  |  | (82,038 | ) |  |  | (164,075 | )
|                                                                                                   |  |     |         |   |      |  |          |     |  |  |         |  
|Net change                                                                                         |  | $   | (6,655  | ) |      |  | (10,238  | )   |  |  | 8,873   |   |  |  | 15,184   |  
|                                                                                                   |  |     |         |   |      |  |          |     |  |  |         |  

|                                                                                                   |  |     |         |   |      |  |          |     |  |  |         |   |  |  |          |  
|-------------------------------------------------------------------------------------------------- |  | --- | ------- | - | ---- |  | -------- | --- |  |  | ------- | - |  |  | -------- | -
|As of December 31, 2004:                                                                           |  |     |         |   |      |  |          |    
|Hypothetical Change in Interest Rate (basis points)                                                |  | +50 |         |   | +100 |  |          | -50 |  |  | -100    |  
|                                                                                                   |  |     |         |   |      |  |          |     |  |  |         |  
|Change in fair value of residual interests in securitizations                                      |  | $   | (550    | ) |      |  | (1,869   | )   |  |  | 474     |   |  |  | 1,425    |  
|Change in fair value of derivatives related to residual
    interests in securitizations           |  |     | 1,138   |   |      |  | 2,275    |     |  |  | (1,138  | ) |  |  | (2,275   | )
|Change in fair value of mortgage loans held for investment                                         |  |     | (79,008 | ) |      |  | (158,523 | )   |  |  | 68,012  |   |  |  | 138,502  |  
|Change in fair value of derivatives related to financing on
    mortgage loans held for investment |  |     | 66,013  |   |      |  | 132,025  |     |  |  | (66,013 | ) |  |  | (132,025 | )
|                                                                                                   |  |     |         |   |      |  |          |     |  |  |         |  
|Net change                                                                                         |  | $   | (12,407 | ) |      |  | (26,092  | )   |  |  | 1,335   |   |  |  | 5,627    |  
|                                                                                                   |  |     |         |   |      |  |          |     |  |  |         |  



|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data





|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure





|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures



|    |                                                 
|--- | ------------------------------------------------
|(a) | Evaluation of Disclosure Controls and Procedures

13a-15(e)


89



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##### Table of Contents





|    |                                                                     
|--- | --------------------------------------------------------------------
|(b) | Managements Report on Internal Control over
    Financial Reporting

13a-15(f)




Internal
Control  Integrated Framework.






|    |                                                         
|--- | --------------------------------------------------------
|(c) | Changes in Internal Control Over Financial
    Reporting

13a-15(f) 15d-15(f)






|         |                  
|-------- | -----------------
|Item 9B. | Other Information



90



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##### Table of Contents



PART III




|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant

10-K


Audit Committee Financial Expert


S-K


Audit Committee




Code of Ethics


http://www.ncen.com/
investorrelations/corporategovernance/index.html.


Corporate Governance Guidelines


http://www.ncen.com/investorrelations/corporategovernance/index.html.


Section 16(a) Beneficial Ownership Reporting
Compliance




91



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##### Table of Contents





|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation





|         |                                                                                                                             
|-------- | ----------------------------------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Directors and Executive Officers and Related Stockholder
    Matters





|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions





|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



92



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##### Table of Contents



PART IV




|         |                                                
|-------- | -----------------------------------------------
|Item 15. | Exhibits and Financial Statements and Schedules

Financial Statements
and Schedules:




| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | 1. Consolidated Financial Statements  See
    Index to Consolidated Financial Statements        
|
| | 2. Consolidated Financial Statement Schedule 
    See Index to Consolidated Financial Statements

Exhibits:




93



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##### Table of Contents



EXHIBIT INDEX


|        |    |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | -- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 2  | .1                      |  | Agreement and Plan of Merger, dated as of April 21, 2004,
    by and among New Century TRS Holdings, Inc. (f/k/a New Century
    Financial Corporation), New Century Financial Corporation (f/k/a
    New Century REIT, Inc.) and NC Merger Sub, Inc.(26)                                                                                                                                                                                          
|        | 3  | .1                      |  | Articles of Amendment and Restatement of New Century Financial
    Corporation.(56)                                                                                                                                                                                                                                                                                                                                                                
|        | 3  | .2                      |  | Certificate of Correction to the Articles of Amendment and
    Restatement of New Century Financial Corporation, dated as of
    January 13, 2006 and filed with the State Department of
    Assessments and Taxation of the State of Maryland on
    January 20, 2006.(88)                                                                                                                                                                        
|        | 3  | .3                      |  | Amended and Restated Bylaws of New Century Financial
    Corporation.(56)                                                                                                                                                                                                                                                                                                                                                                          
|        | 3  | .4                      |  | Second Amended and Restated Bylaws of New Century Financial
    Corporation.(76)                                                                                                                                                                                                                                                                                                                                                                   
|        | 3  | .5                      |  | Third Amended and Restated Bylaws of New Century Financial
    Corporation.(83)                                                                                                                                                                                                                                                                                                                                                                    
|        | 3  | .6                      |  | Articles Supplementary of New Century Financial
    Corporation.(48)                                                                                                                                                                                                                                                                                                                                                                               
|        | 3  | .7                      |  | Articles Supplementary of New Century Financial Corporation
    relating to 9.125% Series A Cumulative Redeemable Preferred
    Stock, liquidation preference $25.00 per share. (72)                                                                                                                                                                                                                                                               
|        | 4  | .1                      |  | Registration Rights Agreement, dated May 30, 1997, by and
    between New Century TRS Holdings, Inc. and certain of its
    stockholders.(1)                                                                                                                                                                                                                                                                                                       
|        | 4  | .2                      |  | Indenture, dated as of July 8, 2003, between New Century
    TRS Holdings, Inc. and Wells Fargo Bank, National
    Association.(21)                                                                                                                                                                                                                                                                                                                
|        | 4  | .3                      |  | First Supplemental Indenture, dated as of September 30,
    2004, by and among New Century TRS Holdings, Inc., New Century
    Financial Corporation and Wells Fargo Bank, National
    Association.(48)                                                                                                                                                                                                                                           
|        | 4  | .4                      |  | Second Supplemental Indenture, dated as of February 14,
    2005, by and among New Century TRS Holdings, Inc., New Century
    Financial Corporation and Wells Fargo Bank, National
    Association.(67)                                                                                                                                                                                                                                           
|        | 4  | .5                      |  | Registration Rights Agreement, dated as of October 6, 2004,
    by and between New Century Financial Corporation and Friedman,
    Billings, Ramsey Group, Inc.(50)                                                                                                                                                                                                                                                                                
|        | 4  | .6                      |  | Specimen Certificate for New Century Financial
    Corporations Common Stock (incorporated by reference to
    the joint filing of New Century Financial Corporations
    Form S-3 Registration Statement (333-119753) and New
    Century TRS Holdings, Inc.s Post-Effective Amendment
    No. 3 to the Registration Statement (No. 333-109727) on
    Form S-3, as filed with the Securities and Exchange
    Commission on October 14, 2004.)
|        | 10 | .1                      |  | Industrial Lease, dated October 11, 1999, between New
    Century TRS Holdings, Inc. and The Irvine Company.(4)                                                                                                                                                                                                                                                                                                                                    
|        | 10 | .2                      |  | Master Loan & Security Agreement, among New Century
    Mortgage Corporation, NC Capital Corporation and Salomon
    Brothers Realty Corp., dated April 1, 2000.(3)                                                                                                                                                                                                                                                                                
|        |    |                         |  | (a) Amendment No. 1 to the Master Loan and Security
    Agreement, dated as of March 30, 2001, among New Century
    Mortgage Corporation, NC Capital Corporation and Salomon
    Brothers Realty Corp.(6)                                                                                                                                                                                                                                         
|        |    |                         |  | (b) Amendment No. 2 to the Master Loan and Security
    Agreement, dated as of May 1, 2001, among New Century
    Mortgage Corporation, NC Capital Corporation and Salomon
    Brothers Realty Corp.(6)                                                                                                                                                                                                                                            
|        |    |                         |  | (c) Amendment No. 3 to the Master Loan &
    Security Agreement, dated as of November 13, 2002, among
    New Century Mortgage Corporation, NC Capital Corporation and
    Salomon Brothers Realty Corp.(14)                                                                                                                                                                                                                                       
|        |    |                         |  | (d) Amendment No. 4 to the Master Loan and Security
    Agreement, dated December 23, 2002, among New Century
    Mortgage Corporation, NC Capital Corporation and Salomon
    Brothers Realty Corp.(14)                                                                                                                                                                                                                                           

94



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|        |    |                         |  |                                                                                                                                                                                                                                                                               
|------- | -- | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        |    |                         |  | (e) Amendment No. 5 to the Master Loan and Security
    Agreement, dated May 13, 2003, among New Century Mortgage
    Corporation, NC Capital Corporation and Citigroup Global Markets
    Realty Corp., as successor to Salomon Brothers Realty Corp.(16)                    
|        |    |                         |  | (f) Amendment Number Six to the Master Loan and Security
    Agreement, dated as of December 29, 2003, among New Century
    Mortgage Corporation, NC Capital Corporation and Citigroup
    Global Markets Realty Corp., as successor to Salomon Brothers
    Realty Corp.(23)
|        |    |                         |  | (g) Amendment Number Seven to the Master Loan and Security
    Agreement, dated as of April 19, 2004, among New Century
    Mortgage Corporation, NC Capital Corporation and Citigroup
    Global Markets Realty Corp., as successor to Salomon Brothers
    Realty Corp.(27) 
|        | 10 | .3                      |  | Limited Guaranty, dated as of April 1, 2000, by New Century
    Mortgage Corporation in favor of Salomon Brothers Realty Corp.
    and Salomon Smith Barney Inc.(17)                                                                                                          
|        | 10 | .4                      |  | Servicing Rights Purchase Agreement, dated February 28,
    2001, between Ocwen Federal Bank FSB and New Century Mortgage
    Corporation.(5)                                                                                                                                 
|        | 10 | .5                      |  | Fifth Amended and Restated Credit Agreement, dated May 23,
    2001, among New Century Mortgage Corporation, NC Capital
    Corporation and U.S. Bank National Association.(7)                                                                                                
|        |    |                         |  | (a) First Amendment to the Fifth Amended and Restated
    Credit Agreement, dated January 11, 2002, among New Century
    Mortgage Corporation, NC Capital Corporation and U.S. Bank
    National Association.(9)                                                             
|        |    |                         |  | (b) Second Amendment to Fifth Amended and Restated Credit
    Agreement, dated as of March 25, 2002, among New Century
    Mortgage Corporation, NC Capital Corporation and U.S. Bank
    National Association.(10)                                                           
|        | 10 | .6                      |  | Master Repurchase Agreement, dated July 19, 2001, among CDC
    Mortgage Capital Inc., New Century Mortgage Corporation and NC
    Capital Corporation.(7)                                                                                                                    
|        |    |                         |  | (a) Amendment No. 1 to Master Repurchase Agreement,
    dated August 31, 2001, among CDC Mortgage Capital, Inc.,
    New Century Mortgage Corporation and NC Capital Corporation.(8)                                                                                          
|        |    |                         |  | (b) Amendment No. 2 to the Master Repurchase
    Agreement, dated as of December 2001, among CDC Mortgage Capital
    Inc., New Century Mortgage Corporation and NC Capital
    Corporation.(9)                                                                               
|        |    |                         |  | (c) Amendment No. 3 to the Master Repurchase
    Agreement, dated as of February 22, 2002, among CDC
    Mortgage Capital Inc., New Century Mortgage Corporation and NC
    Capital Corporation.(9)                                                                           
|        |    |                         |  | (d) Amendment No. 4 to the Master Repurchase
    Agreement, dated as of March 15, 2002, among New Century
    Mortgage Corporation, NC Capital Corporation and CDC Mortgage
    Capital, Inc.(10)                                                                             
|        | 10 | .7                      |  | Guarantee, dated as of July 19, 2001, by New Century TRS
    Holdings, Inc. in favor of CDC Mortgage Capital Inc.(17)                                                                                                                                                         
|        | 10 | .8                      |  | Letter Agreement, dated as of April 28, 2004, among CDC
    Mortgage Capital Inc., New Century Mortgage Corporation and NC
    Capital Corporation.(27)                                                                                                                       
|        | 10 | .9                      |  | Letter Agreement, dated as of May 14, 2004, among New
    Century TRS Holdings, Inc., NC Capital Corporation, New Century
    Mortgage Corporation and CDC Mortgage Capital Inc.(28)                                                                                          
|        | 10 | .10                     |  | Amended and Restated Master Loan and Security Agreement, dated
    December 1, 2001, between NC Capital Corporation and Morgan
    Stanley Dean Witter Mortgage Capital Inc.(9)                                                                                               
|        |    |                         |  | (a) Amendment No. 1 to the Amended and Restated Master
    Loan and Security Agreement, dated February 15, 2002, among
    NC Capital Corporation and Morgan Stanley Dean Witter Mortgage
    Capital Inc.(9)                                                                 
|        |    |                         |  | (b) Amendment No. 2 to Amended and Restated Master
    Loan and Security Agreement, dated as of May 9, 2002,
    between NC Capital Corporation and Morgan Stanley Dean Witter
    Mortgage Capital Inc.(12)                                                                  

95



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|        |    |                         |  |                                                                                                                                                                                                                                                       
|------- | -- | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        |    |                         |  | (c) Amendment No. 3 to Amended and Restated Master
    Loan and Security Agreement, dated as of June 20, 2002,
    between NC Capital Corporation and Morgan Stanley Dean Witter
    Mortgage Capital Inc.(13)                                        
|        |    |                         |  | (d) Amendment No. 4 to Amended and Restated Master
    Loan and Security Agreement, dated as of August 15, 2002,
    between NC Capital Corporation and Morgan Stanley Dean Witter
    Mortgage Capital Inc.(13)                                      
|        | 10 | .11                     |  | Letter Agreement, dated January 1, 2002, between NC Capital
    Corporation, New Century Mortgage Corporation and Salomon
    Brothers Realty Corp.(9)                                                                                                
|        |    |                         |  | (a) Amendment No. 1 to the Letter Agreement, dated
    December 23, 2002, among NC Capital Corporation, New
    Century Mortgage Corporation and Salomon Brothers Realty
    Corp.(15)                                                                
|        |    |                         |  | (b) Amendment No. 2 to the Letter Agreement, dated
    April 30, 2003, among NC Capital Corporation, New Century
    Mortgage Corporation and Salomon Brothers Realty Corp.(20)                                                                       
|        |    |                         |  | (c) Amendment Number Three to Letter Agreement, dated
    September 16, 2003, among NC Capital Corporation, New
    Century Mortgage Corporation and Citigroup Global Markets Realty
    Corp., as successor to Salomon Brothers Realty Corp.(23)     
|        |    |                         |  | (d) Amendment Number Four to the Letter Agreement, dated
    December 29, 2003, among New Century Mortgage Corporation,
    NC Capital Corporation and Citigroup Global Markets Realty
    Corp., as successor to Salomon Brothers Realty Corp.(25)   
|        |    |                         |  | (e) Amendment Number Five to the Letter Agreement, dated as
    of March 31, 2004, among New Century Mortgage Corporation,
    NC Capital Corporation and Citigroup Global Markets Realty
    Corp., as successor to Salomon Brothers Realty Corp.(25)
|        |    |                         |  | (f) Amendment Number Six to the Letter Agreement dated as
    of June 25, 2004, among New Century Mortgage Corporation,
    NC Capital Corporation and Citigroup Global Markets Realty
    Corp., as successor to Salomon Brothers Realty Corp.(33)   
|        | 10 | .12                     |  | Limited Guaranty, dated as of January 1, 2002, by New
    Century Mortgage Corporation in favor of Salomon Brothers Realty
    Corp. and Salomon Smith Barney Inc.(17)                                                                                
|        | 10 | .13                     |  | Master Contribution Agreement, dated as of May 13, 2002,
    between New Century Mortgage Corporation and New Century Funding
    A.(11)                                                                                                              
|        | 10 | .14                     |  | Amended and Restated Master Repurchase Agreement, dated as of
    May 21, 2004, between New Century Funding A and Bank of
    America, N.A.(34)                                                                                                       
|        |    |                         |  | (a) Amendment No. 1 to the Amended and Restated Master
    Repurchase Agreement, dated as of October 1, 2004, between
    New Century Funding A and Bank of America, N.A.(49)                                                                         
|        |    |                         |  | (b) Amendment Number Two to Amended and Restated
    Master Repurchase Agreement, dated as of May 5, 2005, by
    and between New Century Funding A and Bank of America,
    N.A.                                                                    
|        |    |                         |  | (c) Amendment Number Three to Amended and Restated Master
    Repurchase Agreement, dated as of July 6, 2005, by and
    between New Century Funding A and Bank of America, N.A.(84)                                                                  
|        |    |                         |  | (d) Amendment Number Four to Amended and Restated Master
    Repurchase Agreement, dated as of August 5, 2005, by and
    between New Century Funding A and Bank of America, N.A.(84)                                                                 
|        |    |                         |  | (e) Amendment Number Five to Amended and Restated Master
    Repurchase Agreement, dated as of August 9, 2005, by and
    between New Century Funding A and Bank of America, N.A.(84)                                                                 
|        | 10 | .15                     |  | Amended and Restated Guaranty and Pledge Agreement, dated as of
    May 21, 2004, among New Century TRS Holdings, Inc., New
    Century Mortgage Corporation and Bank of America, N.A.(34)                                                            
|        | 10 | .16                     |  | Amended and Restated Master Repurchase Agreement, dated as of
    May 10, 2002, among CDC Mortgage Capital, Inc., New Century
    Mortgage Corporation and NC Capital Corporation.(11)                                                                
|        |    |                         |  | (a) Amendment No. 1 to the Amended and Restated Master
    Repurchase Agreement, dated as of July 26, 2002, among CDC
    Mortgage Capital Inc., New Century Mortgage Corporation and NC
    Capital Corporation.(13)                                 
|        |    |                         |  | (b) Amendment No. 2 to the Amended and Restated Master
    Repurchase Agreement, dated as of August 5, 2002, among CDC
    Mortgage Capital Inc., New Century Mortgage Corporation and NC
    Capital Corporation.(13)                                

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|        |    |                         |  |                                                                                                                                                                                                                                                                                                                                     
|------- | -- | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        |    |                         |  | (c) Amendment No. 3 to the Amended and Restated Master
    Repurchase Agreement, dated March 14, 2003, among CDC
    Mortgage Capital Inc., New Century Mortgage Corporation and NC
    Capital Corporation.(15)                                                                                                                    
|        | 10 | .17                     |  | Committed Note Purchase Agreement and Security Agreement,
    dated as of May 10, 2002, among New Century Funding I,
    UBS Warburg Real Estate Securities Inc. and each person party
    thereto as a Purchaser or a Noteholder from time to time.(11)                                                                            
|        |    |                         |  | (a) Amendment No. 1 to the Committed
    Note Purchase and Security Agreement, dated as of
    June 15, 2002, among New Century Funding I, UBS
    Warburg Real Estate Securities Inc. and each person party
    thereto as a Purchaser or a Noteholder from time to time.(13)                                                      
|        |    |                         |  | (b) Amendment No. 2 to the Committed
    Note Purchase and Security Agreement, dated as of
    November 21, 2002, among New Century Funding I, UBS
    Warburg Real Estate Securities Inc. and each person party
    thereto as a Noteholder from time to time.(14)                                                                 
|        |    |                         |  | (c) Amendment No. 3 to the Committed
    Note Purchase and Security Agreement, dated as of
    June 23, 2003, among New Century Funding I, UBS
    Warburg Real Estate Securities Inc. and each person party
    thereto as a Purchaser or a Noteholder from time to time.(17)                                                      
|        |    |                         |  | (d) Amendment No. 4 to the Committed
    Note Purchase and Security Agreement, dated as of
    May 14, 2004, among New Century Funding I, UBS Real
    Estate Securities Inc. (f/k/a UBS Warburg Real Estate Securities
    Inc.) and each person party thereto as a Purchaser or a
    Noteholder from time to time.(28)           
|        |    |                         |  | (e) Amendment No. 5 to the Committed
    Note Purchase and Security Agreement, dated as of
    June 11, 2004, among New Century Funding I and UBS Real
    Estate Securities Inc. (f/k/a UBS Warburg Real Estate Securities
    Inc.) and each person party thereto as a Purchaser or a
    Noteholder from time to time.(30)       
|        |    |                         |  | (f) Amendment No. 6 to the Committed
    Note Purchase and Security Agreement, dated June 18,
    2004, between New Century Funding I and UBS Real Estate
    Securities Inc. (f/k/a UBS Warburg Real Estate Securities Inc.)
    and each person party thereto as a Purchaser or a Noteholder
    from time to time.(31)           
|        |    |                         |  | (g) Amendment No. 7 to the Committed
    Note Purchase and Security Agreement, dated as of
    September 30, 2004, between New Century Funding I and UBS
    Real Estate Securities Inc. (f/k/a UBS Warburg Real Estate
    Securities Inc.) and each person party thereto as a Purchaser or
    a Noteholder from time to time.(49)
|        | 10 | .18                     |  | Loan Purchase Agreement, dated as of May 10, 2002, among
    New Century Mortgage Corporation, New Century TRS Holdings, Inc.
    and New Century Funding I.(11)                                                                                                                                                                    
|        |    |                         |  | (a) Amendment No. 1 to Loan Purchase Agreement, dated
    as of November 21, 2002, among New Century Mortgage
    Corporation, New Century TRS Holdings, Inc. and New Century
    Funding I.(14)                                                                                                                                    
|        |    |                         |  | (b) Amendment No. 2 to Loan Purchase Agreement, dated
    as of June 23, 2003, among New Century Mortgage
    Corporation, New Century TRS Holdings, Inc. and New Century
    Funding I.(17)                                                                                                                                        
|        |    |                         |  | (c) Amendment No. 3 to Loan Purchase Agreement, dated
    June 18, 2004, among New Century Funding I, New
    Century TRS Holdings, Inc., New Century Mortgage Corporation and
    NC Capital Corporation.(31)                                                                                                                      
|        | 10 | .19                     |  | Waiver and Consent, dated May 13, 2002, under the
    Subordinated Loan Agreement between New Century Mortgage
    Corporation and U.S. Bank National Association dated as of
    April 28, 2000.(11)                                                                                                                               
|        | 10 | .20                     |  | First Amendment to Lease, dated May 1, 2000, between The
    Irvine Company and New Century TRS Holdings, Inc.(12)                                                                                                                                                                                                                  
|        | 10 | .21                     |  | Office Lease Agreement, dated April 23, 2002, between Koll
    Center Irvine Number Two, L.L.C. and New Century Mortgage
    Corporation.(12)                                                                                                                                                                                       
|        |    |                         |  | (a) First Amendment to Office Lease Agreement, dated
    May 12, 2003, between Koll Center Irvine Number Two, L.L.C.
    and New Century Mortgage Corporation.(45)                                                                                                                                                                  

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|        |    |                         |  |                                                                                                                                                                                                                                       
|------- | -- | ----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .22                     |  | Unit Purchase Agreement, dated as of May 24, 2002, among
    Gary Busacca, Marc Loewenthal, Jeffrey Lemieux, David Logsdon,
    eGarden, Inc., and New Century Mortgage Corporation.(12)                                              
|        | 10 | .23                     |  | Master Repurchase Agreement, dated as of May 30, 2002,
    between Salomon Brothers Realty Corp. and New Century Funding
    SB-1.(12)                                                                                                
|        |    |                         |  | (a) Amendment No. 1 to the Master Repurchase
    Agreement, dated December 23, 2002, between New Century
    Funding SB-1 and Salomon Brothers Realty Corp.(14)                                                                       
|        |    |                         |  | (b) Amendment No. 2 to the Master Repurchase
    Agreement, dated May 13, 2003, between New Century Funding
    SB-1 and Citigroup Global Markets Realty Corp., as successor to
    Salomon Brothers Realty Corp.(16)                 
|        |    |                         |  | (c) Amendment Number Three to the Master Repurchase
    Agreement, dated September 16, 2003, between New Century
    Funding SB-I and Citigroup Global Markets Realty Corp., as
    successor to Salomon Brothers Realty Corp.(19)    
|        |    |                         |  | (d) Amendment Number Four to the Master Repurchase
    Agreement, dated as of December 29, 2003, between New
    Century Funding SB-1 and Citigroup Global Markets Realty Corp.,
    as successor to Salomon Brothers Realty Corp.(23)
|        |    |                         |  | (e) Amendment Number Five to the Master Repurchase
    Agreement, dated as of March 31, 2004, between New Century
    Funding SB-1 and Citigroup Global Markets Realty Corp., as
    successor to Salomon Brothers Realty Corp.(27)   
|        |    |                         |  | (f) Amendment Number Six to the Master Repurchase
    Agreement, dated as of June 25, 2004, between New Century
    Funding SB-1 and Citigroup Global Markets Realty Corp., as
    successor to Salomon Brothers Realty Corp.(33)     
|        |    |                         |  | (g) Amendment Number Seven to the Master Repurchase
    Agreement, dated as of October 1, 2004, between New Century
    Funding SB-1 and Citigroup Global Markets Realty Corp.(49)                                                    
|        |    |                         |  | (h) Amendment Number Eight to the Master Repurchase
    Agreement, dated as of December 29, 2004, between New
    Century Funding SB-1 and Citigroup Global Markets Realty
    Corp.(62)                                              
|        |    |                         |  | (i) Amendment Number Nine to the Master Repurchase
    Agreement, dated as of March 30, 2005, by and between New
    Century Funding SB-1 and Citigroup Global Markets Realty
    Corp.(71)                                           
|        |    |                         |  | (j) Amendment Number Ten to the Master Repurchase
    Agreement, dated as of June 1, 2005, by and between New
    Century Funding SB-1 and Citigroup Global Markets Realty Corp.
                                                    
|        |    |                         |  | (k) Amendment Number Eleven to the Master Repurchase
    Agreement, dated as of September 28, 2005, between New
    Century Funding SB-1 and Citigroup Global Markets Realty
    Corp.(84)                                            
|        |    |                         |  | (l) Amendment Number Twelve to the Master Repurchase
    Agreement, dated as of December 28, 2005, by and between
    New Century Funding SB-1 and Citigroup Global Markets Realty
    Corp.                                         
|        |    |                         |  | (m) Amendment Number Thirteen to the Master Repurchase
    Agreement, dated as of January 20, 2006, by and between New
    Century Funding SB-1 and Citigroup Global Markets Realty Corp.
                                           
|        |    |                         |  | (n) Amendment Number Fourteen to the Master Repurchase
    Agreement, dated as of February 28, 2006, by and between
    New Century Funding SB-1 and Citigroup Global Markets Realty
    Corp.                                       
|        | 10 | .24                     |  | Master Contribution Agreement, dated as of May 30, 2002,
    between New Century Mortgage and New Century Funding SB-1.(12)                                                                                                           
|        | 10 | .25                     |  | Guaranty and Pledge Agreement, dated as of May 30, 2002, by
    New Century TRS Holdings, Inc. and New Century Mortgage
    Corporation in favor of Salomon Brothers Realty Corp.(17)                                                 
|        |    |                         |  | (a) Amended and Restated Guaranty and Pledge Agreement,
    dated as of October 1, 2004, among New Century Financial
    Corporation, New Century Mortgage Corporation and Citigroup
    Global Markets Realty Corp.(49)              
|        | 10 | .26                     |  | Lease, dated May 31, 2002, between The Irvine Company and
    New Century Mortgage Corporation.(12)                                                                                                                                   

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|        |    |                         |  |                                                                                                                                                                                                                                             
|------- | -- | ----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .27                     |  | Second Amendment to Lease, dated June 17, 2002, between The
    Irvine Company and New Century TRS Holdings, Inc.(12)                                                                                                                       
|        |    |                         |  | (a) Third Amendment to Lease, dated September 12,
    2002, between The Irvine Company and New Century TRS Holdings,
    Inc.(45)                                                                                                           
|        |    |                         |  | (b) Fourth Amendment to Lease, dated October 14, 2003,
    between The Irvine Company and New Century TRS Holdings, Inc.(45)                                                                                                                
|        |    |                         |  | (c) Fifth Amendment to Lease, dated February 5, 2004,
    between The Irvine Company and New Century TRS Holdings, Inc.(45)                                                                                                                 
|        |    |                         |  | (d) Sixth Amendment to Lease, dated September 10,
    2004, between The Irvine Company and New Century TRS Holdings,
    Inc.(46)                                                                                                           
|        |    |                         |  | (e) Seventh Amendment to Lease, dated October 12,
    2004, by and between New Century TRS Holdings, Inc. and The
    Irvine Company.(52)                                                                                                   
|        | 10 | .28                     |  | Lease, dated June 17, 2002, between The Irvine Company and
    New Century Mortgage Corporation.(12)                                                                                                                                        
|        |    |                         |  | (a) First Amendment to Lease dated November 5, 2002 by
    and between The Irvine Company, New Century Mortgage Corporation
    and the Anyloan Company.(45)                                                                                
|        | 10 | .29                     |  | Office Space Lease, dated June 29, 2002, between National
    Office Partners Limited Partnership and New Century Mortgage
    Corporation.(12)                                                                                             
|        |    |                         |  | (a) Amendment to Office Space Lease dated
    September 17, 2003 by and between National Office Partners
    Limited Partnership and New Century Mortgage Corporation.(45)                                                                  
|        | 10 | .30                     |  | Master Loan and Security Agreement, dated December 1, 2002,
    between NC Capital Corporation and Morgan Stanley Mortgage
    Capital Inc.(14)                                                                                             
|        |    |                         |  | (a) Amendment No. 1 to Master Loan and Security
    Agreement, dated as of March 27, 2003, between NC Capital
    Corporation and Morgan Stanley Mortgage Capital, Inc.(15)                                                                 
|        | 10 | .31                     |  | Amended and Restated Master Loan and Security Agreement, dated
    June 20, 2003, among NC Capital Corporation, New Century
    Mortgage Corporation and Morgan Stanley Mortgage Capital,
    Inc.(17)                                      
|        |    |                         |  | (a) Amendment No. 1 to the Amended and Restated Master
    Loan and Security Agreement, dated as of September 15,
    2003, among NC Capital Corporation, New Century Mortgage
    Corporation and Morgan Stanley Mortgage Capital, Inc.(19)
|        |    |                         |  | (b) Amendment No. 2 to the Amended and Restated Master
    Loan and Security Agreement, dated as of December 11, 2003,
    among NC Capital Corporation, New Century Mortgage Corporation
    and Morgan Stanley Mortgage Capital, Inc.(22) 
|        |    |                         |  | (c) Amendment No. 3 to the Amended and Restated Master
    Loan and Security Agreement, dated as of January 13, 2004,
    among NC Capital Corporation, New Century Mortgage Corporation
    and Morgan Stanley Mortgage Capital Inc.(23)   
|        | 10 | .32                     |  | Amended and Restated Guaranty, dated as of June 20, 2003,
    by New Century TRS Holdings, Inc. in favor of Morgan Stanley
    Mortgage Capital, Inc.(17)                                                                                   
|        |    |                         |  | (a) Amendment No. 1 to the Amended and Restated
    Guaranty, dated as of September 18, 2003, by New Century
    TRS Holdings, Inc. in favor of Morgan Stanley Mortgage Capital
    Inc.(19)                                                
|        | 10 | .33                     |  | Second Amended and Restated Master Repurchase Agreement, dated
    as of June 23, 2003, among CDC Mortgage Capital Inc., New
    Century Mortgage Corporation and NC Capital Corporation.(17)                                               
|        |    |                         |  | (a) Amendment No. 1 to the Second Amended and Restated
    Master Repurchase Agreement, dated as of June 30, 2003,
    among CDC Mortgage Capital Inc., New Century Mortgage
    Corporation and NC Capital Corporation.(17)                
|        |    |                         |  | (b) Amendment No. 2 to the Second Amended and Restated
    Master Repurchase Agreement, dated as of September 3, 2003,
    among New Century Mortgage Corporation, NC Capital Corporation
    and CDC Mortgage Capital Inc.(18)             

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|        |    |                         |  |                                                                                                                                                                                                                                                             
|------- | -- | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        |    |                         |  | (c) Amendment No. 3 to the Second Amended and Restated
    Master Loan Purchase Agreement, dated September 30, 2003,
    among NC Capital Corporation, New Century Mortgage Corporation
    and CDC Mortgage Capital Inc.(19)                               
|        |    |                         |  | (d) Amendment No. 4 to the Second Amended and Restated
    Master Loan Purchase Agreement, dated February 12, 2004,
    among NC Capital Corporation, New Century Mortgage Corporation
    and CDC Mortgage Capital, Inc.(24)                               
|        |    |                         |  | (e) Letter Agreement, dated as of June 18, 2004, among
    New Century Mortgage Corporation, NC Capital Corporation and CDC
    Mortgage Capital Inc.(31)                                                                                                   
|        |    |                         |  | (f) Letter Agreement, dated as of July 1, 2004, among
    New Century Mortgage Corporation, NC Capital Corporation and CDC
    Mortgage Capital Inc.(35)                                                                                                    
|        |    |                         |  | (g) Letter Agreement, dated as of July 15, 2004, among
    New Century Mortgage Corporation, NC Capital Corporation and CDC
    Mortgage Capital Inc.(36)                                                                                                   
|        |    |                         |  | (h) Letter Agreement, dated as of July 29, 2004, among
    New Century Mortgage Corporation, NC Capital Corporation and CDC
    Mortgage Capital Inc.(38)                                                                                                   
|        |    |                         |  | (i) Letter Agreement, dated as of August 11, 2004,
    among New Century Mortgage Corporation, NC Capital Corporation
    and CDC Mortgage Capital Inc.(42)                                                                                                 
|        |    |                         |  | (j) Letter Agreement, dated as of August 30, 2004,
    among New Century Mortgage Corporation, NC Capital Corporation
    and CDC Mortgage Capital Inc.(43)                                                                                                 
|        | 10 | .34                     |  | Master Loan and Security Agreement, dated June 26, 2003,
    between New Century Mortgage Corporation and Greenwich Capital
    Financial Products, Inc.(17)                                                                                                
|        | 10 | .35                     |  | Servicer Advance Financing Facility Agreement, dated as of
    August 28, 2003, between Citigroup Global Markets Realty
    Corp. and New Century Mortgage Corporation.(18)                                                                                 
|        |    |                         |  | (a) Amendment Number One to Servicer Advance Financing
    Facility Agreement, dated as of August 27, 2004, between
    Citigroup Global Markets Realty Corp. and New Century Mortgage
    Corporation.(43)                                                 
|        |    |                         |  | (b) Amend Number Two to the Servicer Advance Financing
    Facility Agreement, dated as of October 1, 2004, between
    New Century Mortgage Corporation and Citigroup Global Markets
    Realty Corp. (49)                                                 
|        |    |                         |  | (c) Amendment Number Three to the Servicer Advance
    Financing Facility Agreement, dated as of August 25, 2005,
    between New Century Mortgage Corporation and Citigroup Global
    Markets Realty Corp.(84)                                            
|        | 10 | .36                     |  | Guaranty, dated as of August 28, 2003, by New Century TRS
    Holdings, Inc. in favor of Citigroup Global Markets Realty
    Corp.(18)                                                                                                                      
|        |    |                         |  | (a) Amended and Restated Guaranty, dated as of
    October 1, 2004, by New Century Financial Corporation in
    favor of Citigroup Global Markets Realty Corp.(49)                                                                                          
|        | 10 | .37                     |  | Master Repurchase Agreement, dated September 25, 2003,
    between NC Capital Corporation and Bear Stearns Mortgage Capital
    Corporation.(19)                                                                                                            
|        | 10 | .38                     |  | Guaranty, dated as of September 25, 2003, by New Century
    TRS Holdings, Inc. in favor of Bear Stearns Mortgage Capital
    Corporation.(19)                                                                                                              
|        | 10 | .39                     |  | Master Repurchase Agreement, dated as of October 31, 2003,
    by and between Bear Stearns Mortgage Capital Corporation and NC
    Capital Corporation.(20)                                                                                                 
|        |    |                         |  | (a) Amendment No. 1 to Master Repurchase Agreement,
    dated as of January 14, 2004, between Bear Stearns Mortgage
    Capital Corporation and NC Capital Corporation.(24)                                                                                 
|        |    |                         |  | (b) Amendment No. 2 to Master Repurchase Agreement,
    dated as of June 29, 2004, among NC Capital Corporation, NC
    Residual II Corporation and Bear Stearns Mortgage Capital
    Corporation.(33)                                                      
|        |    |                         |  | (c) Amendment and Joinder No. 3 to the Master
    Repurchase Agreement, dated as of October 1, 2004, among NC
    Residual II Corporation, NC Capital Corporation, New
    Century Credit Corporation and Bear Stearns Mortgage Capital
    Corporation.(49)

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|        |    |                         |  |                                                                                                                                                                                                                                                                                               
|------- | -- | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        |    |                         |  | (d) Amendment No. 4 to Master Repurchase Agreement,
    dated as of December 30, 2004, among New Century Credit
    Corporation, NC Capital Corporation, NC Residual II
    Corporation and Bear Stearns Mortgage Capital Corporation.(62)                                                    
|        | 10 | .40                     |  | Guaranty, dated as of October 31, 2003, by New Century TRS
    Holdings, Inc. in favor of Bear Stearns Mortgage Capital
    Corporation.(20)                                                                                                                                                  
|        | 10 | .41                     |  | Guaranty dated as of June 29, 2004, by New Century TRS
    Holdings, Inc. in favor of Bear Stearns Mortgage Capital
    Corporation.(33)                                                                                                                                                      
|        | 10 | .42                     |  | Guaranty, dated as of October 1, 2004, by New Century
    Financial Corporation in favor of Bear Stearns Mortgage Capital
    Corporation. (49)                                                                                                                                               
|        | 10 | .43                     |  | Mortgage Loan Purchase and Servicing Agreement, dated as of
    September 5, 2003, between Von Karman Funding LLC and New
    Century Mortgage Corporation.(20)                                                                                                                               
|        | 10 | .44                     |  | Security Agreement, dated as of September 5, 2003, between
    Von Karman Funding LLC and Deutsche Bank Trust Company
    Americas.(20)                                                                                                                                                       
|        | 10 | .45                     |  | Guaranty, dated as of September 5, 2003, by New Century TRS
    Holdings, Inc. in favor of Citibank, N.A.(20)                                                                                                                                                                                 
|        | 10 | .46                     |  | Confirmation, dated as of September 5, 2003, between Von
    Karman Funding LLC and Citibank, N.A.(20)                                                                                                                                                                                        
|        | 10 | .47                     |  | Schedule to the Master Agreement, dated as of September 5,
    2003, between Citibank, N.A. and Von Karman Funding LLC.(20)                                                                                                                                                                   
|        | 10 | .48                     |  | Confirmation for Swap Transaction under Existing 1992 Master
    Agreement, dated as of September 5, 2003, between NC
    Capital Corporation and Citibank, N.A.(20)                                                                                                                          
|        | 10 | .49                     |  | Schedule to the ISDA Master Agreement, dated as of
    September 5, 2003, between Citibank, N.A. and NC Capital
    Corporation.(20)                                                                                                                                                          
|        | 10 | .50                     |  | Master Repurchase Agreement, dated as of December 2, 2003,
    between Bank of America, N.A. and NC Capital Corporation.(22)                                                                                                                                                                  
|        |    |                         |  | (a) Amendment Number One to the Master Repurchase
    Agreement, dated as of April 12, 2004, between Bank of
    America, N.A. and NC Capital Corporation.(27)                                                                                                                                
|        | 10 | .51                     |  | Guaranty Agreement, dated as of December 2, 2003, by New
    Century TRS Holdings, Inc. and New Century Mortgage Corporation
    in favor of Bank of America, N.A.(22)                                                                                                                        
|        | 10 | .52                     |  | Second Amended and Restated Master Loan and Security Agreement,
    dated as of January 30, 2004, among NC Capital Corporation,
    New Century Mortgage Corporation, Morgan Stanley Bank and Morgan
    Stanley Mortgage Capital, Inc.(24)                                                   
|        |    |                         |  | (a) Amendment No. 1 and Joinder to Second Amended and
    Restated Master Loan and Security Agreement, dated May 21,
    2004, among New Century Mortgage Corporation, NC Capital
    Corporation, Morgan Stanley Bank and Morgan Stanley Mortgage
    Capital, Inc.(34)                      
|        |    |                         |  | (b) Amendment No. 2 to Second Amended and Restated
    Master Loan and Security Agreement, dated June 9, 2004,
    among NC Capital Corporation, New Century Mortgage Corporation,
    NC Residual II Corporation, Morgan Stanley Bank, and Morgan
    Stanley Mortgage Capital, Inc.(30)     
|        |    |                         |  | (c) Amendment No. 3 to Second Amended and Restated
    Master Loan and Security Agreement, dated as of June 18,
    2004, among NC Capital Corporation, New Century Mortgage
    Corporation, NC Residual II Corporation, Morgan Stanley
    Bank and Morgan Stanley Mortgage Capital Inc.(31)
|        |    |                         |  | (d) Amendment No. 4 to Second Amended and Restated
    Master Loan and Security Agreement, dated as of June 30,
    2004, among NC Capital Corporation, New Century Mortgage
    Corporation, NC Residual II Corporation, Morgan Stanley
    Bank and Morgan Stanley Capital Inc.(45)         
|        |    |                         |  | (e) Amendment No. 5 to Second Amended and Restated
    Master Loan and Security Agreement, dated as of August 6,
    2004, among NC Capital Corporation, New Century Mortgage
    Corporation, NC Residual II Corporation, Morgan Stanley
    Bank and Morgan Stanley Capital Inc.(40)        

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|        |    |                         |  |                                                                                                                                                                                                                                                                                                                                                        
|------- | -- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        |    |                         |  | (f) Amendment No. 6 to Second Amended and Restated
    Master Loan and Security Agreement, dated as of
    September 8, 2004, among NC Capital Corporation, New
    Century Mortgage Corporation, NC Residual II Corporation,
    Morgan Stanley Bank and Morgan Stanley Capital Inc.(44)                                                              
|        | 10 | .53                     |  | Second Amended and Restated Guaranty, dated as of
    January 30, 2004, by New Century TRS Holdings, Inc. in
    favor of Morgan Stanley Bank and Morgan Stanley Mortgage
    Capital, Inc.(24)                                                                                                                                                        
|        | 10 | .54                     |  | Master Repurchase Agreement, dated as of June 18, 2004,
    between New Century Mortgage Corporation and Citigroup Global
    Markets Realty Corp.(31)                                                                                                                                                                                                 
|        | 10 | .55                     |  | Third Amended and Restated Master Repurchase Agreement, dated as
    of September 10, 2004, among CDC Mortgage Capital Inc., New
    Century Mortgage Corporation and NC Capital Corporation.(46)                                                                                                                                                      
|        |    |                         |  | (a) Amendment and Joinder to the Third Amended and Restated
    Repurchase Agreement, dated as of September 29, 2004, among
    New Century Mortgage Corporation, NC Residual II
    Corporation, NC Capital Corporation, New Century Credit
    Corporation and CDC Mortgage Capital Inc.(49)                                                         
|        |    |                         |  | (b) Amendment No. 2 to Third Amended and Restated
    Master Repurchase Agreement, dated as of January 10, 2005,
    by and among New Century Mortgage Corporation, NC
    Residual II Corporation, NC Capital Corporation, New
    Century Credit Corporation and IXIS Real Estate Capital Inc.
    (formerly known as CDC Mortgage Capital Inc.).(64)
|        |    |                         |  | (c) Amendment No. 3 to Third Amended and Restated
    Master Repurchase Agreement, dated as of March 7, 2005, by
    and among New Century Mortgage Corporation, NC Residual II
    Corporation, NC Capital Corporation, New Century Credit
    Corporation and IXIS Real Estate Capital Inc. (formerly known as
    CDC Mortgage Capital Inc.).(69)   
|        |    |                         |  | (d) Amendment No. 4 to Third Amended and Restated
    Master Repurchase Agreement, dated as of May 5, 2005, by
    and among New Century Mortgage Corporation, NC Residual II
    Corporation, NC Capital Corporation, New Century Credit
    Corporation and IXIS Real Estate Capital Inc. (formerly known as
    CDC Mortgage Capital Inc.).        
|        |    |                         |  | (e) Amendment No. 5 to Third Amended and Restated
    Master Repurchase Agreement, dated as of May 27, 2005, by
    and among New Century Mortgage Corporation, NC Residual II
    Corporation, NC Capital Corporation, New Century Credit
    Corporation and IXIS Real Estate Capital Inc. (formerly known as
    CDC Mortgage Capital Inc.).       
|        |    |                         |  | (f) Amendment No. 6 to Third Amended and Restated
    Master Repurchase Agreement, dated as of July 31, 2005, by
    and among New Century Mortgage Corporation, NC Residual II
    Corporation, NC Capital Corporation, New Century Credit
    Corporation and IXIS Real Estate Capital Inc.(84)                                                      
|        | 10 | .56                     |  | Guarantee, dated as of September 29, 2004, by New Century
    Financial Corporation in favor of CDC Mortgage Capital Inc.(49)                                                                                                                                                                                                                          
|        | 10 | .57                     |  | Form of Indemnification Agreement between New Century Financial
    Corporation and each of its executive officers and directors.(2)*                                                                                                                                                                                                                  
|        | 10 | .58                     |  | 1995 Stock Option Plan (incorporated by reference from New
    Century TRS Holdings, Inc.s Form S-8 Registration
    Statement No. 333-105624), as amended.*                                                                                                                                                                                          
|        | 10 | .59                     |  | Form of Equalization Nonqualified Stock Option granted to Edward
    Gotschall in December 1996.(1)*                                                                                                                                                                                                                                                   
|        | 10 | .60                     |  | Form of Director Stock Option Agreement.(72)                                                                                                                                                                                                                                                                                                           
|        | 10 | .61                     |  | Form of Performance-Based Award Agreement (6-Month Period Ending
    June 30, 2006).(91)*                                                                                                                                                                                                                                                              
|        | 10 | .62                     |  | Form of Performance-Based Award Agreement (12-Month Period
    Ending December 31, 2006).(91)*                                                                                                                                                                                                                                                         
|        | 10 | .63                     |  | Employee Stock Purchase Plan, as amended.(13)*                                                                                                                                                                                                                                                                                                         
|        | 10 | .64                     |  | Deferred Compensation Plan, Amended and Restated July 1,
    2004.(47)*                                                                                                                                                                                                                                                                                

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|        |    |                         |  |                                                                                                                                                                                                                                                                                                                         
|------- | -- | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .65                     |  | 1999 Incentive Compensation Plan (incorporated by reference from
    New Century Financial Corporations Proxy Statement as
    filed with the Securities and Exchange Commission on
    April 2, 1999).*                                                                                                               
|        | 10 | .66                     |  | Directors Deferred Compensation Plan.(24)*                                                                                                                                                                                                                                                                              
|        | 10 | .67                     |  | Form of Executive Officers Employment Agreement, dated as
    of January 1, 2004.(24)*                                                                                                                                                                                                                                 
|        |    |                         |  | (a) Form of First Amendment to Executive Officers
    Employment Agreements.(48)*                                                                                                                                                                                                                                      
|        | 10 | .68                     |  | Form of New Century Financial Corporation 2004 Performance
    Incentive Plan. (attached as Annex D to the proxy
    statement/ prospectus that is part of New Century Financial
    Corporations Registration Statement on Form S-4, as
    filed with the Securities and Exchange Commission on
    April 22, 2004).*
|        | 10 | .69                     |  | Second Amended and Restated Guaranty and Pledge Agreement, dated
    as of October 1, 2004, among New Century Financial
    Corporation, New Century Mortgage Corporation and Bank of
    America, N.A.(49)                                                                                                             
|        | 10 | .70                     |  | Assignment and Assumption Agreement, dated as of
    September 30, 2004, among New Century Mortgage Corporation,
    NC Residual II Corporation, New Century Funding I, New
    Century Financial Corporation and New Century TRS Holdings,
    Inc.(49)                                                                
|        | 10 | .71                     |  | Amended and Restated Purchase and Sale Agreement, dated as of
    October 1, 2004, among NC Capital Corporation, New Century
    Credit Corporation, New Century Mortgage Corporation and
    Citigroup Global Markets Realty Corp.(49)                                                                                 
|        | 10 | .72                     |  | Amended and Restated Letter Agreement, dated as of
    October 1, 2004, among NC Capital Corporation, New Century
    Credit Corporation, New Century Mortgage Corporation and
    Citigroup Global Markets Realty Corp.(49)                                                                                            
|        |    |                         |  | (a) Amendment Number One to the Amended and Restated Letter
    Agreement, dated as of October 4, 2004, by and among New
    Century Mortgage Corporation, NC Capital Corporation, New
    Century Credit Corporation and Citigroup Global Markets Realty
    Corp.(51)                                                 
|        |    |                         |  | (b) Amendment Number Two to the Amended and Restated Letter
    Agreement, dated as of November 3, 2004, among New Century
    Mortgage Corporation, NC Capital Corporation, New Century Credit
    Corporation and Citigroup Global Markets Realty Corp.(56)                                                           
|        |    |                         |  | (c) Amendment Number Three to the Amended and Restated
    Letter Agreement, dated as of December 29, 2004, among New
    Century Mortgage Corporation, NC Capital Corporation, New
    Century Credit Corporation and Citigroup Global Markets Realty
    Corp.(62)                                                    
|        |    |                         |  | (d) Amendment Number Four to the Amended and Restated
    Letter Agreement, dated as of January 28, 2005, by and
    among New Century Mortgage Corporation, NC Capital Corporation,
    New Century Credit Corporation and Citigroup Global Markets
    Realty Corp.(65)                                               
|        |    |                         |  | (e) Amendment Number Five to the Amended and Restated
    Letter Agreement, dated as of January 28, 2005, by and
    among New Century Mortgage Corporation, NC Capital Corporation,
    New Century Credit Corporation and Citigroup Global Markets
    Realty Corp.(71)                                               
|        |    |                         |  | (f) Amendment Number Six to the Amended and Restated Letter
    Agreement, dated as of June 14, 2005, by and among New
    Century Mortgage Corporation, NC Capital Corporation, New
    Century Credit Corporation and Citigroup Global Markets Realty
    Corp.                                                      
|        |    |                         |  | (g) Amendment Number Seven to Amended and Restated Letter
    Agreement, dated as of September 28, 2005, by and among New
    Century Mortgage Corporation, NC Capital Corporation, New
    Century Credit Corporation and Citigroup Global Markets Realty
    Corp.(84)                                                
|        |    |                         |  | (h) Amendment Number Eight to the Amended and Restated
    Letter Agreement, dated as of December 28, 2005, by and
    among New Century Mortgage Corporation, NC Capital Corporation,
    New Century Credit Corporation and Citigroup Global Markets
    Realty Corp.                                                
|        |    |                         |  | (i) Amendment Number Nine to the Amended and Restated
    Letter Agreement, dated as of January 20, 2006, by and
    among New Century Mortgage Corporation, NC Capital Corporation,
    New Century Credit Corporation and Citigroup Global Markets
    Realty Corp.                                                  

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|        |    |                         |  |                                                                                                                                                                                                                                                                                                                                                 
|------- | -- | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        |    |                         |  | (j) Amendment Number Ten to the Amended and Restated Letter
    Agreement, dated as of February 27, 2006, by and among New
    Century Mortgage Corporation, NC Capital Corporation, New
    Century Credit Corporation and Citigroup Global Markets Realty
    Corp.                                                                          
|        | 10 | .73                     |  | Limited Guaranty, dated as of October 1, 2004, by New
    Century Financial Corporation in favor of Citigroup Global
    Markets Realty Corp.(49)                                                                                                                                                                                               
|        | 10 | .74                     |  | Amendment to Certain Program Documents in relation to the Von
    Karman Funding LLC Secured Liquidity Notes Program 2003,
    dated as of September 30, 2004, between Von Karman Funding
    LLC, New Century Mortgage Corporation and Deutsche Bank Company
    Americas.(49)                                                                 
|        | 10 | .75                     |  | Third Amended and Restated Master Loan and Security Agreement,
    dated as of October 1, 2004, among New Century Mortgage
    Corporation, NC Capital Corporation, NC Residual II
    Corporation, New Century Credit Corporation, Morgan Stanley Bank
    and Morgan Stanley Mortgage Capital Inc.(50)                                        
|        |    |                         |  | (a) Amendment No. 1 to the Third Amended and Restated
    Master Loan and Security Agreement, dated as of January 28,
    2005, by and among New Century Mortgage Corporation, NC Capital
    Corporation, New Century Credit Corporation, NC Residual II
    Corporation, Morgan Stanley Bank and Morgan Stanley Mortgage
    Capital Inc.(65) 
|        |    |                         |  | (b) Amendment No. 2 to the Third Amended and Restated
    Master Loan and Security Agreement, dated as of
    February 28, 2005, by and among NC Capital Corporation, New
    Century Credit Corporation, NC Residual II Corporation, New
    Century Mortgage Corporation, Morgan Stanley Bank and Morgan
    Stanley Mortgage Capital Inc.(68)
|        | 10 | .76                     |  | Guaranty, dated as of October 1, 2004, by New Century
    Financial Corporation in favor of Morgan Stanley Bank and Morgan
    Stanley Mortgage Capital Inc.(50)                                                                                                                                                                                
|        | 10 | .77                     |  | Termination of Guaranty, dated as of October 1, 2004, among
    New Century Financial Corporation, New Century TRS Holdings,
    Inc., Morgan Stanley Bank and Morgan Stanley Mortgage Capital
    Inc.(50)                                                                                                                                     
|        | 10 | .78                     |  | Guaranty of New Century Financial Corporation, dated as of
    October 21, 2004, by New Century Financial Corporation in
    favor of Citibank, N.A.(53)                                                                                                                                                                                        
|        | 10 | .79                     |  | Letter Agreement, dated as of October 29, 2004, among New
    Century Credit Corporation, NC Capital Corporation, NC
    Residual II Corporation and Bear Stearns Mortgage Capital
    Corporation.(54)                                                                                                                                         
|        | 10 | .80                     |  | Purchase Agreement by and between New Century Financial
    Corporation and New Century TRS Holdings, Inc., dated
    November 3, 2004.(55)                                                                                                                                                                                                     
|        | 10 | .81                     |  | Master Repurchase Agreement dated as of November 12, 2004,
    among New Century Mortgage Corporation, NC Capital Corporation,
    New Century Credit Corporation, NC Residual II Corporation
    and Barclays Bank PLC.(57)                                                                                                                    
|        |    |                         |  | (a) Amendment No. 1 to Master Repurchase Agreement,
    dated as of August 30, 2005, by and among NC Capital
    Corporation, New Century Credit Corporation, New Century
    Mortgage Corporation, NC Residual II Corporation and
    Barclays Bank PLC.(79)                                                                                   
|        |    |                         |  | (b) Amendment No. 2 to Master Repurchase Agreement,
    dated as of November 8, 2005, by and among NC Capital
    Corporation, New Century Credit Corporation, New Century
    Mortgage Corporation, NC Residual II Corporation and
    Barclays Bank PLC.                                                                                     
|        |    |                         |  | (c) Amendment No. 3 to Master Repurchase Agreement,
    dated as of December 23, 2005, by and among NC Capital
    Corporation, New Century Credit Corporation, New Century
    Mortgage Corporation, NC Residual II Corporation and
    Barclays Bank PLC.                                                                                    
|        |    |                         |  | (d) Amendment No. 4 to Master Repurchase Agreement,
    dated as of January 26, 2006, by and among NC Capital
    Corporation, New Century Credit Corporation, New Century
    Mortgage Corporation, NC Asset Holding, L.P. (as successor to NC
    Residual II Corporation) and Barclays Bank PLC.                                            

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|        |    |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | -- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        |    |                         |  | (e) Amendment No. 5 to Master Repurchase Agreement,
    dated as of February 14, 2006, by and among NC Capital
    Corporation, New Century Credit Corporation, New Century
    Mortgage Corporation, NC Asset Holding, L.P. (as successor to NC
    Residual II Corporation) and Barclays Bank PLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |    |                         |  | (f) Amendment No. 6 to Master Repurchase Agreement,
    dated as of February 24, 2006, by and among NC Capital
    Corporation, New Century Credit Corporation, New Century
    Mortgage Corporation, NC Asset Holding, L.P. (as successor to NC
    Residual II Corporation) and Barclays Bank PLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |    |                         |  | (g) Amendment No. 7 to Master Repurchase Agreement,
    dated as of March 7, 2006, by and among NC Capital
    Corporation, New Century Credit Corporation, New Century
    Mortgage Corporation, NC Asset Holding, L.P. (as successor
    to NC Residual II Corporation) and Barclays Bank PLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .82                     |  | Guaranty dated as of November 12, 2004, by New Century
    Financial Corporation in favor of Barclays Bank PLC.(57)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10 | .83                     |  | Letter Agreement, dated as of November 30, 2004, among New
    Century Credit Corporation, NC Capital Corporation, NC
    Residual II Corporation and Bear Stearns Mortgage Capital
    Corporation.(58)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 10 | .84                     |  | Sublease, dated as of December 1, 2004, between New Century
    Mortgage Corporation and Ingram Micro Inc.(59)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .85                     |  | Employment Agreement, dated as of December 16, 2004,
    between New Century Financial Corporation and Patti M.
    Dodge.(60)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 10 | .86                     |  | Amended and Restated Employment Agreement, dated as of
    September 1, 2004, between New Century Financial
    Corporation and Kevin M. Cloyd.(70)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10 | .87                     |  | Master Repurchase Agreement dated as of December 22, 2004,
    among New Century Mortgage Corporation, NC Capital Corporation,
    New Century Credit Corporation, NC Residual II Corporation,
    New Century Financial Corporation and Credit Suisse First Boston
    Mortgage Capital LLC.(61)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |    |                         |  | (a) Amendment No. 1 to Master Repurchase Agreement,
    dated as of August 26, 2005, by and among NC Capital
    Corporation, New Century Credit Corporation, New Century
    Mortgage Corporation, NC Residual II Corporation, New
    Century Financial Corporation and Credit Suisse First Boston
    Mortgage Capital LLC.(78)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |    |                         |  | (b) Amendment No. 2 and Joinder to Master Repurchase
    Agreement, dated as of September 2, 2005, by and among New
    Century Financial Corporation, NC Capital Corporation, New
    Century Credit Corporation, New Century Mortgage Corporation, NC
    Residual II Corporation, Home123 Corporation, Loan Partners
    Mortgage, Ltd., Kingston Mortgage Company, Ltd., Compufund
    Mortgage Company, Ltd., WRT Financial Limited Partnership,
    Peachtree Residential Mortgage, L.P., Residential Prime Lending
    Limited Partnership, Team Home Lending, Ltd., Sutter Buttes
    Mortgage, L.P., Midwest Home Mortgage Ltd., Austin Mortgage,
    L.P., Capital Pacific Home Loans, L.P., Golden Oak Mortgage,
    L.P., Northwest Capital Mortgage, L.P., scFinance, L.P., Ad
    Astra Mortgage, Ltd. and Credit Suisse First Boston Mortgage
    Capital LLC.(80)                                  
|        |    |                         |  | (c) Amendment No. 3 and Joinder to Master Repurchase
    Agreement, dated as of November 30, 2005, by and among New
    Century Financial Corporation, NC Capital Corporation, New
    Century Credit Corporation, New Century Mortgage Corporation, NC
    Residual II Corporation, Home123 Corporation, New Century
    Mortgage Ventures, LLC, Loan Partners Mortgage, Ltd., Kingston
    Mortgage Company, Ltd., Compufund Mortgage Company, Ltd., WRT
    Financial Limited Partnership, Peachtree Residential Mortgage,
    L.P., Residential Prime Lending Limited Partnership, Team Home
    Lending, Ltd., Sutter Buttes Mortgage, L.P., Midwest Home
    Mortgage Ltd., Austin Mortgage, L.P., Capital Pacific Home
    Loans, L.P., Golden Oak Mortgage, L.P., Northwest Capital
    Mortgage, L.P., scFinance, L.P., Ad Astra Mortgage, Ltd. and
    Credit Suisse First Boston Mortgage Capital LLC. 

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|        |    |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | -- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        |    |                         |  | (d) Amendment No. 4 to Master Repurchase Agreement,
    dated as of December 30, 2005, by and among New Century
    Financial Corporation, NC Capital Corporation, New Century
    Credit Corporation, New Century Mortgage Corporation, NC Asset
    Holding, L.P., Home123 Corporation, New Century Mortgage
    Ventures, LLC, Loan Partners Mortgage, Ltd., Kingston Mortgage
    Company, Ltd., Compufund Mortgage Company, Ltd., WRT Financial
    Limited Partnership, Peachtree Residential Mortgage, L.P.,
    Residential Prime Lending Limited Partnership, Team Home
    Lending, Ltd., Sutter Buttes Mortgage, L.P., Midwest Home
    Mortgage Ltd., Austin Mortgage, L.P., Capital Pacific Home
    Loans, L.P., Golden Oak Mortgage, L.P., Northwest Capital
    Mortgage, L.P., scFinance, L.P., Ad Astra Mortgage, Ltd. and
    Credit Suisse First Boston Mortgage Capital LLC. 
|        | 10 | .88                     |  | Guaranty dated as of December 22, 2004, by New Century
    Financial Corporation in favor of Credit Suisse First Boston
    Mortgage Capital LLC.(61)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 10 | .89                     |  | Sublease dated as of December 22, 2004, between New Century
    Financial Corporation and ConAgra Foods, Inc.(61)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .90                     |  | Amended and Restated Master Repurchase Agreement, dated as of
    December 29, 2004, among New Century Mortgage Corporation,
    New Century Financial Corporation and Citigroup Global Markets
    Realty Corp.(62)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10 | .91                     |  | Guaranty Agreement, dated as of December 29, 2004, between
    New Century Financial Corporation and Citigroup Global Markets
    Realty Corp.(62)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 10 | .92                     |  | Amended and Restated Master Loan and Security Agreement, dated
    as of December 29, 2004, among New Century Mortgage
    Corporation, New Century Financial Corporation, NC Capital
    Corporation and Citigroup Global Markets Realty Corp.(62)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |    |                         |  | (a) Amendment Number One to the Amended and Restated
    Purchase and Sale Agreement, dated as of January 28, 2005,
    by and among NC Capital Corporation, New Century Credit
    Corporation and Citigroup Global Markets Realty Corp.(65)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .93                     |  | Guaranty Agreement, dated as of December 29, 2004, between
    New Century Financial Corporation and Citigroup Global Markets
    Realty Corp.(62)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 10 | .94                     |  | Guaranty, dated as of December 30, 2004, by New Century
    Financial Corporation in favor of Bear Stearns Mortgage Capital
    Corporation.(63)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10 | .95                     |  | Lease, dated as of February 8, 2005, between New Century
    Financial Corporation and Maguire Properties-Park Place, LLC.(66)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .96                     |  | Lease, dated as of February 8, 2005, between New Century
    Financial Corporation and Maguire Properties-3121 Michelson,
    LLC.(66)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .97                     |  | Master Loan and Security Agreement, dated as of March 1,
    2005, by and among NC Capital Corporation, New Century Credit
    Corporation, NC Residual II Corporation, New Century
    Mortgage Corporation, Morgan Stanley Bank, Morgan Stanley
    Mortgage Capital Inc. and Concord Minutemen Capital Company,
    LLC.(68)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |    |                         |  | (a) Amendment No. 1 to the Master Loan and Security
    Agreement, dated as of May 10, 2005, by and among NC
    Capital Corporation, New Century Credit Corporation, NC
    Residual II Corporation, New Century Mortgage Corporation,
    Morgan Stanley Bank, Morgan Stanley Mortgage Capital Inc. and
    Concord Minutemen Capital Company, LLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |    |                         |  | (b) Amendment No. 2 to the Master Loan and Security
    Agreement, dated as of August 22, 2005, by and among NC
    Capital Corporation, New Century Credit Corporation, NC
    Residual II Corporation, New Century Mortgage Corporation,
    Morgan Stanley Bank, Morgan Stanley Mortgage Capital Inc. and
    Concord Minutemen Capital Company, LLC.(77)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 10 | .98                     |  | Guaranty dated as of March 1, 2005, by New Century
    Financial Corporation in favor of Morgan Stanley Bank, Morgan
    Stanley Mortgage Capital Inc. and Concord Minutemen Capital
    Company, LLC.(68)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 10 | .99                     |  | Lease, dated as of May 26, 2005, between New Century
    Financial Corporation and Maguire Properties  3161
    Michelson, LLC.(73)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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|        |    |                         |  |                                                                                                                                                                                                                                                                                                                           
|------- | -- | ----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .100                    |  | Agreement, dated as of June 24, 2005, between New Century
    Financial Corporation and Patrick J. Flanagan.(74)*                                                                                                                                                                                                         
|        | 10 | .101                    |  | Letter Agreement, dated as of June 24, 2005, between New
    Century Financial Corporation and Patrick J. Flanagan.(74)*                                                                                                                                                                                                  
|        | 10 | .102                    |  | Performance-Based Award Agreement, dated as of June 24,
    2005, between New Century Financial Corporation and Patrick J.
    Flanagan.(74)*                                                                                                                                                                             
|        | 10 | .103                    |  | Dividend Equivalent Rights Award Agreement, dated as of
    June 24, 2005, between New Century Financial Corporation
    and Patrick J. Flanagan.(74)*                                                                                                                                                                    
|        | 10 | .104                    |  | Performance-Accelerated Restricted Stock Award Agreement, dated
    as of June 24, 2005, between New Century Financial
    Corporation and Patrick J. Flanagan.(74)*                                                                                                                                                      
|        | 10 | .105                    |  | Second Amended and Restated Master Loan and Security Agreement,
    dated as of June 27, 2005, among New Century Mortgage
    Corporation, NC Capital Corporation, New Century Financial
    Corporation and Citigroup Global Markets Realty Corp.(74)                                                                    
|        |    |                         |  | (a) Amendment No. 1 to Second Amended and Restated
    Master Loan and Security Agreement, dated as of
    December 28, 2005, among New Century Mortgage Corporation,
    NC Capital Corporation, New Century Financial Corporation and
    Citigroup Global Markets Realty Corp.                                        
|        |    |                         |  | (b) Amendment No. 2 to Second Amended and Restated
    Master Loan and Security Agreement, dated as of
    February 27, 2006, among New Century Mortgage Corporation,
    NC Capital Corporation, New Century Financial Corporation and
    Citigroup Global Markets Realty Corp.                                        
|        | 10 | .106                    |  | Sublease, dated as of June 23, 2005, between New Century
    Financial Corporation and the State of California, acting by and
    through its Director of General Services.(75)                                                                                                                                           
|        | 10 | .107                    |  | Letter Agreement, dated as of August 25, 2005, by and among
    NC Capital Corporation, New Century Credit Corporation, New
    Century Mortgage Corporation, NC Residual II Corporation
    and IXIS Real Estate Capital Inc.(78)                                                                                        
|        | 10 | .108                    |  | Amended and Restated Master Repurchase Agreement, dated as of
    August 18, 2005, by and among NC Capital Corporation, New
    Century Credit Corporation, NC Residual II Corporation and
    Bear Stearns Mortgage Capital Corporation.(78)                                                                             
|        |    |                         |  | (a) Amendment No. 1 to Amended and Restated Master
    Repurchase Agreement, dated as of October 27, 2005, by and
    among Bear Stearns Mortgage Capital Corporation, NC Capital
    Corporation, NC Residual II Corporation and New Century
    Credit Corporation.(84)                                                 
|        |    |                         |  | (b) Amendment No. 2 to Amended and Restated Master
    Repurchase Agreement, dated as of November 28, 2005, by and
    among Bear Stearns Mortgage Capital Corporation, NC Capital
    Corporation, NC Residual II Corporation, Home 123
    Corporation and New Century Credit Corporation.                             
|        | 10 | .109                    |  | Master Repurchase Agreement, dated as of August 26, 2005,
    by and among NC Capital Corporation, New Century Credit
    Corporation, NC Residual II Corporation and Concord
    Minutemen Capital Company, LLC.(78)                                                                                                     
|        | 10 | .110                    |  | Guaranty, dated as of August 18, 2005, by New Century
    Financial Corporation in favor of Bear Stearns Mortgage Capital
    Corporation.(78)                                                                                                                                                                            
|        | 10 | .111                    |  | Master Repurchase Agreement, dated as of September 2, 2005,
    by and among NC Capital Corporation, New Century Credit
    Corporation, Home123 Corporation, New Century Mortgage
    Corporation, DB Structured Products, Inc., Aspen Funding Corp.,
    Newport Funding Corp. and Gemini Securitization Corp., LLC.(80)
|        | 10 | .112                    |  | Guaranty Agreement, dated as of September 2, 2005, made by
    New Century Financial Corporation in favor of DB Structured
    Products, Inc., Aspen Funding Corp., Newport Funding Corp. and
    Gemini Securitization Corp., LLC.(80)                                                                                   
|        | 10 | .113                    |  | Master Repurchase Agreement, dated as of September 2, 2005,
    by and among NC Capital Corporation, New Century Credit
    Corporation, Home123 Corporation, New Century Mortgage
    Corporation, New Century Financial Corporation and Bank of
    America, N.A.(80)                                                   

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|        |    |                         |  |                                                                                                                                                                                                                                                                                                                                                                                        
|------- | -- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .114                    |  | Guaranty, dated as of September 2, 2005, made by New
    Century Financial Corporation in favor of Bank of America,
    N.A.(80)                                                                                                                                                                                                                                                       
|        | 10 | .115                    |  | Second Amended and Restated Master Repurchase Agreement, dated
    as of September 15, 2005, by and among New Century
    Financial Corporation, NC Capital Corporation, New Century
    Credit Corporation, New Century Mortgage Corporation, NC
    Residual II Corporation and Bank of America, N.A.(81)                                                                            
|        | 10 | .116                    |  | Third Amended and Restated Guaranty, dated as of
    September 15, 2005, by and between New Century Financial
    Corporation and Bank of America, N.A.(81)                                                                                                                                                                                                                            
|        | 10 | .117                    |  | Fourth Amended and Restated Master Repurchase Agreement, dated
    as of October 11, 2005, by and among New Century Mortgage
    Corporation, NC Capital Corporation, NC Residual II
    Corporation, New Century Credit Corporation, Home123 Corporation
    and IXIS Real Estate Capital Inc.(82)                                                                                    
|        | 10 | .118                    |  | Letter Agreement, dated as of September 9, 2005, by and
    among New Century Mortgage Corporation, NC Capital Corporation,
    NC Residual II Corporation, New Century Credit Corporation
    and IXIS Real Estate Capital Inc.(84)                                                                                                                                                   
|        | 10 | .119                    |  | Omnibus Amendment No. 1, dated as of October 13, 2005,
    among New Century Funding I, New Century Mortgage
    Corporation, NC Residual II Corporation, New Century
    Financial Corporation, NC Capital Corporation, Home123
    Corporation, New Century Credit Corporation, Deutsche Bank
    National Trust Company and UBS Real Estate Securities, Inc.(84)                    
|        | 10 | .120                    |  | Master Loan and Security Agreement, dated as of
    November 15, 2005, by and among New Century Mortgage
    Corporation, NC Capital Corporation, New Century Credit
    Corporation, NC Residual II Corporation and Morgan Stanley
    Mortgage Capital Inc.(85)                                                                                                                      
|        |    |                         |  | (a) Amendment No. 1 to Master Loan and Security
    Agreement, dated as of November 16, 2005, by and among New
    Century Mortgage Corporation, NC Capital Corporation, New
    Century Credit Corporation, NC Residual II Corporation and
    Morgan Stanley Mortgage Capital Inc.(85)                                                                                               
|        | 10 | .121                    |  | Guaranty, dated as of November 15, 2005, by New Century
    Financial Corporation in favor of Morgan Stanley Mortgage
    Capital Inc.(85)                                                                                                                                                                                                                                             
|        | 10 | .122                    |  | Master Repurchase Agreement, dated as of December 12, 2005,
    by and among New Century Mortgage Corporation, NC Capital
    Corporation, New Century Credit Corporation, Home123
    Corporation, NC Residual II Corporation, Morgan Stanley
    Bank and Morgan Stanley Mortgage Capital Inc.(86)                                                                                   
|        |    |                         |  | (a) Amendment No. 1 to Master Repurchase Agreement,
    dated as of February 23, 2006, by and among New Century
    Mortgage Corporation, NC Capital Corporation, New Century Credit
    Corporation, Home123 Corporation, NC Asset Holding, L.P. (as
    successor by conversion to NC Residual II
    Corporation), Morgan Stanley Bank and Morgan Stanley Mortgage
    Capital Inc.
|        | 10 | .123                    |  | Guaranty, dated as of December 12, 2005, by New Century
    Financial Corporation in favor of Morgan Stanley Bank and Morgan
    Stanley Mortgage Capital Inc.(86)                                                                                                                                                                                                                     
|        | 10 | .124                    |  | Employment Agreement, dated as of December 27, 2005,
    between New Century Financial Corporation and Patrick J.
    Flanagan.(87)*                                                                                                                                                                                                                                                   
|        | 10 | .125                    |  | Consulting Agreement, dated as of July 1, 2006, between New
    Century Financial Corporation and Patrick J. Flanagan.(87)*                                                                                                                                                                                                                                                            
|        | 10 | .126                    |  | Professional Services Agreement, dated as of January 25,
    2006, by and between New Century Financial Corporation and
    Accenture LLP.(89)                                                                                                                                                                                                                                         
|        | 10 | .127                    |  | Amended and Restated Mortgage Loan Purchase and Servicing
    Agreement, dated as of December 15, 2005, by and among Von
    Karman Funding Trust, New Century Mortgage Corporation, and New
    Century Financial Corporation.(90)                                                                                                                                                    
|        | 10 | .128                    |  | Amended and Restated Security Agreement, dated as of
    December 15, 2005, by and between Von Karman Funding Trust
    and Deutsche Bank Trust Company Americas.(90)                                                                                                                                                                                                                  
|        | 10 | .129                    |  | Schedule I to the Amended and Restated Security Agreement,
    dated as of December 15, 2005, by and between Von Karman
    Funding Trust and Deutsche Bank Trust Company Americas.(90)                                                                                                                                                                                                

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|        |    |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | -- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .130                    |  | Amended and Restated Depositary Agreement, dated as of
    December 15, 2005, by and between Von Karman Funding Trust
    and Deutsche Bank Trust Company Americas.(90)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10 | .131                    |  | Amended and Restated Custodial Agreement, dated as of
    December 15, 2005, by and among Von Karman Funding Trust,
    New Century Mortgage Corporation, Deutsche Bank Trust Company
    Americas and Deutsche Bank National Trust Company.(90)                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 10 | .132                    |  | Confirmation for Swap Transaction under the ISDA Master
    Agreement, dated as of December 15, 2005, between Von
    Karman Funding Trust and Calyon New York Branch.(90)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .133                    |  | Schedule to the ISDA Master Agreement, dated as of
    December 15, 2005, by and between Von Karman Funding Trust
    and Calyon New York Branch.(90)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .134                    |  | Confirmation for Swap Transaction under the ISDA Master
    Agreement, dated as of December 15, 2005, between Von
    Karman Funding Trust and BNP Paribas.(90)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10 | .135                    |  | Schedule to the ISDA Master Agreement, dated as of
    December 15, 2005, by and between Von Karman Funding Trust
    and BNP Paribas.(90)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .136                    |  | Amended and Restated Confirmation for Swap Transaction under the
    ISDA Master Agreement, dated as of December 15, 2005,
    between Von Karman Funding Trust and Citibank, N.A.(90)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 10 | .137                    |  | Amended and Restated Schedule to the ISDA Master Agreement,
    dated as of December 15, 2005, by and between Von Karman
    Funding Trust and Citibank, N.A.(90)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .138                    |  | Master Repurchase Agreement, dated as of February 15, 2006,
    by and among New Century Mortgage Corporation, New Century
    Warehouse Corporation, New Century Financial Corporation and
    Goldman Sachs Mortgage Company.(91)                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 10 | .139                    |  | Guaranty, dated as of February 15, 2006, by New Century
    Financial Corporation in favor of Goldman Sachs Mortgage
    Company.(91)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .140                    |  | Agreement, dated March 14, 2006, by and among New Century
    Financial Corporation, a Maryland corporation, and Greenlight
    Capital, L.P., a Delaware limited partnership, Greenlight
    Capital, L.L.C., a Delaware limited liability company,
    Greenlight Capital, Inc., a Delaware corporation, DME Advisors,
    L.P., a Delaware limited partnership, DME Advisors GP, L.L.C., a
    Delaware limited liability company, Greenlight Capital
    Qualified, L.P., a Delaware limited partnership, Greenlight
    Capital Offshore, Ltd., a British Virgin Islands international
    business company, and David Einhorn, an individual.(92)
|        | 21 | .1                      |  | List of Subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 23 | .1                      |  | Consent of KPMG LLP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 31 | .1                      |  | Certification of Robert K. Cole pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 31 | .2                      |  | Certification of Edward F. Gotschall pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 31 | .3                      |  | Certification of Brad A. Morrice pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 31 | .4                      |  | Certification of Patti M. Dodge pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 32 | .1                      |  | Certification of Robert K. Cole pursuant to 18 U.S.C.
    Section 1350 as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 32 | .2                      |  | Certification of Edward F. Gotschall pursuant to 18 U.S.C.
    Section 1350 as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 32 | .3                      |  | Certification of Brad A. Morrice pursuant to 18 U.S.C.
    Section 1350 as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 32 | .4                      |  | Certification of Patti M. Dodge pursuant to 18 U.S.C.
    Section 1350 as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      










|    |                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference from Amendment No. 1 to New
    Century TRS Holdings, Inc.s Registration Statement on
    Form S-1 as filed
    with the Securities and Exchange Commission on June 2, 1997.

109



---



##### Table of Contents





|    |                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Incorporated by reference from Amendment No. 2 to New
    Century TRS Holdings, Inc.s Registration Statement on
    Form S-1 as filed
    with the Securities and Exchange Commission on June 18,
    1997.
|   
|(3) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Quarterly Report on
    Form 10-Q as filed
    with the Securities and Exchange Commission on May 15, 2000.                             
|   
|(4) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Quarterly Report on
    Form 10-Q as filed
    with the Securities and Exchange Commission on November 15,
    1999.                    
|   
|(5) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Annual Report on
    Form 10-K for the
    fiscal year ended December 31, 2000 on file with the
    Securities and Exchange Commission. 
|   
|(6) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Quarterly Report on
    Form 10-Q as filed
    with the Securities and Exchange Commission on May 15, 2001.                             
|   
|(7) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Quarterly Report on
    Form 10-Q as filed
    with the Securities and Exchange Commission on July 27,
    2001.                        
|   
|(8) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Form Report S-2/ A as filed with the Securities and
    Exchange Commission on October 4, 2001.                                         
|   
|(9) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Annual Report on
    Form 10-K for the
    fiscal year ended December 31, 2001 on file with the
    Securities and Exchange Commission. 



|     |                                                                                                                                                                                         
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Form
    Report 8-K as
    filed with the Securities and Exchange Commission on
    April 8, 2002.                  
|    
|(11) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Form
    Report 8-K as
    filed with the Securities and Exchange Commission on
    June 6, 2002.                   
|    
|(12) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Quarterly Report on
    Form 10-Q as filed
    with the Securities and Exchange Commission on August 14,
    2002.  
|    
|(13) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Quarterly Report on
    Form 10-Q as filed
    with the Securities and Exchange Commission on November 14,
    2002.
|    
|(14) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Form
    Report 8-K as
    filed with the Securities and Exchange Commission on
    January 10, 2003.               
|    
|(15) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Quarterly Report on
    Form 10-Q, as
    filed with the Securities and Exchange Commission on
    May 15, 2003.    
|    
|(16) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K Report,
    as filed with the Securities and Exchange Commission on
    June 18, 2003.                 
|    
|(17) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Quarterly Report on
    Form 10-Q as filed
    with the Securities and Exchange Commission on August 13,
    2003.  
|    
|(18) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K Report as
    filed with the Securities and Exchange Commission on
    September 12, 2003.             
|    
|(19) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K Report as
    filed with the Securities and Exchange Commission on
    October 10, 2003.               
|    
|(20) | Incorporated by reference from New Century TRS Holdings,
    Inc.s Quarterly Report on
    Form 10-Q as filed
    with the Securities and Exchange Commission on November 14,
    2003.
|    
|(21) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K Report as
    filed with the Securities and Exchange Commission on
    December 11, 2003.              
|    
|(22) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K Report as
    filed with the Securities and Exchange Commission on
    December 22, 2003.              

110



---



##### Table of Contents





|     |                                                                                                                                                                                                                       
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(23) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K Report,
    as filed with the Securities and Exchange Commission on
    January 14, 2004.                                            
|    
|(24) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 10-K for the
    fiscal year ended December 31, 2003 on file with the
    Securities and Exchange Commission.                            
|    
|(25) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K Report,
    as filed with the Securities and Exchange Commission on
    April 7, 2004.                                               
|    
|(26) | Incorporated by reference from New Century Financial
    Corporations Registration Statement on
    Form S-3, as filed
    with the Securities and Exchange Commission on April 22,
    2004.                        
|    
|(27) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 10-Q for the
    quarter ended March 31, 2004, as filed with the Securities
    and Exchange Commission on May 10, 2004.                 
|    
|(28) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on May 20, 2004.                                                           
|    
|(29) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on June 1, 2004.                                                           
|    
|(30) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on June 17,
    2004.                                                      
|    
|(31) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on June 28,
    2004.                                                      
|    
|(32) | Incorporated by reference from Amendment No. 2 to New
    Century Financial Corporations Registration Statement on
    Form S-4, as filed
    with the Securities and Exchange Commission on June 28,
    2004.      
|    
|(33) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on July 2, 2004.                                                           
|    
|(34) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K/ A, as
    filed with the Securities and Exchange Commission on
    July 7, 2004.                                                    
|    
|(35) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on July 13,
    2004.                                                      
|    
|(36) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on July 20,
    2004.                                                      
|    
|(37) | Incorporated by reference from Amendment No. 3 to the New
    Century Financial Corporations Registration Statement on
    Form S-4, as filed
    with the Securities and Exchange Commission on July 27,
    2004.  
|    
|(38) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on August 2,
    2004.                                                     
|    
|(39) | Incorporated by reference from Amendment No. 4 to the New
    Century Financial Corporations Registration Statement on
    Form S-4, as filed
    with the Securities and Exchange Commission on August 6,
    2004. 
|    
|(40) | Incorporated by reference from New Century TRS Holdings,
    Inc.s 10-Q
    for the quarter ended June 30, 2004, as filed with the
    Securities and Exchange Commission on August 9, 2004.                         
|    
|(41) | Incorporated by reference from Amendment No. 5 to the New
    Century Financial Corporations Registration Statement on
    Form S-4, as filed
    with the Securities and Exchange Commission on August 11,
    2004.
|    
|(42) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on August 17,
    2004.                                                    

111



---



##### Table of Contents





|     |                                                                                                                                                                                                                                         
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(43) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on September 1,
    2004.                                                                    
|    
|(44) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on
    September 10, 2004.                                                                   
|    
|(45) | Incorporated by reference from Post-Effective Amendment
    No. 2 to New Century Financial Corporations
    Registration Statement on
    Form S-3, as filed
    with the Securities and Exchange Commission on
    September 15, 2004.
|    
|(46) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on
    September 15, 2004.                                                                   
|    
|(47) | Incorporated by reference from New Century TRS Holdings,
    Inc.s
    Form 8-K, as filed
    with the Securities and Exchange Commission on
    September 27, 2004.                                                                   
|    
|(48) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on October 1,
    2004.                                                                   
|    
|(49) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on October 5,
    2004.                                                                   
|    
|(50) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on October 6,
    2004.                                                                   
|    
|(51) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on October 8,
    2004.                                                                   
|    
|(52) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on October 14,
    2004.                                                                  
|    
|(53) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on October 26,
    2004.                                                                  
|    
|(54) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on November 1,
    2004.                                                                  
|    
|(55) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on November 4,
    2004.                                                                  
|    
|(56) | Incorporated by reference from New Century Financial
    Corporations Quarterly Report on
    Form 10-Q as filed
    with the Securities and Exchange Commission on November 9,
    2004.                                              
|    
|(57) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on November 16,
    2004.                                                                 
|    
|(58) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on December 2,
    2004.                                                                  
|    
|(59) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on December 7,
    2004.                                                                  
|    
|(60) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on December 22,
    2004.                                                                 
|    
|(61) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on December 29,
    2004.                                                                 
|    
|(62) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on January 5,
    2005.                                                                   
|    
|(63) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on January 7,
    2005.                                                                   

112



---



##### Table of Contents





|     |                                                                                                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(64) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on January 13,
    2005.                                        
|    
|(65) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on February 3,
    2005.                                        
|    
|(66) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on February 14,
    2005.                                       
|    
|(67) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on February 18,
    2005.                                       
|    
|(68) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on March 3,
    2005.                                           
|    
|(69) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on March 11,
    2005.                                          
|    
|(70) | Incorporated by reference from New Century Financial
    Corporations Annual Report on
    Form 10-K for the
    fiscal year ended December 31, 2004 on file with the
    Securities and Exchange Commission.
|    
|(71) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on April 4,
    2005.                                           
|    
|(72) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on June 21,
    2005.                                           
|    
|(73) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on June 23,
    2005.                                           
|    
|(74) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on June 30,
    2005.                                           
|    
|(75) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on July 21,
    2005.                                           
|    
|(76) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on August 8,
    2005.                                          
|    
|(77) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on August 25,
    2005.                                         
|    
|(78) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on August 31,
    2005.                                         
|    
|(79) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on September 6,
    2005.                                       
|    
|(80) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on September 9,
    2005.                                       
|    
|(81) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on
    September 20, 2005.                                      
|    
|(82) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on October 17,
    2005.                                        
|    
|(83) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on October 31,
    2005.                                        
|    
|(84) | Incorporated by reference from New Century Financial
    Corporations Quarterly Report on
    Form 10-Q as filed
    with the Securities and Exchange Commission on November 9,
    2005.                    

113



---



##### Table of Contents





|     |                                                                                                                                                                        
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(85) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on November 18,
    2005.
|    
|(86) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on December 16,
    2005.
|    
|(87) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on December 30,
    2005.
|    
|(88) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on January 20,
    2006. 
|    
|(89) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on January 31,
    2006. 
|    
|(90) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on February 3,
    2006. 
|    
|(91) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on February 17,
    2006.
|    
|(92) | Incorporated by reference from New Century Financial
    Corporations
    Form 8-K, as filed
    with the Securities and Exchange Commission on March 15,
    2006.   

114



---



##### Table of Contents



SIGNATURES






| |                                  
| | ---------------------------------
| | NEW CENTURY FINANCIAL CORPORATION



| |     |                   
| | --- | ------------------
| | By: | /s/ Robert K. Cole

| |                                     
| | ------------------------------------
| |                                     
| | Robert K. Cole                      
| | Chairman and Chief Executive Officer
|
| | Date: March 16, 2006                

attorneys-in 10-K, attorneys-in




|                                                 |  |                                                                                                       |  |                |  | 
|------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                        |  | Title                                                                                                 |  | Date          
|                                                 |  |                                                                                                       |  |               
|                                                
|/s/ Robert K. ColeRobert K. Cole                 |  | Chairman of the Board and Chief Executive Officer
    (Principal Executive Officer)                   |  | March 16, 2006
|                                                
|/s/ Patti M. DodgePatti M. Dodge                 |  | Executive Vice President and Chief Financial Officer
    (Principal Financial and Accounting Officer) |  | March 16, 2006
|                                                
|/s/ Brad A. MorriceBrad A. Morrice               |  | Vice Chairman, President and Chief Operating Officer                                                  |  | March 16, 2006
|                                                
|/s/ Edward F. GotschallEdward F. Gotschall       |  | Vice Chairman  Finance                                                                               |  | March 16, 2006
|                                                
|/s/ Marilyn A.
    AlexanderMarilyn A. Alexander |  | Director                                                                                              |  | March 16, 2006
|                                                
|/s/ Harold A. BlackHarold A. Black               |  | Director                                                                                              |  | March 16, 2006
|                                                
|/s/ Fredric J. ForsterFredric J. Forster         |  | Director                                                                                              |  | March 16, 2006
|                                                
|/s/ Donald E. LangeDonald E. Lange               |  | Director                                                                                              |  | March 16, 2006

115



---



##### Table of Contents



|                                         |  |          |  |                |  | 
|---------------------------------------- |  | -------- |  | -------------- |  | 
|Signature                                |  | Title    |  | Date          
|                                         |  |          |  |               
|                                        
|/s/ William J. PopejoyWilliam J. Popejoy |  | Director |  | March 16, 2006
|                                        
|/s/ Michael M. SachsMichael M. Sachs     |  | Director |  | March 16, 2006
|                                        
|/s/ Richard A. ZonaRichard A. Zona       |  | Director |  | March 16, 2006

116



---



##### 










NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                                                                         |  |       |  | 
|------------------------------------------------------------------------------------------------------------------------ |  | ----- |  | 
|                                                                                                                         |  | Page  | 
|                                                                                                                         |  |       | 
|Managements Report on Internal
    Control Over Financial Reporting                                                     |  | F-2  
|Report of Independent Registered Public
    Accounting Firm                                                              |  | F-3  
|Report of Independent Registered Public
    Accounting Firm                                                              |  | F-5  
|Consolidated Balance Sheets as of
    December 31, 2005 and 2004                                                         |  | F-6  
|Consolidated Statements of Income for the
    years ended December 31, 2005, 2004, and 2003                              |  | F-7  
|Consolidated Statements of Comprehensive
    Income for the years ended December 31, 2005, 2004, and
    2003            |  | F-8  
|Consolidated Statements of Changes in
    Stockholders Equity for the years ended December 31,
    2005, 2004, and 2003 |  | F-9  
|Consolidated Statements of Cash Flows for
    the years ended December 31, 2005, 2004, and 2003                          |  | F- 10
|Notes to Consolidated Financial
    Statements                                                                           |  | F- 11
|EXHIBIT 10.14(b)                                                                                                        
|EXHIBIT 10.23(j)                                                                                                        
|EXHIBIT 10.23(l)                                                                                                        
|EXHIBIT 10.23(m)                                                                                                        
|EXHIBIT 10.23(n)                                                                                                        
|EXHIBIT 10.55(d)                                                                                                        
|EXHIBIT 10.55(e)                                                                                                        
|EXHIBIT 10.72(f)                                                                                                        
|EXHIBIT 10.72(h)                                                                                                        
|EXHIBIT 10.72(i)                                                                                                        
|EXHIBIT 10.72(j)                                                                                                        
|EXHIBIT 10.81(b)                                                                                                        
|EXHIBIT 10.81(c)                                                                                                        
|EXHIBIT 10.81(d)                                                                                                        
|EXHIBIT 10.81(e)                                                                                                        
|EXHIBIT 10.81(f)                                                                                                        
|EXHIBIT 10.81(g)                                                                                                        
|EXHIBIT 10.87(c)                                                                                                        
|EXHIBIT 10.87(d)                                                                                                        
|EXHIBIT 10.97(a)                                                                                                        
|EXHIBIT 10.105(a)                                                                                                       
|EXHIBIT 10.105(b)                                                                                                       
|EXHIBIT 10.108(b)                                                                                                       
|EXHIBIT 10.122(a)                                                                                                       
|EXHIBIT 21.1                                                                                                            
|EXHIBIT 23.1                                                                                                            
|EXHIBIT 31.1                                                                                                            
|EXHIBIT 31.2                                                                                                            
|EXHIBIT 31.3                                                                                                            
|EXHIBIT 31.4                                                                                                            
|EXHIBIT 32.1                                                                                                            
|EXHIBIT 32.2                                                                                                            
|EXHIBIT 32.3                                                                                                            
|EXHIBIT 32.4                                                                                                            



F-1



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES





MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING


13a-15(f)




Internal
Control  Integrated Framework






F-2



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Managements Report on Internal Control
Over Financial Reporting,












F-3



---



##### Table of Contents







| |             
| | ------------
| | /s/ KPMG LLP





F-4



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















| |             
| | ------------
| | /s/ KPMG LLP





F-5



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES





CONSOLIDATED BALANCE SHEETS


December 31, 2005 and 2004


|                                                                                                                                                                                                     |  |                               |            |   |      |  |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ---------- | - | ---- |  | ---------- | -
|                                                                                                                                                                                                     |  | 2005                          |            |   | 2004 | 
|                                                                                                                                                                                                     |  |                               |            |   |      | 
|                                                                                                                                                                                                     |  | (Dollars in thousands, except |           
|                                                                                                                                                                                                     |  | share amounts)                |           
|ASSETS                                                                                                                                                                                              
|Cash and cash equivalents                                                                                                                                                                            |  | $                             | 503,723    |   |      |  | 842,854    |  
|Restricted cash                                                                                                                                                                                      |  |                               | 726,697    |   |      |  | 454,035    |  
|Mortgage loans held for sale at lower of cost or market                                                                                                                                              |  |                               | 7,825,175  |   |      |  | 3,922,865  |  
|Mortgage loans held for investment, net of allowance of $198,131
    and $90,227, respectively                                                                                                       |  |                               | 16,143,865 |   |      |  | 13,195,324 |  
|Residual interests in securitizations                                                                                                                                                                |  |                               | 234,930    |   |      |  | 148,021    |  
|Mortgage servicing assets                                                                                                                                                                            |  |                               | 69,315     |   |      |  | 8,249      |  
|Accrued interest receivable                                                                                                                                                                          |  |                               | 101,945    |   |      |  | 66,208     |  
|Income taxes receivable                                                                                                                                                                              |  |                               | 36,000     |   |      |  | 129,871    |  
|Deferred income taxes                                                                                                                                                                                |  |                               | 44,823     |   |      |  | 50,969     |  
|Office property and equipment, net                                                                                                                                                                   |  |                               | 86,886     |   |      |  | 47,266     |  
|Goodwill                                                                                                                                                                                             |  |                               | 92,980     |   |      |  | 15,497     |  
|Prepaid expenses and other assets                                                                                                                                                                    |  |                               | 280,751    |   |      |  | 170,785    |  
|                                                                                                                                                                                                     |  |                               |            |   |      | 
|Total assets                                                                                                                                                                                         |  | $                             | 26,147,090 |   |      |  | 19,051,944 |  
|                                                                                                                                                                                                     |  |                               |            |   |      | 
|                                                                                                                                                                                                    
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                
|Credit facilities on mortgage loans held for sale                                                                                                                                                    |  | $                             | 7,439,685  |   |      |  | 3,704,268  |  
|Financing on mortgage loans held for investment, net                                                                                                                                                 |  |                               | 16,045,459 |   |      |  | 13,105,973 |  
|Accounts payable and accrued liabilities                                                                                                                                                             |  |                               | 508,163    |   |      |  | 320,108    |  
|Convertible senior notes, net                                                                                                                                                                        |  |                               | 4,943      |   |      |  | 5,392      |  
|Notes payable                                                                                                                                                                                        |  |                               | 39,140     |   |      |  | 37,638     |  
|                                                                                                                                                                                                     |  |                               |            |   |      | 
|Total liabilities                                                                                                                                                                                    |  |                               | 24,037,390 |   |      |  | 17,173,379 |  
|                                                                                                                                                                                                     |  |                               |            |   |      | 
|Commitments and contingencies                                                                                                                                                                        |  |                               |            |   |      |  |            |  
|Stockholders equity:                                                                                                                                                                                |  |                               |            |   |      |  |            |  
|Preferred stock, $0.01 par value. Authorized
    10,000,000 shares; issued and outstanding 4,500,000 and
    zero shares at December 31, 2005 and 2004, respectively                                 |  |                               | 45         |   |      |  |           |  
|Common stock, $0.01 par value. Authorized 300,000,000 at
    December 31, 2005 and 2004; issued and outstanding
    55,723,267 and 54,702,623 shares at December 31, 2005
    and 2004, respectively |  |                               | 557        |   |      |  | 547        |  
|Additional paid-in capital                                                                                                                                                                           |  |                               | 1,234,362  |   |      |  | 1,108,590  |  
|Accumulated other comprehensive income (loss)                                                                                                                                                        |  |                               | 61,045     |   |      |  | (4,700     | )
|Retained earnings                                                                                                                                                                                    |  |                               | 828,270    |   |      |  | 781,627    |  
|                                                                                                                                                                                                     |  |                               |            |   |      | 
|                                                                                                                                                                                                     |  |                               | 2,124,279  |   |      |  | 1,886,064  |  
|Deferred compensation costs                                                                                                                                                                          |  |                               | (14,579    | ) |      |  | (7,499     | )
|                                                                                                                                                                                                     |  |                               |            |   |      | 
|Total stockholders equity                                                                                                                                                                           |  |                               | 2,109,700  |   |      |  | 1,878,565  |  
|                                                                                                                                                                                                     |  |                               |            |   |      | 
|Total liabilities and stockholders equity                                                                                                                                                           |  | $                             | 26,147,090 |   |      |  | 19,051,944 |  
|                                                                                                                                                                                                     |  |                               |            |   |      | 



F-6



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF INCOME


|                                                           |                                                |                                               |            |         |         |  |            |         |         |  |            |         |         | 
|---------------------------------------------------------- | ---------------------------------------------- | --------------------------------------------- | ---------- | ------- | ------- |  | ---------- | ------- | ------- |  | ---------- | ------- | ------- | 
|                                                           |                                                | Years ended December 31,                      |           
|                                                           |                                                |                                               |           
|                                                           |                                                | 2005                                          |            |         | 2004    |  |            | 2003    |        
|                                                           |                                                |                                               |            |         |         |  |            |         |        
|                                                           |                                                | (Dollars in thousands, except per share and   |           
|                                                           |                                                | share amounts)                                |           
|Interest income                                            |                                                | $                                             | 1,759,567  |         |         |  | 898,647    |         |         |  | 353,691    |        
|Interest expense                                           |                                                |                                               | (988,123   | )       |         |  | (367,094   | )       |         |  | (117,575   | )      
|                                                           |                                                |                                               |            |         |         |  |            |         |        
|                                                           | Net interest income                            |                                               |            | 771,444 |         |  |            | 531,553 |         |  |            | 236,116 |        
|Provision for losses on mortgage loans held for investment |                                                |                                               | (140,233   | )       |         |  | (70,250    | )       |         |  | (26,304    | )      
|                                                           |                                                |                                               |            |         |         |  |            |         |        
|                                                           | Net interest income after provision for losses |                                               |            | 631,211 |         |  |            | 461,303 |         |  |            | 209,812 |        
|Other operating income:                                    |                                                |                                               |            |         |         |  |            |         |         |  |            |        
|                                                           | Gain on sale of mortgage loans                 |                                               |            | 622,617 |         |  |            | 800,609 |         |  |            | 611,136 |        
|                                                           | Servicing income                               |                                               |            | 38,514  |         |  |            | 28,896  |         |  |            | 11,139  |        
|                                                           | Other income                                   |                                               |            | 22,400  |         |  |            | 4,415   |         |  |            |        |        
|                                                           |                                                |                                               |            |         |         |  |            |         |        
|                                                           |                                                | Total other operating income                  |            |         | 683,531 |  |            |         | 833,920 |  |            |         | 622,275 | 
|                                                           |                                                |                                               |            |         |         |  |            |         |        
|Other operating expenses:                                  |                                                |                                               |            |         |         |  |            |         |         |  |            |        
|                                                           | Personnel                                      |                                               |            | 551,780 |         |  |            | 419,736 |         |  |            | 248,796 |        
|                                                           | General and administrative                     |                                               |            | 193,052 |         |  |            | 146,417 |         |  |            | 105,301 |        
|                                                           | Advertising and promotion                      |                                               |            | 83,738  |         |  |            | 65,503  |         |  |            | 26,118  |        
|                                                           | Professional services                          |                                               |            | 42,752  |         |  |            | 27,669  |         |  |            | 28,620  |        
|                                                           | Inducement expense-convertible senior notes    |                                               |            | 43      |         |  |            | 24,757  |         |  |            |        |        
|                                                           |                                                |                                               |            |         |         |  |            |         |        
|                                                           |                                                | Total operating expenses                      |            |         | 871,365 |  |            |         | 684,082 |  |            |         | 408,835 | 
|                                                           |                                                |                                               |            |         |         |  |            |         |        
|                                                           |                                                | Earnings before income taxes                  |            |         | 443,377 |  |            |         | 611,141 |  |            |         | 423,252 | 
|                                                           | Income taxes                                   |                                               |            | 26,834  |         |  |            | 235,570 |         |  |            | 177,769 |        
|                                                           |                                                |                                               |            |         |         |  |            |         |        
|                                                           |                                                | Net earnings                                  |            |         | 416,543 |  |            |         | 375,571 |  |            |         | 245,483 | 
|Dividends on preferred stock                               |                                                |                                               | 5,418      |         |         |  |           |         |         |  |           |        
|                                                           |                                                |                                               |            |         |         |  |            |         |        
|                                                           |                                                | Net earnings available to common stockholders |            | $       | 411,125 |  |            |         | 375,571 |  |            |         | 245,483 | 
|                                                           |                                                |                                               |            |         |         |  |            |         |        
|Basic earnings per share                                   |                                                | $                                             | 7.42       |         |         |  | 10.20      |         |         |  | 7.26       |        
|Diluted earnings per share                                 |                                                | $                                             | 7.17       |         |         |  | 8.29       |         |         |  | 6.32       |        
|Basic weighted average shares outstanding                  |                                                |                                               | 55,430,666 |         |         |  | 36,807,298 |         |         |  | 33,835,127 |        
|Diluted weighted average shares outstanding                |                                                |                                               | 57,323,991 |         |         |  | 46,214,837 |         |         |  | 39,234,833 |        



F-7



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


|                                                                                                                |                      |                          |         |         |      |  |         |         |  |  |         |         | 
|--------------------------------------------------------------------------------------------------------------- | -------------------- | ------------------------ | ------- | ------- | ---- |  | ------- | ------- |  |  | ------- | ------- | 
|                                                                                                                |                      | Years ended December 31, |        
|                                                                                                                |                      |                          |        
|                                                                                                                |                      | 2005                     |         |         | 2004 |  |         | 2003    | 
|                                                                                                                |                      |                          |         |         |      |  |         |         | 
|                                                                                                                |                      | (In thousands)           |        
|Net earnings                                                                                                    |                      | $                        | 416,543 |         |      |  | 375,571 |         |  |  | 245,483 |        
|Net unrealized gains (losses) on derivative instruments
    designated as hedges                                |                      |                          | 55,489  |         |      |  | (5,743  | )       |  |  | (3,003  | )      
|Reclassification adjustment into earnings for realized losses on
    and amortization of derivative instruments |                      |                          | 11,524  |         |      |  | 1,808   |         |  |  |        |        
|Tax effect                                                                                                      |                      |                          | (1,268  | )       |      |  | 977     |         |  |  | 1,261   |        
|                                                                                                                |                      |                          |         |         |      |  |         |         | 
|                                                                                                                | Comprehensive income |                          | $       | 482,288 |      |  |         | 372,613 |  |  |         | 243,741 | 
|                                                                                                                |                      |                          |         |         |      |  |         |         | 



F-8



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
EQUITY


|                                                                 |  |                                              |       |             |           |  |    |             |  |  |        |   |  |            |     |   |               |  |           |          |  |  |              |   |  |       |          |   |  |  |         |   |  |  |           |  
|---------------------------------------------------------------- |  | -------------------------------------------- | ----- | ----------- | --------- |  | -- | ----------- |  |  | ------ | - |  | ---------- | --- | - | ------------- |  | --------- | -------- |  |  | ------------ | - |  | ----- | -------- | - |  |  | ------- | - |  |  | --------- | -
|                                                                 |  | Years ended December 31, 2005, 2004 and 2003 |      
|                                                                 |  |                                              |      
|                                                                 |  |                                              |       | Accumulated |           |  |   
|                                                                 |  |                                              |       | Other       |           |  |   
|                                                                 |  | Preferred                                    |       |             | Preferred |  |    | Common      |  |  | Common |   |  | Additional |     |   | Comprehensive |  |           |         
|                                                                 |  | Shares                                       |       |             | Stock     |  |    | Shares      |  |  | Stock  |   |  | Paid-In    |     |   | Income        |  |           | Retained |  |  | Deferred     |   |  |      
|                                                                 |  | Outstanding                                  |       |             | Amount    |  |    | Outstanding |  |  | Amount |   |  | Capital    |     |   | (Loss)        |  |           | Earnings |  |  | Compensation |   |  | Total |         
|                                                                 |  |                                              |       |             |           |  |    |             |  |  |        |   |  |            |     |   |               |  |           |          |  |  |              |   |  |       |         
|                                                                 |  | (In thousands)                               |      
|Balance at December 31, 2002                                     |  |                                              |      |             |           |  |   |             |  |  | 23,539 |   |  |            | 235 |   |               |  | 110,906   |          |  |  |             |   |  |       | 279,124  |   |  |  | (3,715  | ) |  |  | 386,550   |  
|Proceeds from issuance of common stock                           |  |                                              |      |             |           |  |   |             |  |  | 786    |   |  |            | 8   |   |               |  | 10,587    |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 10,595    |  
|Stock split                                                      |  |                                              |      |             |           |  |   |             |  |  | 11,565 |   |  |            | 116 |   |               |  | (116      | )        |  |  |             |   |  |       |         |   |  |  |        |   |  |  |          |  
|Proceeds from sale of warrants                                   |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  | 24,389    |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 24,389    |  
|Purchase of call options                                         |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  | (46,819   | )        |  |  |             |   |  |       |         |   |  |  |        |   |  |  | (46,819   | )
|Issuance of restricted stock                                     |  |                                              |      |             |           |  |   |             |  |  | 396    |   |  |            | 4   |   |               |  | 5,015     |          |  |  |             |   |  |       |         |   |  |  | (5,019  | ) |  |  |          |  
|Repurchases and cancellation of treasury stock                   |  |                                              |      |             |           |  |   |             |  |  | (2,526 | ) |  |            | (25 | ) |               |  | (71,937   | )        |  |  |             |   |  |       |         |   |  |  |        |   |  |  | (71,962   | )
|Amortization of deferred compensation                            |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  |             |   |  |       |         |   |  |  | 3,326   |   |  |  | 3,326     |  
|Net earnings                                                     |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  |             |   |  |       | 245,483  |   |  |  |        |   |  |  | 245,483   |  
|Tax benefit related to call options purchased                    |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  | 1,500     |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 1,500     |  
|Tax benefit from non-qualified stock options                     |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  | 5,300     |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 5,300     |  
|Other comprehensive loss, net of tax                             |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  | (1,742       | ) |  |       |         |   |  |  |        |   |  |  | (1,742    | )
|Dividends declared on common stock, $0.43 per share              |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  |             |   |  |       | (14,609  | ) |  |  |        |   |  |  | (14,609   | )
|                                                                 |  |                                              |       |             |           |  |    |             |  |  |        |   |  |            |     |   |               |  |           |          |  |  |              |   |  |       |         
|Balance at December 31, 2003                                     |  |                                              |      |             |           |  |   |             |  |  | 33,760 |   |  |            | 338 |   |               |  | 38,825    |          |  |  | (1,742       | ) |  |       | 509,998  |   |  |  | (5,408  | ) |  |  | 542,011   |  
|Proceeds from issuance of common stock                           |  |                                              |      |             |           |  |   |             |  |  | 941    |   |  |            | 10  |   |               |  | 18,158    |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 18,168    |  
|Issuance of common stock in connection with conversion to a REIT |  |                                              |      |             |           |  |   |             |  |  | 14,137 |   |  |            | 141 |   |               |  | 770,044   |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 770,185   |  
|Repurchases and cancellation of treasury stock                   |  |                                              |      |             |           |  |   |             |  |  | (375   | ) |  |            | (4  | ) |               |  | 4         |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  |          |  
|Cancelled shares related to stock compensation                   |  |                                              |      |             |           |  |   |             |  |  | (133   | ) |  |            | (1  | ) |               |  | (6,374    | )        |  |  |             |   |  |       |         |   |  |  |        |   |  |  | (6,375    | )
|Conversion of convertible senior notes                           |  |                                              |      |             |           |  |   |             |  |  | 6,236  |   |  |            | 62  |   |               |  | 227,955   |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 228,017   |  
|Call options sold                                                |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  | 29,777    |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 29,777    |  
|Issuance of restricted stock, net                                |  |                                              |      |             |           |  |   |             |  |  | 137    |   |  |            | 1   |   |               |  | 7,034     |          |  |  |             |   |  |       |         |   |  |  | (7,035  | ) |  |  |          |  
|Amortization of deferred compensation                            |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  |             |   |  |       |         |   |  |  | 4,944   |   |  |  | 4,944     |  
|Net earnings                                                     |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  |             |   |  |       | 375,571  |   |  |  |        |   |  |  | 375,571   |  
|Tax benefit related to call options sold                         |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  | 14,580    |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 14,580    |  
|Tax benefit from non-qualified stock options                     |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  | 8,587     |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 8,587     |  
|Other comprehensive loss, net of tax                             |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  | (2,958       | ) |  |       |         |   |  |  |        |   |  |  | (2,958    | )
|Dividends declared on common stock, $2.13 per share              |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  |             |   |  |       | (103,942 | ) |  |  |        |   |  |  | (103,942  | )
|                                                                 |  |                                              |       |             |           |  |    |             |  |  |        |   |  |            |     |   |               |  |           |          |  |  |              |   |  |       |         
|Balance at December 31, 2004                                     |  |                                              |      |             |           |  |   |             |  |  | 54,703 |   |  |            | 547 |   |               |  | 1,108,590 |          |  |  | (4,700       | ) |  |       | 781,627  |   |  |  | (7,499  | ) |  |  | 1,878,565 |  
|Proceeds from issuance of common stock                           |  |                                              |      |             |           |  |   |             |  |  | 1,880  |   |  |            | 19  |   |               |  | 26,440    |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 26,459    |  
|Proceeds from issuance of preferred stock                        |  |                                              | 4,500 |             |           |  | 45 |             |  |  |       |   |  |            |    |   |               |  | 108,619   |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 108,664   |  
|Repurchases and cancellation of treasury stock                   |  |                                              |      |             |           |  |   |             |  |  | (879   | ) |  |            | (9  | ) |               |  | (29,465   | )        |  |  |             |   |  |       |         |   |  |  |        |   |  |  | (29,474   | )
|Cancelled shares related to stock compensation                   |  |                                              |      |             |           |  |   |             |  |  | (244   | ) |  |            | (2  | ) |               |  | (12,414   | )        |  |  |             |   |  |       |         |   |  |  |        |   |  |  | (12,416   | )
|Conversion of convertible senior notes                           |  |                                              |      |             |           |  |   |             |  |  | 15     |   |  |            |    |   |               |  | 500       |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 500       |  
|Issuance of restricted stock, net                                |  |                                              |      |             |           |  |   |             |  |  | 248    |   |  |            | 2   |   |               |  | 14,493    |          |  |  |             |   |  |       |         |   |  |  | (14,495 | ) |  |  |          |  
|Amortization of deferred compensation                            |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  |             |   |  |       |         |   |  |  | 7,415   |   |  |  | 7,415     |  
|Net earnings                                                     |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  |             |   |  |       | 416,543  |   |  |  |        |   |  |  | 416,543   |  
|Tax benefit from non-qualified stock options                     |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  | 17,599    |          |  |  |             |   |  |       |         |   |  |  |        |   |  |  | 17,599    |  
|Other comprehensive income, net of tax                           |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  | 65,745       |   |  |       |         |   |  |  |        |   |  |  | 65,745    |  
|Dividends declared on common stock, $6.50 per share              |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  |             |   |  |       | (364,482 | ) |  |  |        |   |  |  | (364,482  | )
|Dividends declared on preferred stock, $1.20 per share           |  |                                              |      |             |           |  |   |             |  |  |       |   |  |            |    |   |               |  |          |          |  |  |             |   |  |       | (5,418   | ) |  |  |        |   |  |  | (5,418    | )
|                                                                 |  |                                              |       |             |           |  |    |             |  |  |        |   |  |            |     |   |               |  |           |          |  |  |              |   |  |       |         
|Balance at December 31, 2005                                     |  |                                              | 4,500 |             |           |  | 45 |             |  |  | 55,723 |   |  |            | 557 |   |               |  | 1,234,362 |          |  |  | 61,045       |   |  |       | 828,270  |   |  |  | (14,579 | ) |  |  | 2,109,700 |  
|                                                                 |  |                                              |       |             |           |  |    |             |  |  |        |   |  |            |     |   |               |  |           |          |  |  |              |   |  |       |         



F-9



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                        |                                                                                    |                          |            |             |      |  |            |             |   |  |            |             |  
|--------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ------------------------ | ---------- | ----------- | ---- |  | ---------- | ----------- | - |  | ---------- | ----------- | -
|                                                                                        |                                                                                    | Years ended December 31, |           
|                                                                                        |                                                                                    |                          |           
|                                                                                        |                                                                                    | 2005                     |            |             | 2004 |  |            | 2003        |  
|                                                                                        |                                                                                    |                          |            |             |      |  |            |             |  
|                                                                                        |                                                                                    | (In thousands)           |           
|Cash flows from operating activities:                                                   |                                                                                    |                          |            |             |      |  |            |             |   |  |            |            
|                                                                                        | Net earnings                                                                       |                          | $          | 416,543     |      |  |            | 375,571     |   |  |            | 245,483     |  
|Adjustments to reconcile net earnings to net cash provided by
    operating activities: |                                                                                    |                          |            |             |      |  |            |             |   |  |            |            
|                                                                                        | Depreciation and amortization of office property and equipment                     |                          |            | 23,016      |      |  |            | 15,246      |   |  |            | 10,652      |  
|                                                                                        | Amortization of deferred compensation                                              |                          |            | 7,415       |      |  |            | 4,944       |   |  |            | 3,326       |  
|                                                                                        | Other amortization                                                                 |                          |            | 101,528     |      |  |            | 53,932      |   |  |            | 9,927       |  
|                                                                                        | Decrease (increase) in deferred income taxes                                       |                          |            | 4,877       |      |  |            | 42,959      |   |  |            | (98,347     | )
|                                                                                        | Decrease (increase) in income taxes receivable                                     |                          |            | 93,871      |      |  |            | (129,871    | ) |  |            |            |  
|                                                                                        | NIR discount                                                                       |                          |            | 109,565     |      |  |            |            |   |  |            |            |  
|                                                                                        | Initial deposits to over-collateralization accounts                                |                          |            | (207,031    | )    |  |            |            |   |  |            |            |  
|                                                                                        | Cash flows received from residual interests                                        |                          |            | 17,544      |      |  |            | 41,453      |   |  |            | 72,331      |  
|                                                                                        | Accretion of Net Interest Receivables, or NIR                                    |                          |            | (16,969     | )    |  |            | (17,673     | ) |  |            | (24,228     | )
|                                                                                        | Servicing gains                                                                    |                          |            | (95,120     | )    |  |            | (7,923      | ) |  |            | (7,777      | )
|                                                                                        | Fair value adjustment of residual securities                                       |                          |            | 9,983       |      |  |            | 7,697       |   |  |            | 19,363      |  
|                                                                                        | Provision for losses on mortgage loans held for investment                         |                          |            | 140,233     |      |  |            | 70,250      |   |  |            | 26,304      |  
|                                                                                        | Provision for repurchase losses                                                    |                          |            | 17,524      |      |  |            | 2,736       |   |  |            | 5,868       |  
|                                                                                        | Mortgage loans originated or acquired for sale                                     |                          |            | (45,917,934 | )    |  |            | (31,292,846 | ) |  |            | (22,458,565 | )
|                                                                                        | Mortgage loan sales, net                                                           |                          |            | 41,756,982  |      |  |            | 30,329,278  |   |  |            | 20,835,105  |  
|                                                                                        | Principal payments on mortgage loans held for sale                                 |                          |            | 275,551     |      |  |            | 461,208     |   |  |            | 115,777     |  
|                                                                                        | Increase in credit facilities on mortgage loans held for sale                      |                          |            | 3,735,417   |      |  |            | 392,431     |   |  |            | 1,426,339   |  
|                                                                                        | Tax benefit from non-qualified stock options                                       |                          |            | 17,599      |      |  |            | 8,587       |   |  |            | 5,300       |  
|                                                                                        | Net change in other assets and liabilities                                         |                          |            | 58,876      |      |  |            | (68,569     | ) |  |            | 16,146      |  
|                                                                                        |                                                                                    |                          |            |             |      |  |            |             |  
|Net cash provided by operating activities                                               |                                                                                    |                          | 549,470    |             |      |  | 289,410    |             |   |  | 203,004    |            
|                                                                                        |                                                                                    |                          |            |             |      |  |            |             |  
|Cash flows from investing activities:                                                   |                                                                                    |                          |            |             |      |  |            |             |   |  |            |            
|                                                                                        | Mortgage loans originated or acquired for investment, net                          |                          |            | (10,273,642 | )    |  |            | (11,020,277 | ) |  |            | (4,996,609  | )
|                                                                                        | Principal payments on mortgage loans held for investment                           |                          |            | 7,122,058   |      |  |            | 2,448,198   |   |  |            | 219,170     |  
|                                                                                        | Sale of mortgage servicing rights                                                  |                          |            | 24,877      |      |  |            | 15,184      |   |  |            | 15,568      |  
|                                                                                        | Purchases of office property and equipment                                         |                          |            | (60,530     | )    |  |            | (28,977     | ) |  |            | (22,574     | )
|                                                                                        | Acquisition of net assets                                                          |                          |            | (80,573     | )    |  |            | (3,991      | ) |  |            |            |  
|                                                                                        |                                                                                    |                          |            |             |      |  |            |             |  
|Net cash used in investing activities                                                   |                                                                                    |                          | (3,267,810 | )           |      |  | (8,589,863 | )           |   |  | (4,784,445 | )          
|                                                                                        |                                                                                    |                          |            |             |      |  |            |             |  
|Cash flows from financing activities:                                                   |                                                                                    |                          |            |             |      |  |            |             |   |  |            |            
|                                                                                        | Proceeds from issuance of financing on mortgage loans held for
    investment, net |                          |            | 9,790,831   |      |  |            | 10,569,666  |   |  |            | 4,918,204   |  
|                                                                                        | Repayments of financing on mortgage loans held for investment                      |                          |            | (6,875,813  | )    |  |            | (2,171,588  | ) |  |            | (235,487    | )
|                                                                                        | Net proceeds from issuance of stock                                                |                          |            | 26,459      |      |  |            | 788,353     |   |  |            | 10,595      |  
|                                                                                        | Proceeds from issuance of preferred stock                                          |                          |            | 108,664     |      |  |            |            |   |  |            |            |  
|                                                                                        | Convertible debt proceeds, net                                                     |                          |            |            |      |  |            |            |   |  |            | 204,315     |  
|                                                                                        | Increases in restricted cash                                                       |                          |            | (272,662    | )    |  |            | (337,152    | ) |  |            | (110,628    | )
|                                                                                        | Call options sold                                                                  |                          |            |            |      |  |            | 29,777      |   |  |            |            |  
|                                                                                        | Proceeds from sale of warrants                                                     |                          |            |            |      |  |            |            |   |  |            | 24,389      |  
|                                                                                        | Purchase of call options                                                           |                          |            |            |      |  |            |            |   |  |            | (46,819     | )
|                                                                                        | Increases in notes payable, net                                                    |                          |            | 1,502       |      |  |            | 18,661      |   |  |            | 2,278       |  
|                                                                                        | Payments of dividends on preferred stock                                           |                          |            | (5,418      | )    |  |            |            |   |  |            |            |  
|                                                                                        | Payments of dividends on common stock                                              |                          |            | (352,464    | )    |  |            | (26,633     | ) |  |            | (11,515     | )
|                                                                                        | Purchase of common stock                                                           |                          |            | (41,890     | )    |  |            | (6,375      | ) |  |            | (71,962     | )
|                                                                                        |                                                                                    |                          |            |             |      |  |            |             |  
|Net cash provided by financing activities                                               |                                                                                    |                          | 2,379,209  |             |      |  | 8,864,709  |             |   |  | 4,683,370  |            
|                                                                                        |                                                                                    |                          |            |             |      |  |            |             |  
|                                                                                        | Net increase (decrease) in cash and cash equivalents                               |                          |            | (339,131    | )    |  |            | 564,256     |   |  |            | 101,929     |  
|                                                                                        | Cash and cash equivalents, beginning of year                                       |                          |            | 842,854     |      |  |            | 278,598     |   |  |            | 176,669     |  
|                                                                                        |                                                                                    |                          |            |             |      |  |            |             |  
|Cash and cash equivalents, end of year                                                  |                                                                                    | $                        | 503,723    |             |      |  | 842,854    |             |   |  | 278,598    |            
|                                                                                        |                                                                                    |                          |            |             |      |  |            |             |  
|Supplemental cash flow disclosure:                                                      |                                                                                    |                          |            |             |      |  |            |             |   |  |            |            
|Interest paid                                                                           |                                                                                    | $                        | 967,335    |             |      |  | 349,227    |             |   |  | 114,839    |            
|Income taxes paid                                                                       |                                                                                    |                          | 25,382     |             |      |  | 373,707    |             |   |  | 252,395    |            
|Supplemental noncash financing activity:                                                |                                                                                    |                          |            |             |      |  |            |             |   |  |            |            
|Restricted stock issued                                                                 |                                                                                    | $                        | 18,389     |             |      |  | 7,249      |             |   |  | 5,019      |            
|Restricted stock cancelled                                                              |                                                                                    |                          | 3,894      |             |      |  | 214        |             |   |  |           |            
|Repurchased common stock cancelled                                                      |                                                                                    |                          | 29,474     |             |      |  | 14,093     |             |   |  | 62,238     |            
|Stock dividend                                                                          |                                                                                    |                          |           |             |      |  |           |             |   |  | 116        |            
|Conversion of convertible debt                                                          |                                                                                    |                          | 500        |             |      |  | 204,500    |             |   |  |           |            
|Accrued dividends on common and preferred stock                                         |                                                                                    |                          | 94,557     |             |      |  | 82,539     |             |   |  | 5,230      |            
|Fixed assets acquired through financing transactions                                    |                                                                                    |                          | 23,097     |             |      |  | 33,569     |             |   |  |           |            



F-10



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2005 and 2004




|    |                                           
|--- | ------------------------------------------
|(1) | Summary of Significant Accounting Policies



|    |             
|--- | ------------
|(a) | Organization









F-11



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|    |                            
|--- | ---------------------------
|(b) | Principles of Consolidation





|    |                          
|--- | -------------------------
|(c) | Cash and Cash Equivalents



F-12



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                
|--- | ---------------
|(d) | Restricted Cash





|    |                      
|--- | ---------------------
|(e) | Loan Origination Fees





|    |                
|--- | ---------------
|(f) | Interest Income





|    |                             
|--- | ----------------------------
|(g) | Mortgage Loans Held for Sale





|    |                                   
|--- | ----------------------------------
|(h) | Mortgage Loans Held for Investment





|    |                                                               
|--- | --------------------------------------------------------------
|(i) | Allowance for Losses on Mortgage Loans Held for
    Investment



F-13



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                                      
|--- | -------------------------------------
|(j) | Residual Interests in Securitizations





(6-month, 1-year, 2-year, 3-year, 5-year






F-14



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|    |                                         
|--- | ----------------------------------------
|(k) | Securitizations Structured as Financings







|    |                       
|--- | ----------------------
|(l) | Gain on Sales of Loans





F-15



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                
|--- | -------------------------------
|(m) | Allowance for Repurchase Losses





|    |                              
|--- | -----------------------------
|(n) | Office Property and Equipment





|    |         
|--- | --------
|(o) | Goodwill









F-16



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                    |  |   |        | 
|--------------------------------------------------- |  | - | ------ | 
|Balance at January 1, 2003                          |  | $ | 12,717 | 
|Acquisition of Home123 brand assets                 |  |   | 2,780  | 
|                                                    |  |   |       
|Balance at December 31, 2004                        |  |   | 15,497 | 
|Acquisition of origination platform of RBC Mortgage |  |   | 77,483 | 
|                                                    |  |   |       
|Balance at December 31, 2005                        |  | $ | 92,980 | 
|                                                    |  |   |       



|    |                                 
|--- | --------------------------------
|(p) | Financial Statement Presentation



|                    |  |      |           |  |      |  |           | 
|------------------- |  | ---- | --------- |  | ---- |  | --------- | 
|                    |  | 2005 |           |  | 2004 | 
|                    |  |      |           |  |      | 
|Current assets      |  | $    | 8,880,004 |  |      |  | 5,157,418 | 
|Current liabilities |  |      | 7,968,847 |  |      |  | 4,041,345 | 
|                    |  |      |           |  |      | 
|Net working capital |  | $    | 911,157   |  |      |  | 1,116,073 | 
|                    |  |      |           |  |      | 





|    |             
|--- | ------------
|(q) | Income Taxes







|    |                          
|--- | -------------------------
|(r) | Mortgage Servicing Assets



F-17



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                         
|--- | ------------------------
|(s) | Stock-Based Compensation





|                               |  |      |       |   |      |  |       |      |  |  |      |  
|------------------------------ |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ---- | -
|                               |  | 2005 |       |   | 2004 |  |       | 2003 | 
|                               |  |      |       |   |      |  |       |      | 
|Fair value                     |  | $    | 9.20  |   |      |  | 19.63 |      |  |  | 9.89 |  
|Expected life (years)          |  |      | 4.5   |   |      |  | 4.5   |      |  |  | 4.5  |  
|Risk-free interest rate        |  |      | 4.2   | % |      |  | 3.3   | %    |  |  | 3.2  | %
|Volatility                     |  |      | 60.5  | % |      |  | 52.8  | %    |  |  | 50.5 | %
|Expected annual dividend yield |  |      | 13.70 | % |      |  | 1.77  | %    |  |  | 1.28 | %

F-18



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                       |                                                  |      |   |            |      |  |  |            |   |  |  |            |  
|------------------------------------------------------ | ------------------------------------------------ | ---- | - | ---------- | ---- |  |  | ---------- | - |  |  | ---------- | -
|                                                       |                                                  | 2005 |   |            | 2004 |  |  | 2003       |  
|                                                       |                                                  |      |   |            |      |  |  |            |  
|Basic net earnings available to common stockholders:   |                                                  |      |   |            |      |  |  |            |   |  |  |           
|                                                       | As reported                                      |      | $ | 411,125    |      |  |  | 375,571    |   |  |  | 245,483    |  
|                                                       | Compensation expense, net of related tax effects |      |   | (6,633     | )    |  |  | (5,569     | ) |  |  | (3,437     | )
|                                                       |                                                  |      |   |            |      |  |  |            |  
|                                                       | Pro forma                                        |      | $ | 404,492    |      |  |  | 370,002    |   |  |  | 242,046    |  
|                                                       |                                                  |      |   |            |      |  |  |            |  
|Diluted net earnings available to common stockholders: |                                                  |      |   |            |      |  |  |            |   |  |  |           
|                                                       | As reported                                      |      | $ | 411,227    |      |  |  | 382,895    |   |  |  | 247,835    |  
|                                                       | Compensation expense, net of related tax effects |      |   | (6,633     | )    |  |  | (5,569     | ) |  |  | (3,437     | )
|                                                       |                                                  |      |   |            |      |  |  |            |  
|                                                       | Pro forma                                        |      | $ | 404,594    |      |  |  | 377,326    |   |  |  | 244,398    |  
|                                                       |                                                  |      |   |            |      |  |  |            |  
|Basic earnings per share:                              |                                                  |      |   |            |      |  |  |            |   |  |  |           
|                                                       | As reported                                      |      | $ | 7.42       |      |  |  | 10.20      |   |  |  | 7.26       |  
|                                                       | Pro forma                                        |      |   | 7.30       |      |  |  | 10.05      |   |  |  | 7.15       |  
|Diluted earnings per share:                            |                                                  |      |   |            |      |  |  |            |   |  |  |           
|                                                       | As reported                                      |      | $ | 7.17       |      |  |  | 8.29       |   |  |  | 6.32       |  
|                                                       | Pro forma                                        |      |   | 7.15       |      |  |  | 8.26       |   |  |  | 6.37       |  
|Basic weighted average shares outstanding:             |                                                  |      |   |            |      |  |  |            |   |  |  |           
|                                                       | As reported                                      |      |   | 55,430,666 |      |  |  | 36,807,298 |   |  |  | 33,835,127 |  
|                                                       | Pro forma                                        |      |   | 55,430,666 |      |  |  | 36,807,298 |   |  |  | 33,835,127 |  
|Diluted weighted average shares outstanding:           |                                                  |      |   |            |      |  |  |            |   |  |  |           
|                                                       | As reported                                      |      |   | 57,323,991 |      |  |  | 46,214,837 |   |  |  | 39,234,833 |  
|                                                       | Pro forma                                        |      |   | 56,621,688 |      |  |  | 45,700,899 |   |  |  | 38,374,842 |  



|    |                   
|--- | ------------------
|(t) | Earnings Per Share



04-8) 04-8 04-8 04-8


F-19



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                         
|--- | ------------------------
|(u) | Investment in Carrington







|    |                 
|--- | ----------------
|(v) | Use of Estimates





|    |            
|--- | -----------
|(w) | Advertising





|    |                  
|--- | -----------------
|(x) | Segment Reporting



F-20



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                               
|--- | ------------------------------
|(y) | Recent Accounting Developments









|    |                   
|--- | ------------------
|(z) | Hedging Activities





F-21



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








Cash Flow Hedge Instruments




F-22



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Fair Value Hedge Instruments




Interest Rate Cap Contracts




Non-designated Hedge Instruments


F-23



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Free-standing derivatives (Interest Rate Locks/ Forward Sale
Commitments)




|     |                 
|---- | ----------------
|(aa) | Reclassification





|    |                             
|--- | ----------------------------
|(2) | Mortgage Loans Held for Sale



|                                         |  |      |           |  |      |  |           | 
|---------------------------------------- |  | ---- | --------- |  | ---- |  | --------- | 
|                                         |  | 2005 |           |  | 2004 | 
|                                         |  |      |           |  |      | 
|First trust deeds                        |  | $    | 7,110,772 |  |      |  | 3,686,830 | 
|Second trust deeds                       |  |      | 704,430   |  |      |  | 197,362   | 
|Net deferred origination costs and other |  |      | 9,973     |  |      |  | 38,673    | 
|                                         |  |      |           |  |      | 
|                                         |  | $    | 7,825,175 |  |      |  | 3,922,865 | 
|                                         |  |      |           |  |      | 



F-24



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                      
|--- | ---------------------
|(a) | Gain on Sale of Loans



| |                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------
| | Gain on sale of loans was comprised of the following components
    for the years ended December 31 (dollars in thousands):

|                                                                  |  |      |          |   |      |  |           |      |  |  |          |  
|----------------------------------------------------------------- |  | ---- | -------- | - | ---- |  | --------- | ---- |  |  | -------- | -
|                                                                  |  | 2005 |          |   | 2004 |  |           | 2003 | 
|                                                                  |  |      |          |   |      |  |           |      | 
|Cash gain from whole loan sale transactions                       |  | $    | 656,672  |   |      |  | 1,068,021 |      |  |  | 861,310  |  
|Gain from securitization of loans                                 |  |      | 141,136  |   |      |  |          |      |  |  |         |  
|Non-cash gain from servicing assets related to securitizations    |  |      | 24,744   |   |      |  |          |      |  |  |         |  
|Cash gain on sale of servicing rights related to securitizations  |  |      | 24,877   |   |      |  |          |      |  |  |         |  
|Non-cash gain from servicing assets related to whole loan sales   |  |      | 45,499   |   |      |  | 7,923     |      |  |  | 7,777    |  
|Cash gain on sale of servicing rights related to whole loan sales |  |      |         |   |      |  | 214       |      |  |  |         |  
|Securitization expenses                                           |  |      | (49,250  | ) |      |  |          |      |  |  |         |  
|Fair value adjustment of residual securities                      |  |      | (9,983   | ) |      |  | (7,697    | )    |  |  | (19,363  | )
|Provision for repurchase losses                                   |  |      | (17,524  | ) |      |  | (2,736    | )    |  |  | (5,868   | )
|Non-refundable loan fees                                          |  |      | 314,597  |   |      |  | 213,207   |      |  |  | 142,745  |  
|Premiums paid                                                     |  |      | (325,068 | ) |      |  | (272,754  | )    |  |  | (182,765 | )
|Origination costs                                                 |  |      | (203,000 | ) |      |  | (203,900  | )    |  |  | (182,100 | )
|Derivative gains (losses)                                         |  |      | 19,917   |   |      |  | (1,669    | )    |  |  | (10,600  | )
|                                                                  |  |      |          |   |      |  |           |      | 
|Gain on sale of mortgage loans                                    |  | $    | 622,617  |   |      |  | 800,609   |      |  |  | 611,136  |  
|                                                                  |  |      |          |   |      |  |           |      | 



|    |                           
|--- | --------------------------
|(b) | Originations and Purchases





|    |                      
|--- | ---------------------
|(c) | Significant Customers





|    |                             
|--- | ----------------------------
|(d) | Concentration of Credit Risk



F-25



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                                   
|--- | ----------------------------------
|(3) | Mortgage Loans Held for Investment



|                                    |                                |      |            |            |      |  |            |            |  
|----------------------------------- | ------------------------------ | ---- | ---------- | ---------- | ---- |  | ---------- | ---------- | -
|                                    |                                | 2005 |            |            | 2004 | 
|                                    |                                |      |            |            |      | 
|Mortgage loans held for investment: |                                |      |            |            |      |  |            |           
|                                    | First trust deeds              |      | $          | 15,877,535 |      |  |            | 12,919,700 |  
|                                    | Second trust deeds             |      |            | 334,689    |      |  |            | 249,895    |  
|                                    | Allowance for loan losses      |      |            | (198,131   | )    |  |            | (90,227    | )
|                                    | Net deferred origination costs |      |            | 129,772    |      |  |            | 115,956    |  
|                                    |                                |      |            |            |      | 
|                                    |                                | $    | 16,143,865 |            |      |  | 13,195,324 |           
|                                    |                                |      |            |            |      | 







F-26



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                  |  |      |         |   |      |  |        |  
|----------------- |  | ---- | ------- | - | ---- |  | ------ | -
|                  |  | 2005 |         |   | 2004 | 
|                  |  |      |         |   |      | 
|Beginning balance |  | $    | 90,227  |   |      |  | 26,251 |  
|Additions         |  |      | 140,233 |   |      |  | 70,250 |  
|Charge-offs       |  |      | (32,329 | ) |      |  | (6,274 | )
|                  |  |      |         |   |      | 
|                  |  | $    | 198,131 |   |      |  | 90,227 |  
|                  |  |      |         |   |      | 



|                            |                                   |           |            |            |           |  |            |            |  |  |             |  |  |  |         |  | 
|--------------------------- | --------------------------------- | --------- | ---------- | ---------- | --------- |  | ---------- | ---------- |  |  | ----------- |  |  |  | ------- |  | 
|                            |                                   |           |            |            |           |  |            | Inception  | 
|                            |                                   |           |            |            |           |  |            | to-date    | 
|                            |                                   | Original  |            |            | Current   |  |            | Delinquent |  |  | Credit      | 
|                            |                                   | Principal |            |            | Principal |  |            | Principal  |  |  | Losses      | 
|                            |                                   | Amount of |            |            | Amount of |  |            | Over 60    |  |  | (Net of     | 
|                            |                                   | Loans     |            |            | Loans     |  |            | Days       |  |  | Recoveries) | 
|                            |                                   |           |            |            |           |  |            |            |  |  |             | 
|Adjustable rate loans       |                                   | $         | 33,194,998 |            |           |  | 21,156,196 |            |  |  | 654,628     |  |  |  | 158,171 | 
|Fixed rate loans            |                                   |           | 14,929,870 |            |           |  | 9,796,831  |            |  |  | 179,687     |  |  |  | 146,797 | 
|Home equity lines of credit |                                   |           | 14,907     |            |           |  | 13,002     |            |  |  |            |  |  |  |        | 
|                            |                                   |           |            |            |           |  |            |            |  |  |             | 
|Total managed loans         |                                   | $         | 48,139,775 |            |           |  | 30,966,029 |            |  |  | 834,315     |  |  |  | 304,968 | 
|                            |                                   |           |            |            |           |  |            |            |  |  |             | 
|Comprised of:               |                                   |           |            |            |           |  |            |            |  |  |             |  |  |  |         | 
|                            | Loans sold through securitization |           | $          | 14,266,003 |           |  |            | 6,938,603  |  |  |             |  |  |  |         |  | 
|                            | Loans held for investment         |           |            | 26,047,590 |           |  |            | 16,212,224 |  |  |             |  |  |  |         |  | 
|                            | Loans held for sale               |           |            | 7,826,182  |           |  |            | 7,815,202  |  |  |             |  |  |  |         |  | 
|                            |                                   |           |            |            |           |  |            |            |  |  |             | 
|Total managed loans         |                                   | $         | 48,139,775 |            |           |  | 30,966,029 |            |  |  |             |  |  |  |         | 
|                            |                                   |           |            |            |           |  |            |            |  |  |             | 





|    |                                      
|--- | -------------------------------------
|(4) | Residual Interests in Securitizations



|                               |  |      |          |   |      |  |         |  
|------------------------------ |  | ---- | -------- | - | ---- |  | ------- | -
|                               |  | 2005 |          |   | 2004 | 
|                               |  |      |          |   |      | 
|Over-collateralization account |  | $    | 350,785  |   |      |  | 158,755 |  
|Net interest receivable (NIR)  |  |      | (115,855 | ) |      |  | (10,734 | )
|                               |  |      |          |   |      | 
|                               |  | $    | 234,930  |   |      |  | 148,021 |  
|                               |  |      |          |   |      | 



F-27



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                   |  |      |         |   |      |  |         |  
|---------------------------------- |  | ---- | ------- | - | ---- |  | ------- | -
|                                   |  | 2005 |         |   | 2004 | 
|                                   |  |      |         |   |      | 
|Balance, beginning of year         |  | $    | 158,755 |   |      |  | 169,905 |  
|Initial deposits to OC accounts    |  |      | 207,031 |   |      |  |        |  
|Additional deposits to OC accounts |  |      | 2,741   |   |      |  | 1,723   |  
|Release of cash from OC accounts   |  |      | (17,742 | ) |      |  | (12,873 | )
|                                   |  |      |         |   |      | 
|Balance, end of year               |  | $    | 350,785 |   |      |  | 158,755 |  
|                                   |  |      |         |   |      | 



|                           |  |      |          |   |      |  |         |  
|-------------------------- |  | ---- | -------- | - | ---- |  | ------- | -
|                           |  | 2005 |          |   | 2004 | 
|                           |  |      |          |   |      | 
|Balance, beginning of year |  | $    | (10,734  | ) |      |  | 9,593   |  
|NIR discounts              |  |      | (109,565 | ) |      |  |        |  
|Cash received from NIRs    |  |      | (2,542   | ) |      |  | (30,303 | )
|Accretion of NIRs          |  |      | 16,969   |   |      |  | 17,673  |  
|Fair value adjustment      |  |      | (9,983   | ) |      |  | (7,697  | )
|                           |  |      |          |   |      | 
|Balance, end of year       |  | $    | (115,855 | ) |      |  | (10,734 | )
|                           |  |      |          |   |      | 





F-28



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                 |  |                             |        |   |            |  |         |       |  |  |         | 
|------------------------------------------------ |  | --------------------------- | ------ | - | ---------- |  | ------- | ----- |  |  | ------- | 
|                                                 |  | Security Type               |       
|                                                 |  |                             |       
|                                                 |  | Fixed                       |        |   | Adjustable |  |         | Total | 
|                                                 |  |                             |        |   |            |  |         |       | 
|Carrying value/ fair value of residual interests |  | $                           | 74,977 |   |            |  | 159,953 |       |  |  | 234,930 | 
|Assumed weighted average life in years           |  |                             | 2.98   |   |            |  | 2.47    |       |  |  | 2.67    | 
|Decline in fair value with 10% adverse change    |  |                             | 2.29   | % |            |  | 8.22    | %     |  |  | 6.33%   | 
|Decline in fair value with 20% adverse change    |  |                             | 4.27   | % |            |  | 14.98   | %     |  |  | 11.56%  | 
|                                                
|Assumed cumulative pool losses                   |  |                             | 3.33   | % |            |  | 3.18    | %     |  |  | 3.24%   | 
|Decline in fair value with 10% adverse change    |  |                             | 1.67   | % |            |  | 6.68    | %     |  |  | 5.08%   | 
|Decline in fair value with 20% adverse change    |  |                             | 3.34   | % |            |  | 13.41   | %     |  |  | 10.20%  | 
|                                                
|Assumed discount rate                            |  | Range of 12% to 14%        
|Decline in fair value with 10% adverse change    |  |                             | 0.51   | % |            |  | 3.33    | %     |  |  | 2.43%   | 
|Decline in fair value with 20% adverse change    |  |                             | 0.98   | % |            |  | 6.43    | %     |  |  | 4.69%   | 
|                                                
|Interest rate assumptions                        |  | Current Forward LIBOR curve
|Decline in fair value with 10% adverse change    |  |                             | 0.86   | % |            |  | 13.70   | %     |  |  | 9.60%   | 
|Decline in fair value with 20% adverse change    |  |                             | 1.26   | % |            |  | 17.55   | %     |  |  | 12.35%  | 







|    |                          
|--- | -------------------------
|(5) | Mortgage Servicing Assets



|                           |                           |                      |       |         |        |  |       |        |       | 
|-------------------------- | ------------------------- | -------------------- | ----- | ------- | ------ |  | ----- | ------ | ----- | 
|                           |                           | 2005                 |       |         | 2004   | 
|                           |                           |                      |       |         |        | 
|Balance, beginning of year |                           | $                    | 8,249 |         |        |  | 1,900 |       
|                           | Additions                 |                      |       | 95,120  |        |  |       | 7,923  |      
|                           | Sales of servicing rights |                      |       | (24,877 | )      |  |       |       |      
|                           | Amortization              |                      |       | (9,177  | )      |  |       | (1,574 | )    
|                           |                           |                      |       |         |        | 
|                           |                           | Balance, end of year |       | $       | 69,315 |  |       |        | 8,249 | 
|                           |                           |                      |       |         |        | 

F-29



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                 
| | ----------------
| | Servicing Income



|                                         |  |      |        |   |      |  |        |      |  |  |        |  
|---------------------------------------- |  | ---- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | -
|                                         |  | 2005 |        |   | 2004 |  |        | 2003 | 
|                                         |  |      |        |   |      |  |        |      | 
|Servicing and ancillary fees collected   |  | $    | 45,686 |   |      |  | 29,861 |      |  |  | 11,284 |  
|Amortization of mortgage servicing asset |  |      | (9,177 | ) |      |  | (1,574 | )    |  |  | (580   | )
|Prepayment penalties collected           |  |      | 2,005  |   |      |  | 609    |      |  |  | 435    |  
|                                         |  |      |        |   |      |  |        |      | 
|                                         |  | $    | 38,514 |   |      |  | 28,896 |      |  |  | 11,139 |  
|                                         |  |      |        |   |      |  |        |      | 



|    |                              
|--- | -----------------------------
|(6) | Office Property and Equipment



|                                               |  |      |         |   |      |  |         |  
|---------------------------------------------- |  | ---- | ------- | - | ---- |  | ------- | -
|                                               |  | 2005 |         |   | 2004 | 
|                                               |  |      |         |   |      | 
|Computer hardware and software                 |  | $    | 85,131  |   |      |  | 64,667  |  
|Furniture and office equipment                 |  |      | 36,141  |   |      |  | 20,765  |  
|Leasehold improvements                         |  |      | 34,571  |   |      |  | 7,775   |  
|                                               |  |      |         |   |      | 
|                                               |  |      | 155,843 |   |      |  | 93,207  |  
|Less accumulated depreciation and amortization |  |      | (68,957 | ) |      |  | (45,941 | )
|                                               |  |      |         |   |      | 
|                                               |  | $    | 86,886  |   |      |  | 47,266  |  
|                                               |  |      |         |   |      | 



F-30



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                  
|--- | -------------------------------------------------
|(7) | Credit Facilities and Other Short-Term Borrowings



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |      |         |  |      |  |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------- |  | ---- |  | ------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | 2005 |         |  | 2004 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |      |         |  |      | 
|A $2.0 billion asset-backed commercial paper facility for
    Von Karman Funding Trust, a wholly-owned subsidiary of New
    Century Mortgage, expiring in February 2009, secured by mortgage
    loans held for sale and cash generated through the sale of
    loans, bearing interest based on a margin over one-month LIBOR.                                                                                                                                                                                                                                                                                                                                                                 |  | $    |        |  |      |  |        | 
|A $2.0 billion master repurchase agreement ($1 billion
    of which is uncommitted) among New Century Mortgage,
    NC Capital, NC Residual II, New Century Credit
    and Bank of America, N.A., expiring in September 2006, secured
    by mortgage loans held for sale, bearing interest based on a
    margin over one-month LIBOR. The Company expects to either renew
    or extend this facility prior to its expiration.                                                                                                                                                                                                                                                                 |  |      | 916,714 |  |      |  | 975,119 | 
|A $1.0 billion master repurchase agreement among New
    Century Mortgage, Home 123 and Bank of America, N.A., expiring
    in September 2006, secured by mortgage loans held for sale,
    bearing interest based on a margin over one-month LIBOR. The
    Company expects to either renew or extend this facility prior to
    its expiration.                                                                                                                                                                                                                                                                                                                                                |  |      | 277,484 |  |      |  |        | 
|A $1.0 billion master repurchase agreement among New
    Century Credit, NC Residual II Corporation, a
    wholly-owned subsidiary of NC Capital
    (NC Residual II), New Century Mortgage,
    NC Capital and Barclays Bank PLC, expiring in March 2006,
    secured by mortgage loans held for sale, bearing interest based
    on a margin over one-month LIBOR. The Company expects to either
    renew or extend this facility prior to its expiration.                                                                                                                                                                                                                                  |  |      | 821,856 |  |      |  | 43,917  | 
|An $800 million uncommitted master repurchase agreement
    among NC Capital, NC Residual II, New Century Credit
    and Bear Stearns Mortgage Capital, expiring in November 2006,
    secured by mortgage loans held for sale, bearing interest based
    on a margin over one-month LIBOR. The Company expects to either
    renew or extend this facility prior to its expiration.                                                                                                                                                                                                                                                                                                            |  |      | 610,365 |  |      |  | 428,397 | 
|A $150 million master repurchase agreement between New
    Century Funding SB-1, a Delaware business trust and wholly-owned
    subsidiary of New Century Mortgage, and Citigroup Global Markets
    Reality Corp., successor to Salomon Brothers Reality Corp.,
    expiring in April 2006, secured by mortgage loans held for sale,
    bearing interest based on a margin over one-month LIBOR. The
    Company expects to either renew or extend this facility before
    its expiration.                                                                                                                                                                                                    |  |      |        |  |      |  |        | 
|A $650 million master repurchase agreement among New
    Century Credit, NC Capital and Citigroup Global Markets
    Reality Corp., successor to Salomon Brothers, expiring in April
    2006, secured by mortgage loans held for sale, bearing interest
    based on a margin over one-month LIBOR. The Company has the
    ability to increase the size of this facility to
    $800 million provided that the value of the loans
    outstanding at any one time under this facility and the
    $150 million facility set forth immediately above may not
    exceed $800 million in the aggregate. The Company expects
    to either renew or extend this facility prior to its expiration. |  |      | 276,816 |  |      |  | 260,025 | 

F-31



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |      |           |  |      |  |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- |  | ---- |  | --------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | 2005 |           |  | 2004 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |      |           |  |      | 
|A $150 million master repurchase agreement among New
    Century Mortgage, NC Capital, New Century Financial and
    Citigroup Global Markets Realty Corp., successor to Salomon
    Brothers Realty Corp., expiring in March 2006, secured by
    delinquent loans and REO properties, bearing interest based on a
    margin over one-month LIBOR. The Company expects to either renew
    or extend this facility prior to its expiration.                                                                                                        |  |      | 109,076   |  |      |  | 959       | 
|A $250 million repurchase agreement between New Century
    Mortgage and Citigroup Global Markets, which expired in December
    2005, secured by small balance commercial mortgage loans held
    for sale, bearing interest based on a margin over one-month
    LIBOR. The Company does not expect to renew or extend this
    facility.                                                                                                                                                                                                          |  |      |          |  |      |  | 54,398    | 
|A $1.5 billion master repurchase agreement
    ($500 million of which is uncommitted) among New Century
    Credit, New Century Mortgage, NC Capital, Home123 and
    Credit Suisse First Boston Mortgage Capital LLC, expiring in
    December 2006, secured by mortgage loans held for sale, bearing
    interest based on a margin over one-month LIBOR. The Company
    expects to either renew or extend this facility prior to its
    expiration.                                                                                             |  |      | 452,239   |  |      |  |          | 
|A $1.0 billion master repurchase agreement among New
    Century Credit, New Century Mortgage, NC Capital, Home123 and
    Deutsche Bank, expiring in September 2006, secured by mortgage
    loans held for sale, bearing interest based on a margin over
    one-month LIBOR. The Company expects to either renew or extend
    this facility prior to its expiration.                                                                                                                                                                             |  |      | 441,227   |  |      |  |          | 
|A $850 million master repurchase agreement
    ($150 million of which is uncommitted) among New Century
    Credit, New Century Mortgage, NC Capital, NC
    Residual II, Home123, and IXIS Real Estate Capital Inc.,
    expiring in October 2006, secured by mortgage loans held for
    sale, bearing interest based on a margin over one-month LIBOR.
    The Company expects to either renew or extend this facility
    prior to its expiration.                                                                                               |  |      | 404,696   |  |      |  | 617,141   | 
|A $3.0 billion master repurchase agreement among New
    Century Credit, New Century Mortgage, NC Capital, NC
    Residual II, Morgan Stanley Bank, and Morgan Stanley
    Mortgage Capital Inc., expiring in February 2007, secured by
    mortgage loans held for sale, bearing interest based on a margin
    over one-month LIBOR. The Company expects to either renew or
    extend this facility prior to its expiration.                                                                                                                      |  |      | 1,469,860 |  |      |  | 959,822   | 
|A $2.0 billion asset-backed note purchase and security
    agreement ($500 million, of which is uncommitted) between
    New Century Funding I, a special-purpose vehicle
    established as a Delaware statutory trust, which is a
    wholly-owned subsidiary of New Century Mortgage, and UBS Real
    Estate Securities Inc., expiring in June 2006, secured by
    mortgage loans held for sale, bearing interest based on a margin
    over one-month LIBOR. The Company expects to renew or extend
    this facility prior to its expiration. |  |      | 1,673,225 |  |      |  | 1,141,167 | 
|Less: Credit facility amounts reclassified to financing on
    mortgage loans held for investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |      | (13,873)  |  |      |  | (776,677) | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |      |           |  |      | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $    | 7,439,685 |  |      |  | 3,704,268 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |      |           |  |      | 



F-32



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


debt-to




|    |                                                
|--- | -----------------------------------------------
|(8) | Financing on Mortgage Loans Held for Investment



|                                                                          |                                                       |      |            |            |      |  |            |            | 
|------------------------------------------------------------------------- | ----------------------------------------------------- | ---- | ---------- | ---------- | ---- |  | ---------- | ---------- | 
|                                                                          |                                                       | 2005 |            |            | 2004 | 
|                                                                          |                                                       |      |            |            |      | 
|Securitized bonds                                                         |                                                       | $    | 16,071,460 |            |      |  | 12,379,524 |           
|Short-term financing on retained bonds                                    |                                                       |      | 1,903      |            |      |  | 23,616     |           
|2003-NC5 NIM bond                                                         |                                                       |      |           |            |      |  | 7,583      |           
|2005-NC3 NIM bond                                                         |                                                       |      | 21,405     |            |      |  |           |           
|Debt issuance costs                                                       |                                                       |      | (63,182    | )          |      |  | (81,427    | )         
|Credit facility amounts reclassified from warehouse credit
    facilities |                                                       |      | 13,873     |            |      |  | 776,677    |           
|                                                                          |                                                       |      |            |            |      | 
|                                                                          | Total financing on mortgage loans held for investment |      | $          | 16,045,459 |      |  |            | 13,105,973 | 
|                                                                          |                                                       |      |            |            |      | 





|           |  |   |            | 
|---------- |  | - | ---------- | 
|2006       |  | $ | 5,207,914  | 
|2007       |  |   | 4,266,050  | 
|2008       |  |   | 1,763,819  | 
|Thereafter |  |   | 4,807,676  | 
|           |  |   |           
|           |  | $ | 16,045,459 | 
|           |  |   |           

F-33



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                         
|--- | ------------------------
|(9) | Convertible Senior Notes









|     |              
|---- | -------------
|(10) | Notes Payable



F-34



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|            |  |   |        | 
|----------- |  | - | ------ | 
|Due in 2006 |  | $ | 20,999 | 
|Due in 2007 |  |   | 13,656 | 
|Due in 2008 |  |   | 4,485  | 
|            |  |   |       
|            |  | $ | 39,140 | 
|            |  |   |       



|     |                
|---- | ---------------
|(11) | Interest Income



|                                               |  |      |           |  |      |  |         |      |  |  |         | 
|---------------------------------------------- |  | ---- | --------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                               |  | 2005 |           |  | 2004 |  |         | 2003 | 
|                                               |  |      |           |  |      |  |         |      | 
|Interest on mortgage loans held for investment |  | $    | 1,223,478 |  |      |  | 528,933 |      |  |  | 104,706 | 
|Interest on mortgage loans held for sale       |  |      | 508,878   |  |      |  | 350,562 |      |  |  | 224,650 | 
|Residual interest income                       |  |      | 16,969    |  |      |  | 17,673  |      |  |  | 24,228  | 
|Other interest income                          |  |      | 10,242    |  |      |  | 1,479   |      |  |  | 107     | 
|                                               |  |      |           |  |      |  |         |      | 
|                                               |  | $    | 1,759,567 |  |      |  | 898,647 |      |  |  | 353,691 | 
|                                               |  |      |           |  |      |  |         |      | 



|     |                 
|---- | ----------------
|(12) | Interest Expense



|                                                              |  |      |         |  |      |  |         |      |  |  |         | 
|------------------------------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                              |  | 2005 |         |  | 2004 |  |         | 2003 | 
|                                                              |  |      |         |  |      |  |         |      | 
|Interest on financing on mortgage loans held for investment   |  | $    | 655,757 |  |      |  | 222,522 |      |  |  | 36,836  | 
|Interest on credit facilities and other short-term borrowings |  |      | 308,357 |  |      |  | 124,547 |      |  |  | 73,532  | 
|Interest on convertible senior notes                          |  |      | 251     |  |      |  | 12,337  |      |  |  | 4,049   | 
|Other interest expense                                        |  |      | 23,758  |  |      |  | 7,688   |      |  |  | 3,158   | 
|                                                              |  |      |         |  |      |  |         |      | 
|                                                              |  | $    | 988,123 |  |      |  | 367,094 |      |  |  | 117,575 | 
|                                                              |  |      |         |  |      |  |         |      | 



|     |                                    
|---- | -----------------------------------
|(13) | General and Administrative Expenses



|                                       |  |      |         |  |      |  |         |      |  |  |         | 
|-------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                       |  | 2005 |         |  | 2004 |  |         | 2003 | 
|                                       |  |      |         |  |      |  |         |      | 
|Occupancy                              |  | $    | 39,963  |  |      |  | 22,527  |      |  |  | 16,761  | 
|Other contract services                |  |      | 18,133  |  |      |  | 21,233  |      |  |  | 11,624  | 
|Travel, entertainment, and conferences |  |      | 19,912  |  |      |  | 18,084  |      |  |  | 12,975  | 
|Depreciation and amortization          |  |      | 23,016  |  |      |  | 15,246  |      |  |  | 10,652  | 
|Telephone                              |  |      | 15,234  |  |      |  | 10,688  |      |  |  | 8,239   | 
|Postage and courier                    |  |      | 11,159  |  |      |  | 8,465   |      |  |  | 5,737   | 
|Software and data processing           |  |      | 10,251  |  |      |  | 4,146   |      |  |  | 3,110   | 
|Other administrative expenses          |  |      | 55,384  |  |      |  | 46,028  |      |  |  | 36,203  | 
|                                       |  |      |         |  |      |  |         |      | 
|                                       |  | $    | 193,052 |  |      |  | 146,417 |      |  |  | 105,301 | 
|                                       |  |      |         |  |      |  |         |      | 

F-35



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |               
|---- | --------------
|(14) | Loan Servicing







|     |             
|---- | ------------
|(15) | Income Taxes









F-36



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                  |  |      |          |   |      |  |         |      |  |  |         |  
|--------------------------------- |  | ---- | -------- | - | ---- |  | ------- | ---- |  |  | ------- | -
|                                  |  | 2005 |          |   | 2004 |  |         | 2003 | 
|                                  |  |      |          |   |      |  |         |      | 
|Computed expected income taxes  |  | $    | 155,182  |   |      |  | 213,899 |      |  |  | 148,141 |  
|State tax, net of federal benefit |  |      | 22,169   |   |      |  | 34,309  |      |  |  | 23,795  |  
|Benefit of REIT election          |  |      | (137,117 | ) |      |  | (17,568 | )    |  |  |        |  
|Recapture of tax reserve          |  |      | (14,800  | ) |      |  |        |      |  |  |        |  
|Other                             |  |      | 1,400    |   |      |  | 4,930   |      |  |  | 5,833   |  
|                                  |  |      |          |   |      |  |         |      | 
|                                  |  | $    | 26,834   |   |      |  | 235,570 |      |  |  | 177,769 |  
|                                  |  |      |          |   |      |  |         |      | 
|Actual tax provision rate         |  |      | 6.05     | % |      |  | 38.55   | %    |  |  | 42.00   | %



|          |         |      |        |        |      |  |         |         |  |  |         |         |  
|--------- | ------- | ---- | ------ | ------ | ---- |  | ------- | ------- |  |  | ------- | ------- | -
|          |         | 2005 |        |        | 2004 |  |         | 2003    | 
|          |         |      |        |        |      |  |         |         | 
|Current:  |         |      |        |        |      |  |         |         |  |  |         |        
|          | Federal |      | $      | 29,357 |      |  |         | 149,915 |  |  |         | 221,964 |  
|          | State   |      |        | (7,400 | )    |  |         | 40,640  |  |  |         | 54,152  |  
|          |         |      |        |        |      |  |         |         | 
|          |         |      | 21,957 |        |      |  | 190,555 |         |  |  | 276,116 |        
|          |         |      |        |        |      |  |         |         | 
|Deferred: |         |      |        |        |      |  |         |         |  |  |         |        
|          | Federal |      |        | 4,909  |      |  |         | 38,245  |  |  |         | (78,386 | )
|          | State   |      |        | (32    | )    |  |         | 6,770   |  |  |         | (19,961 | )
|          |         |      |        |        |      |  |         |         | 
|          |         |      | 4,877  |        |      |  | 45,015  |         |  |  | (98,347 | )      
|          |         |      |        |        |      |  |         |         | 
|          |         | $    | 26,834 |        |      |  | 235,570 |         |  |  | 177,769 |        
|          |         |      |        |        |      |  |         |         | 

F-37



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                          |                                              |      |        |         |      |  |        |         |  
|------------------------- | -------------------------------------------- | ---- | ------ | ------- | ---- |  | ------ | ------- | -
|                          |                                              | 2005 |        |         | 2004 | 
|                          |                                              |      |        |         |      | 
|Deferred tax assets:      |                                              |      |        |         |      |  |        |        
|                          | Allowance for loan losses                    |      | $      | 15,701  |      |  |        | 20,114  |  
|                          | State taxes                                  |      |        |        |      |  |        | 10,885  |  
|                          | Non-cash gain from securitizations           |      |        | 1,863   |      |  |        | 11,126  |  
|                          | Fair value adjustment on loans held for sale |      |        | 26,251  |      |  |        | 14,616  |  
|                          | Capital loss carryforward                    |      |        | 20,511  |      |  |        | 21,024  |  
|                          | Accruals and other reserves                  |      |        | 3,517   |      |  |        |        |  
|                          | Other                                        |      |        | 2,048   |      |  |        | 3,317   |  
|                          |                                              |      |        |         |      | 
|                          | Gross deferred tax assets                    |      |        | 69,891  |      |  |        | 81,082  |  
|                          |                                              |      |        |         |      | 
|                          | Less: valuation allowance for capital loss   |      |        | (20,511 | )    |  |        | (21,024 | )
|                          |                                              |      |        |         |      | 
|                          |                                              |      | 49,380 |         |      |  | 60,058 |        
|                          |                                              |      |        |         |      | 
|Deferred tax liabilities: |                                              |      |        |         |      |  |        |        
|                          | Office property and equipment                |      |        | 2,368   |      |  |        | 5,707   |  
|                          | Deferred loan fees                           |      |        | 2,189   |      |  |        | 3,382   |  
|                          |                                              |      |        |         |      | 
|                          |                                              |      | 4,557  |         |      |  | 9,089  |        
|                          |                                              |      |        |         |      | 
|                          | Net deferred income tax asset                |      | $      | 44,823  |      |  |        | 50,969  |  
|                          |                                              |      |        |         |      | 







|     |                              
|---- | -----------------------------
|(16) | Commitments and Contingencies



|    |              
|--- | -------------
|(a) | Related Party





F-38



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












F-39



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


12-month












|    |                 
|--- | ----------------
|(b) | Operating Leases



F-40



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                         |  |   |         | 
|------------------------ |  | - | ------- | 
|Year ending December 31: |  |   |         | 
|2006                     |  | $ | 34,292  | 
|2007                     |  |   | 34,655  | 
|2008                     |  |   | 30,693  | 
|2009                     |  |   | 26,529  | 
|2010                     |  |   | 17,163  | 
|Thereafter               |  |   | 50,785  | 
|                         |  |   |        
|                         |  | $ | 194,117 | 
|                         |  |   |        



|    |                 
|--- | ----------------
|(c) | Loan Commitments







|    |              
|--- | -------------
|(d) | Contingencies





|                                |  |      |         |   |      |  |        |      |  |  |         |  
|------------------------------- |  | ---- | ------- | - | ---- |  | ------ | ---- |  |  | ------- | -
|                                |  | 2005 |         |   | 2004 |  |        | 2003 | 
|                                |  |      |         |   |      |  |        |      | 
|Balance, beginning of year      |  | $    | 6,263   |   |      |  | 9,843  |      |  |  | 16,904  |  
|Provision for repurchase losses |  |      | 17,524  |   |      |  | 2,736  |      |  |  | 5,868   |  
|Charge-offs, net                |  |      | (16,832 | ) |      |  | (6,316 | )    |  |  | (12,929 | )
|                                |  |      |         |   |      |  |        |      | 
|Balance, end of year            |  | $    | 6,955   |   |      |  | 6,263  |      |  |  | 9,843   |  
|                                |  |      |         |   |      |  |        |      | 

F-41



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |           
|--- | ----------
|(e) | Litigation



Klas vs. New
Century Financial Corporation, et al




F-42



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












F-43



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Murray v. GMAC Mortgage Corporation










|     |                       
|---- | ----------------------
|(17) | Employee Benefit Plans







F-44



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|     |                   
|---- | ------------------
|(18) | Earnings per Share



|                                                                                                  |  |      |            |  |      |  |            |      |  |  |            | 
|------------------------------------------------------------------------------------------------- |  | ---- | ---------- |  | ---- |  | ---------- | ---- |  |  | ---------- | 
|                                                                                                  |  | 2005 |            |  | 2004 |  |            | 2003 | 
|                                                                                                  |  |      |            |  |      |  |            |      | 
|Basic:                                                                                            |  |      |            |  |      |  |            |      |  |  |            | 
|Net earnings                                                                                      |  | $    | 416,543    |  |      |  | 375,571    |      |  |  | 245,483    | 
|Less: Preferred stock dividends                                                                   |  |      | 5,418      |  |      |  |           |      |  |  |           | 
|                                                                                                  |  |      |            |  |      |  |            |      | 
|Net earnings available to common stockholders                                                     |  | $    | 411,125    |  |      |  | 375,571    |      |  |  | 245,483    | 
|                                                                                                  |  |      |            |  |      |  |            |      | 
|Weighted average common shares outstanding                                                        |  |      | 55,430,666 |  |      |  | 36,807,298 |      |  |  | 33,835,127 | 
|                                                                                                  |  |      |            |  |      |  |            |      | 
|Earnings per share                                                                                |  | $    | 7.42       |  |      |  | 10.20      |      |  |  | 7.26       | 
|                                                                                                  |  |      |            |  |      |  |            |      | 
|Diluted:                                                                                          |  |      |            |  |      |  |            |      |  |  |            | 
|Net earnings available to common stockholders                                                     |  | $    | 411,125    |  |      |  | 375,571    |      |  |  | 245,483    | 
|Add: Interest and amortization of debt issuance costs on
    convertible senior notes, net of tax |  |      | 102        |  |      |  | 7,324      |      |  |  | 2,352      | 
|                                                                                                  |  |      |            |  |      |  |            |      | 
|Diluted net earnings                                                                              |  | $    | 411,227    |  |      |  | 382,895    |      |  |  | 247,835    | 
|                                                                                                  |  |      |            |  |      |  |            |      | 
|Weighted average number of common shares outstanding                                              |  |      | 55,430,666 |  |      |  | 36,807,298 |      |  |  | 33,835,127 | 
|Effect of dilutive securities:                                                                    |  |      |            |  |      |  |            |      |  |  |            | 
|Restricted stock awards                                                                           |  |      | 122,414    |  |      |  | 280,213    |      |  |  | 113,940    | 
|Warrants                                                                                          |  |      |           |  |      |  | 426,141    |      |  |  |           | 
|Stock options                                                                                     |  |      | 1,609,043  |  |      |  | 2,698,256  |      |  |  | 2,276,690  | 
|Convertible senior notes(1)                                                                       |  |      | 160,013    |  |      |  | 6,002,573  |      |  |  | 3,009,076  | 
|Directors deferred compensation plan awards                                                      |  |      | 1,855      |  |      |  | 356        |      |  |  |           | 
|                                                                                                  |  |      |            |  |      |  |            |      | 
|                                                                                                  |  |      | 57,323,991 |  |      |  | 46,214,837 |      |  |  | 39,234,833 | 
|                                                                                                  |  |      |            |  |      |  |            |      | 
|Earnings per share                                                                                |  | $    | 7.17       |  |      |  | 8.29       |      |  |  | 6.32       | 
|                                                                                                  |  |      |            |  |      |  |            |      | 






|    |                   
|--- | ------------------
|(1) | See footnote 1(t).



04-08,


F-45



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |              
|---- | -------------
|(19) | Stock Options





|                             |  |           |            |          |          |   |       | 
|---------------------------- |  | --------- | ---------- | -------- | -------- | - | ----- | 
|                             |  |           |            | Weighted |         
|                             |  |           |            | Average  |         
|                             |  | Number of |            |          | Exercise |  
|                             |  | Shares    |            |          | Price    |  
|                             |  |           |            |          |          |  
|Balance at December 31, 2002 |  |           | 4,842,575  |          |          | $ | 9.11  | 
|Granted                      |  |           | 1,217,500  |          |          |   | 23.50 | 
|Exercised                    |  |           | (841,456   | )        |          |   | 9.97  | 
|Canceled                     |  |           | (158,501   | )        |          |   | 14.02 | 
|                             |  |           |            |          |          |  
|Balance at December 31, 2003 |  |           | 5,060,118  |          |          |   | 12.54 | 
|Granted                      |  |           | 979,500    |          |          |   | 47.09 | 
|Exercised                    |  |           | (734,916   | )        |          |   | 11.83 | 
|Canceled                     |  |           | (176,594   | )        |          |   | 19.69 | 
|                             |  |           |            |          |          |  
|Balance at December 31, 2004 |  |           | 5,128,108  |          |          |   | 19.00 | 
|Granted                      |  |           | 891,602    |          |          |   | 45.66 | 
|Exercised                    |  |           | (1,695,524 | )        |          |   | 10.47 | 
|Canceled                     |  |           | (504,653   | )        |          |   | 32.00 | 
|                             |  |           |            |          |          |  
|Balance at December 31, 2005 |  |           | 3,819,533  |          |          |   | 27.29 | 
|                             |  |           |            |          |          |  

F-46



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##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                         |  |             |           |         |           |  |      |                |  |   |             |  |  |                   |           |  |  |   |       | 
|------------------------ |  | ----------- | --------- | ------- | --------- |  | ---- | -------------- |  | - | ----------- |  |  | ----------------- | --------- |  |  | - | ----- | 
|                         |  |             |           | Average |           |  |      |                |  |   |            
|                         |  | Number      |           |         | Remaining |  |      | Average        |  |   | Number      |  |  | Average           |          
|Range of Exercise Prices |  | Outstanding |           |         | Term      |  |      | Exercise Price |  |   | Exercisable |  |  | Exercisable Price |          
|                         |  |             |           |         |           |  |      |                |  |   |             |  |  |                   |          
|$ 0.33   5.59           |  |             | 101,089   |         |           |  | 1.99 |                |  | $ | 5.25        |  |  |                   | 101,089   |  |  | $ | 5.25  | 
|6.00   6.79             |  |             | 453,800   |         |           |  | 5.64 |                |  |   | 6.65        |  |  |                   | 340,700   |  |  |   | 6.65  | 
|7.33   7.67             |  |             | 119,727   |         |           |  | 2.92 |                |  |   | 7.40        |  |  |                   | 89,277    |  |  |   | 7.36  | 
|8.00   9.27             |  |             | 216,319   |         |           |  | 5.89 |                |  |   | 9.05        |  |  |                   | 73,819    |  |  |   | 8.94  | 
|10.47  11.43            |  |             | 256,525   |         |           |  | 6.12 |                |  |   | 10.48       |  |  |                   | 172,150   |  |  |   | 10.48 | 
|12.17  14.62            |  |             | 276,157   |         |           |  | 6.67 |                |  |   | 14.51       |  |  |                   | 98,332    |  |  |   | 14.47 | 
|16.25  18.66            |  |             | 480,264   |         |           |  | 6.92 |                |  |   | 18.41       |  |  |                   | 211,577   |  |  |   | 18.27 | 
|19.47  26.97            |  |             | 309,631   |         |           |  | 7.46 |                |  |   | 26.36       |  |  |                   | 104,591   |  |  |   | 26.63 | 
|35.74  43.51            |  |             | 96,082    |         |           |  | 8.34 |                |  |   | 38.87       |  |  |                   | 19,738    |  |  |   | 38.17 | 
|44.05  44.06            |  |             | 467,913   |         |           |  | 9.21 |                |  |   | 44.06       |  |  |                   | 3,165     |  |  |   | 44.05 | 
|45.04  45.96            |  |             | 362,334   |         |           |  | 8.09 |                |  |   | 45.86       |  |  |                   | 225,584   |  |  |   | 45.87 | 
|46.38  46.78            |  |             | 368,560   |         |           |  | 8.67 |                |  |   | 46.66       |  |  |                   | 209,560   |  |  |   | 46.63 | 
|47.26  49.30            |  |             | 194,276   |         |           |  | 9.08 |                |  |   | 49.05       |  |  |                   | 14,611    |  |  |   | 47.94 | 
|51.20  60.47            |  |             | 116,856   |         |           |  | 8.75 |                |  |   | 55.13       |  |  |                   | 79,375    |  |  |   | 56.73 | 
|                         |  |             |           |         |           |  |      |                |  |   |             |  |  |                   |          
|                         |  |             | 3,819,533 |         |           |  |      |                |  |   |             |  |  |                   | 1,743,568 |  |  |   |       | 
|                         |  |             |           |         |           |  |      |                |  |   |             |  |  |                   |          



|     |                     
|---- | --------------------
|(20) | Stockholders Equity



|    |             
|--- | ------------
|(a) | Common Stock



paid-in










F-47



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






























F-48



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                                      
|--- | -------------------------------------
|(b) | Cumulative Redeemable Preferred Stock







|    |               
|--- | --------------
|(c) | Treasury Stock





|    |            
|--- | -----------
|(d) | Stock Split



F-49



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                  
|--- | -----------------
|(e) | Minimum Net Worth





|     |                                    
|---- | -----------------------------------
|(21) | Fair Value of Financial Instruments





|                                                     |  |                |            |  |            |  |            | 
|---------------------------------------------------- |  | -------------- | ---------- |  | ---------- |  | ---------- | 
|                                                     |  | 2005           |           
|                                                     |  |                |           
|                                                     |  | Carrying Value |            |  | Fair Value | 
|                                                     |  |                |            |  |            | 
|Financial assets:                                    |  |                |            |  |            |  |            | 
|Cash and cash equivalents                            |  | $              | 503,723    |  |            |  | 503,723    | 
|Restricted cash                                      |  |                | 726,697    |  |            |  | 726,697    | 
|Mortgage loans held for sale                         |  |                | 7,825,175  |  |            |  | 7,886,859  | 
|Mortgage loans held for investment, net              |  |                | 16,143,865 |  |            |  | 16,143,865 | 
|Residual interests in securitizations                |  |                | 234,930    |  |            |  | 234,930    | 
|Euro Dollar futures contracts                        |  |                | 80,538     |  |            |  | 80,538     | 
|Interest rate cap contracts                          |  |                | 543        |  |            |  | 543        | 
|Financial liabilities:                               |  |                |            |  |            |  |            | 
|Credit facilities on mortgage loans held for sale    |  | $              | 7,439,685  |  |            |  | 7,439,685  | 
|Financing on mortgage loans held for investment, net |  |                | 16,045,459 |  |            |  | 16,045,459 | 
|Convertible senior notes, net                        |  |                | 4,943      |  |            |  | 6,025      | 
|Notes payable                                        |  |                | 39,140     |  |            |  | 39,140     | 
|Interest rate locks/forward sale commitments         |  |                | 1,078      |  |            |  | 1,078      | 

F-50



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                     |  |                |            |  |            |  |            | 
|---------------------------------------------------- |  | -------------- | ---------- |  | ---------- |  | ---------- | 
|                                                     |  | 2004           |           
|                                                     |  |                |           
|                                                     |  | Carrying Value |            |  | Fair Value | 
|                                                     |  |                |            |  |            | 
|Financial assets:                                    |  |                |            |  |            |  |            | 
|Cash and cash equivalents                            |  | $              | 842,854    |  |            |  | 842,854    | 
|Restricted cash                                      |  |                | 454,035    |  |            |  | 454,035    | 
|Mortgage loans held for sale                         |  |                | 3,922,865  |  |            |  | 3,999,753  | 
|Mortgage loans held for investment, net              |  |                | 13,195,324 |  |            |  | 13,195,324 | 
|Residual interests in securitizations                |  |                | 148,021    |  |            |  | 148,021    | 
|Euro Dollar futures contracts                        |  |                | 26,226     |  |            |  | 26,226     | 
|Interest rate cap contracts                          |  |                | 7,437      |  |            |  | 7,437      | 
|Financial liabilities:                               |  |                |            |  |            |  |            | 
|Credit facilities on mortgage loans held for sale    |  | $              | 3,704,268  |  |            |  | 3,704,268  | 
|Financing on mortgage loans held for investment, net |  |                | 13,105,973 |  |            |  | 13,105,973 | 
|Convertible senior notes, net                        |  |                | 5,392      |  |            |  | 5,837      | 
|Notes payable                                        |  |                | 37,638     |  |            |  | 37,638     | 



Cash and Cash Equivalents:


Restricted Cash:


Mortgage Loans Held for Sale:


Mortgage Loans Held for Investment:


Residual Interests in Securitizations:


Euro Dollar Futures Contracts:


Interest Rate Cap Contracts:


Interest Rate Locks/ Forward Sale Commitments:


Credit Facilities:


Financing on Mortgage Loans Held for Investment:


F-51



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Convertible Senior Notes:


Notes Payable:




|     |                                    
|---- | -----------------------------------
|(22) | Consolidating Financial Information



F-52



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Consolidating Schedule  Balance Sheet


|                                                        |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              |  |            |            |   |  |            |            | 
|------------------------------------------------------- | ----------------- | ---------------------- | --------- | --------- | ----------- |  | ---------- | ----------- |  |  | -------------- | ------ |  | --------------- | ---------- | ---------- | ------------ |  | ---------- | ---------- | - |  | ---------- | ---------- | 
|                                                        |                   | December 31, 2005      |          
|                                                        |                   |                        |          
|                                                        |                   | New Century            |           |           | New Century |  |            | New Century |  |  | New Century    |        |  |                
|                                                        |                   | Financial              |           |           | Residual IV |  |            | Credit      |  |  | TRS            |        |  |                
|                                                        |                   | Corporation            |           |           | Corporation |  |            | Corporation |  |  | Holdings, Inc. |        |  | Eliminations(1) |            |            | Consolidated | 
|                                                        |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              | 
|                                                        |                   | (Dollars in thousands) |          
|Assets                                                  |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              |  |            |            |   |  |            |           
|Cash and cash equivalents                               |                   | $                      | 305,237   |           |             |  |           |             |  |  | 1,000          |        |  |                 | 197,486    |            |              |  |           |            |   |  | 503,723    |           
|Restricted cash                                         |                   |                        |          |           |             |  | 585,587    |             |  |  |               |        |  |                 | 141,110    |            |              |  |           |            |   |  | 726,697    |           
|Mortgage loans held for sale at lower of cost or market |                   |                        |          |           |             |  |           |             |  |  |               |        |  |                 | 7,825,175  |            |              |  |           |            |   |  | 7,825,175  |           
|Mortgage loans held for investment, net                 |                   |                        |          |           |             |  | 13,942,324 |             |  |  | 27,991         |        |  |                 | 2,274,224  |            |              |  | (100,674   | )          |   |  | 16,143,865 |           
|Residual interests in securitizations                   |                   |                        |          |           |             |  |           |             |  |  |               |        |  |                 | 234,930    |            |              |  |           |            |   |  | 234,930    |           
|Mortgage servicing assets                               |                   |                        |          |           |             |  |           |             |  |  |               |        |  |                 | 69,315     |            |              |  |           |            |   |  | 69,315     |           
|Accrued interest receivable                             |                   |                        |          |           |             |  | 72,964     |             |  |  | (156           | )      |  |                 | 29,137     |            |              |  |           |            |   |  | 101,945    |           
|Income taxes receivable                                 |                   |                        |          |           |             |  |           |             |  |  |               |        |  |                 | 36,000     |            |              |  |           |            |   |  | 36,000     |           
|Deferred income taxes                                   |                   |                        |          |           |             |  |           |             |  |  |               |        |  |                 | 44,823     |            |              |  |           |            |   |  | 44,823     |           
|Office property and equipment, net                      |                   |                        |          |           |             |  |           |             |  |  |               |        |  |                 | 86,886     |            |              |  |           |            |   |  | 86,886     |           
|Goodwill                                                |                   |                        |          |           |             |  |           |             |  |  |               |        |  |                 | 92,980     |            |              |  |           |            |   |  | 92,980     |           
|Prepaid expenses and other assets                       |                   |                        | 473       |           |             |  | 136,592    |             |  |  | 147,224        |        |  |                 | (55,338    | )          |              |  | 51,800     |            |   |  | 280,751    |           
|Due to (from) affiliates                                |                   |                        | 143,032   |           |             |  | 19,769     |             |  |  | (95,952        | )      |  |                 | (66,849    | )          |              |  |           |            |   |  |           |           
|Investment in subsidiaries                              |                   |                        | 1,759,784 |           |             |  |           |             |  |  |               |        |  |                 |           |            |              |  | (1,759,784 | )          |   |  |           |           
|                                                        |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              | 
|                                                        | Total assets      |                        | $         | 2,208,526 |             |  |            | 14,757,236  |  |  |                | 80,107 |  |                 |            | 10,909,879 |              |  |            | (1,808,658 | ) |  |            | 26,147,090 | 
|                                                        |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              | 
|                                                       
|Liabilities and Stockholders Equity                    |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              |  |            |            |   |  |            |           
|Credit facilities on mortgage loans held for sale       |                   | $                      |          |           |             |  |           |             |  |  |               |        |  |                 | 7,439,685  |            |              |  |           |            |   |  | 7,439,685  |           
|Financing on mortgage loans held for investment, net    |                   |                        |          |           |             |  | 13,836,387 |             |  |  | 13,873         |        |  |                 | 2,204,084  |            |              |  | (8,885     | )          |   |  | 16,045,459 |           
|Accounts payable and accrued liabilities                |                   |                        | 98,826    |           |             |  | 44,783     |             |  |  | 3,610          |        |  |                 | 360,944    |            |              |  |           |            |   |  | 508,163    |           
|Convertible senior notes, net                           |                   |                        |          |           |             |  |           |             |  |  |               |        |  |                 | 4,943      |            |              |  |           |            |   |  | 4,943      |           
|Notes payable                                           |                   |                        |          |           |             |  |           |             |  |  |               |        |  |                 | 39,140     |            |              |  |           |            |   |  | 39,140     |           
|                                                        |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              | 
|                                                        | Total liabilities |                        |           | 98,826    |             |  |            | 13,881,170  |  |  |                | 17,483 |  |                 |            | 10,048,796 |              |  |            | (8,885     | ) |  |            | 24,037,390 | 
|                                                        |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              | 
|Commitments and contingencies Stockholders equity:     |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              |  |            |            |   |  |            |           
|Preferred stock                                         |                   |                        | 45        |           |             |  |           |             |  |  |               |        |  |                 |           |            |              |  |           |            |   |  | 45         |           
|Common stock                                            |                   |                        | 557       |           |             |  |           |             |  |  |               |        |  |                 |           |            |              |  |           |            |   |  | 557        |           
|Additional paid-in capital                              |                   |                        | 1,234,362 |           |             |  | 450,152    |             |  |  | 3,000          |        |  |                 |           |            |              |  | (453,152   | )          |   |  | 1,234,362  |           
|Accumulated other comprehensive income (loss)           |                   |                        | 61,045    |           |             |  | 75,679     |             |  |  |               |        |  |                 | (14,634    | )          |              |  | (61,045    | )          |   |  | 61,045     |           
|Retained earnings                                       |                   |                        | 828,270   |           |             |  | 350,235    |             |  |  | 59,624         |        |  |                 | 875,717    |            |              |  | (1,285,576 | )          |   |  | 828,270    |           
|                                                        |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              | 
|                                                        |                   |                        | 2,124,279 |           |             |  | 876,066    |             |  |  | 62,624         |        |  |                 | 861,083    |            |              |  | (1,799,773 | )          |   |  | 2,124,279  |           
|Deferred compensation costs                             |                   |                        | (14,579   | )         |             |  |           |             |  |  |               |        |  |                 |           |            |              |  |           |            |   |  | (14,579    | )         
|                                                        |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              | 
|Total stockholders equity                              |                   |                        | 2,109,700 |           |             |  | 876,066    |             |  |  | 62,624         |        |  |                 | 861,083    |            |              |  | (1,799,773 | )          |   |  | 2,109,700  |           
|                                                        |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              | 
|Total liabilities and stockholders equity              |                   | $                      | 2,208,526 |           |             |  | 14,757,236 |             |  |  | 80,107         |        |  |                 | 10,909,879 |            |              |  | (1,808,658 | )          |   |  | 26,147,090 |           
|                                                        |                   |                        |           |           |             |  |            |             |  |  |                |        |  |                 |            |            |              | 






|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(1) | Certain amounts related to transactions between the QRS and TRS
    are netted for elimination and consolidation purposes.

F-53



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Schedule  Balance Sheet


|                                                        |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              |  |            |            |   |  |            |            | 
|------------------------------------------------------- | ----------------- | ---------------------- | --------- | --------- | ----------- |  | --------- | ----------- |  |  | -------------- | ------- |  | --------------- | --------- | --------- | ------------ |  | ---------- | ---------- | - |  | ---------- | ---------- | 
|                                                        |                   | December 31, 2004      |          
|                                                        |                   |                        |          
|                                                        |                   | New Century            |           |           | New Century |  |           | New Century |  |  | New Century    |         |  |                
|                                                        |                   | Financial              |           |           | Residual IV |  |           | Credit      |  |  | TRS            |         |  |                
|                                                        |                   | Corporation            |           |           | Corporation |  |           | Corporation |  |  | Holdings, Inc. |         |  | Eliminations(1) |           |           | Consolidated | 
|                                                        |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              | 
|                                                        |                   | (Dollars in thousands) |          
|Assets                                                  |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              |  |            |            |   |  |            |           
|Cash and cash equivalents                               |                   | $                      | 742,239   |           |             |  |          |             |  |  | 1,000          |         |  |                 | 99,615    |           |              |  |           |            |   |  | 842,854    |           
|Restricted cash                                         |                   |                        | 9,000     |           |             |  | 274,408   |             |  |  |               |         |  |                 | 170,627   |           |              |  |           |            |   |  | 454,035    |           
|Mortgage loans held for sale at lower of cost or market |                   |                        |          |           |             |  |          |             |  |  |               |         |  |                 | 3,922,865 |           |              |  |           |            |   |  | 3,922,865  |           
|Mortgage loans held for investment, net                 |                   |                        |          |           |             |  | 8,582,010 |             |  |  | 806,479        |         |  |                 | 3,834,614 |           |              |  | (27,779    | )          |   |  | 13,195,324 |           
|Residual interests in securitizations                   |                   |                        |          |           |             |  |          |             |  |  |               |         |  |                 | 148,021   |           |              |  |           |            |   |  | 148,021    |           
|Mortgage servicing assets                               |                   |                        |          |           |             |  |          |             |  |  |               |         |  |                 | 8,249     |           |              |  |           |            |   |  | 8,249      |           
|Accrued interest receivable                             |                   |                        |          |           |             |  | 43,374    |             |  |  | 1,328          |         |  |                 | 21,506    |           |              |  |           |            |   |  | 66,208     |           
|Income taxes receivable                                 |                   |                        |          |           |             |  |          |             |  |  |               |         |  |                 | 129,871   |           |              |  |           |            |   |  | 129,871    |           
|Deferred income taxes                                   |                   |                        |          |           |             |  |          |             |  |  |               |         |  |                 | 50,969    |           |              |  |           |            |   |  | 50,969     |           
|Office property and equipment, net                      |                   |                        |          |           |             |  |          |             |  |  |               |         |  |                 | 47,266    |           |              |  |           |            |   |  | 47,266     |           
|Goodwill                                                |                   |                        |          |           |             |  |          |             |  |  |               |         |  |                 | 15,497    |           |              |  |           |            |   |  | 15,497     |           
|Prepaid expenses and other assets                       |                   |                        | 213       |           |             |  | 40,062    |             |  |  | 1,694          |         |  |                 | 110,569   |           |              |  | 18,247     |            |   |  | 170,785    |           
|Due to (from) affiliates                                |                   |                        | (30,568   | )         |             |  | 44,288    |             |  |  | 39,006         |         |  |                 | (52,726   | )         |              |  |           |            |   |  |           |           
|Investment in subsidiaries                              |                   |                        | 1,240,315 |           |             |  |          |             |  |  |               |         |  |                 |          |           |              |  | (1,240,315 | )          |   |  |           |           
|                                                        |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              | 
|                                                        | Total assets      |                        | $         | 1,961,199 |             |  |           | 8,984,142   |  |  |                | 849,507 |  |                 |           | 8,506,943 |              |  |            | (1,249,847 | ) |  |            | 19,051,944 | 
|                                                        |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              | 
|                                                       
|Liabilities and Stockholders Equity                    |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              |  |            |            |   |  |            |           
|Credit facilities on mortgage loans held for sale       |                   | $                      |          |           |             |  |          |             |  |  |               |         |  |                 | 3,704,268 |           |              |  |           |            |   |  | 3,704,268  |           
|Financing on mortgage loans held for investment, net    |                   |                        |          |           |             |  | 8,467,650 |             |  |  | 776,676        |         |  |                 | 3,861,647 |           |              |  |           |            |   |  | 13,105,973 |           
|Accounts payable and accrued liabilities                |                   |                        | 82,634    |           |             |  | 8,277     |             |  |  | 59,853         |         |  |                 | 169,344   |           |              |  |           |            |   |  | 320,108    |           
|Convertible senior notes, net                           |                   |                        |          |           |             |  |          |             |  |  |               |         |  |                 | 5,392     |           |              |  |           |            |   |  | 5,392      |           
|Notes payable                                           |                   |                        |          |           |             |  |          |             |  |  |               |         |  |                 | 37,638    |           |              |  |           |            |   |  | 37,638     |           
|                                                        |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              | 
|                                                        | Total liabilities |                        |           | 82,634    |             |  |           | 8,475,927   |  |  |                | 836,529 |  |                 |           | 7,778,289 |              |  |            |           |   |  |            | 17,173,379 | 
|                                                        |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              | 
|Commitments and contingencies Stockholders equity:     |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              |  |            |            |   |  |            |           
|Common stock                                            |                   |                        | 547       |           |             |  |          |             |  |  |               |         |  |                 |          |           |              |  |           |            |   |  | 547        |           
|Additional paid-in capital                              |                   |                        | 1,108,590 |           |             |  | 450,152   |             |  |  | 3,000          |         |  |                 |          |           |              |  | (453,152   | )          |   |  | 1,108,590  |           
|Accumulated other comprehensive income (loss)           |                   |                        | (4,700    | )         |             |  | 23,608    |             |  |  |               |         |  |                 | (28,307   | )         |              |  | 4,699      |            |   |  | (4,700     | )         
|Retained earnings                                       |                   |                        | 781,627   |           |             |  | 34,455    |             |  |  | 9,978          |         |  |                 | 756,961   |           |              |  | (801,394   | )          |   |  | 781,627    |           
|                                                        |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              | 
|                                                        |                   |                        | 1,886,064 |           |             |  | 508,215   |             |  |  | 12,978         |         |  |                 | 728,654   |           |              |  | (1,249,847 | )          |   |  | 1,886,064  |           
|Deferred compensation costs                             |                   |                        | (7,499    | )         |             |  |          |             |  |  |               |         |  |                 |          |           |              |  |           |            |   |  | (7,499     | )         
|                                                        |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              | 
|Total stockholders equity                              |                   |                        | 1,878,565 |           |             |  | 508,215   |             |  |  | 12,978         |         |  |                 | 728,654   |           |              |  | (1,249,847 | )          |   |  | 1,878,565  |           
|                                                        |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              | 
|Total liabilities and stockholders equity              |                   | $                      | 1,961,199 |           |             |  | 8,984,142 |             |  |  | 849,507        |         |  |                 | 8,506,943 |           |              |  | (1,249,847 | )          |   |  | 19,051,944 |           
|                                                        |                   |                        |           |           |             |  |           |             |  |  |                |         |  |                 |           |           |              | 






|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(1) | Certain amounts related to transactions between the QRS and TRS
    are netted for elimination and consolidation purposes.

F-54



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Schedule


Statement of Income


|                                                           |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              |  |         |          |          |   |           |         |         | 
|---------------------------------------------------------- | ---------------------------------------------- | ----------------------------------- | ------ | ------- | ----------- |  | --------- | ----------- | ------- | - | ------------- | ------ | ------ | --------------- | -------- | ------- | ------------ |  | ------- | -------- | -------- | - | --------- | ------- | ------- | 
|                                                           |                                                | December 31, 2005                   |       
|                                                           |                                                |                                     |       
|                                                           |                                                | New Century                         |        |         | New Century |  |           | New Century |         |   | New Century   |        |        |                
|                                                           |                                                | Financial                           |        |         | Residual IV |  |           | Credit      |         |   | TRS Holdings, |        |        |                
|                                                           |                                                | Corporation                         |        |         | Corporation |  |           | Corporation |         |   | Inc.          |        |        | Eliminations(1) |          |         | Consolidated | 
|                                                           |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              | 
|                                                           |                                                | (In thousands)                      |       
|Interest income                                            |                                                | $                                   | 8,802  |         |             |  | 1,009,294 |             |         |   | 55,805        |        |        |                 | 741,871  |         |              |  | (56,205 | )        |          |   | 1,759,567 |        
|Interest expense                                           |                                                |                                     | (5,200 | )       |             |  | (451,636  | )           |         |   | (19,033       | )      |        |                 | (504,421 | )       |              |  | (7,833  | )        |          |   | (988,123  | )      
|                                                           |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              | 
|                                                           | Net interest income                            |                                     |        | 3,602   |             |  |           | 557,658     |         |   |               | 36,772 |        |                 |          | 237,450 |              |  |         | (64,038  | )        |   |           | 771,444 |        
|Provision for losses on mortgage loans held for investment |                                                |                                     |       |         |             |  | (139,162  | )           |         |   |              |        |        |                 | (1,071   | )       |              |  |        |          |          |   | (140,233  | )      
|                                                           |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              | 
|                                                           | Net interest income after provision for losses |                                     |        | 3,602   |             |  |           | 418,496     |         |   |               | 36,772 |        |                 |          | 236,379 |              |  |         | (64,038  | )        |   |           | 631,211 |        
|Other operating income:                                    |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              |  |         |          |          |   |           |        
|                                                           | Gain on sale of mortgage loans                 |                                     |        |        |             |  |           |            |         |   |               |       |        |                 |          | 589,035 |              |  |         | 33,582   |          |   |           | 622,617 |        
|                                                           | Servicing fees received (paid)                 |                                     |        |        |             |  |           | (30,368     | )       |   |               | (632   | )      |                 |          | 69,514  |              |  |         |         |          |   |           | 38,514  |        
|                                                           | Other income (loss)                            |                                     |        |        |             |  |           | 9,315       |         |   |               | 13,505 |        |                 |          | (420    | )            |  |         |         |          |   |           | 22,400  |        
|                                                           | Equity in net earnings of subsidiary           |                                     |        | 437,521 |             |  |           |            |         |   |               |       |        |                 |          |        |              |  |         | (437,521 | )        |   |           |        |        
|                                                           |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              | 
|                                                           |                                                | Total other operating income (loss) |        |         | 437,521     |  |           |             | (21,053 | ) |               |        | 12,873 |                 |          |         | 658,129      |  |         |          | (403,939 | ) |           |         | 683,531 | 
|                                                           |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              | 
|Other operating expenses:                                  |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              |  |         |          |          |   |           |        
|                                                           | Personnel                                      |                                     |        | 10,165  |             |  |           |            |         |   |               |       |        |                 |          | 541,615 |              |  |         |         |          |   |           | 551,780 |        
|                                                           | General and administrative                     |                                     |        | 12,326  |             |  |           |            |         |   |               |       |        |                 |          | 180,726 |              |  |         |         |          |   |           | 193,052 |        
|                                                           | Advertising and promotion                      |                                     |        |        |             |  |           |            |         |   |               |       |        |                 |          | 83,738  |              |  |         |         |          |   |           | 83,738  |        
|                                                           | Professional services                          |                                     |        | 1,439   |             |  |           |            |         |   |               |       |        |                 |          | 41,313  |              |  |         |         |          |   |           | 42,752  |        
|                                                           | Inducement expense on convertible senior notes |                                     |        |        |             |  |           |            |         |   |               |       |        |                 |          | 43      |              |  |         |         |          |   |           | 43      |        
|                                                           |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              | 
|                                                           |                                                | Total operating expenses            |        |         | 23,930      |  |           |             |        |   |               |        |       |                 |          |         | 847,435      |  |         |          |         |   |           |         | 871,365 | 
|                                                           |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              | 
|                                                           |                                                | Earnings before income taxes        |        |         | 417,193     |  |           |             | 397,443 |   |               |        | 49,645 |                 |          |         | 47,073       |  |         |          | (467,977 | ) |           |         | 443,377 | 
|Income taxes                                               |                                                |                                     | 650    |         |             |  |          |             |         |   |              |        |        |                 | 26,184   |         |              |  |        |          |          |   | 26,834    |        
|                                                           |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              | 
|                                                           | Net earnings                                   |                                     | $      | 416,543 |             |  |           | 397,443     |         |   |               | 49,645 |        |                 |          | 20,889  |              |  |         | (467,977 | )        |   |           | 416,543 |        
|                                                           |                                                |                                     |        |         |             |  |           |             |         |   |               |        |        |                 |          |         |              | 






|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(1) | Certain amounts related to transactions between the QRS and TRS
    are netted for elimination and consolidation purposes.

F-55



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Schedule


Statement of Income


|                                                           |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |          |   |          |         |         |  |          |         |         | 
|---------------------------------------------------------- | ---------------------------------------------- | ----------------------------------- | ----- | ------- | ----------- |  | ------- | ----------- | ------ | - | ------------- | ----- | ----- | --------------- | -------- | ------------- | ------------ |  | - | -------- | -------- | - | -------- | ------- | ------- |  | -------- | ------- | ------- | 
|                                                           |                                                | December 31, 2004 and 2003          |      
|                                                           |                                                |                                     |      
|                                                           |                                                | 2004                                |       |         | 2003        | 
|                                                           |                                                |                                     |       |         |             | 
|                                                           |                                                | New Century                         |       |         | New Century |  |         | New Century |        |   | New Century   |       |       |                 |          | New Century   |             
|                                                           |                                                | Financial                           |       |         | Residual IV |  |         | Credit      |        |   | TRS Holdings, |       |       |                 |          | TRS Holdings, |             
|                                                           |                                                | Corporation                         |       |         | Corporation |  |         | Corporation |        |   | Inc.          |       |       | Eliminations(1) |          |               | Consolidated |  |   | Inc.     |         
|                                                           |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |         
|                                                           |                                                | (In thousands)                      |      
|Interest income                                            |                                                | $                                   | 1,277 |         |             |  | 103,239 |             |        |   | 15,234        |       |       |                 | 778,897  |               |              |  |  |          |          |   | 898,647  |         |         |  | 353,691  |        
|Interest expense                                           |                                                |                                     |      |         |             |  | (42,601 | )           |        |   | (5,270        | )     |       |                 | (319,223 | )             |              |  |  |          |          |   | (367,094 | )       |         |  | (117,575 | )      
|                                                           |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |         
|                                                           | Net interest income                            |                                     |       | 1,277   |             |  |         | 60,638      |        |   |               | 9,964 |       |                 |          | 459,674       |              |  |   |         |          |   |          | 531,553 |         |  |          | 236,116 |        
|Provision for losses on mortgage loans held for investment |                                                |                                     |      |         |             |  | (17,808 | )           |        |   |              |       |       |                 | (52,442  | )             |              |  |  |          |          |   | (70,250  | )       |         |  | (26,304  | )      
|                                                           |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |         
|                                                           | Net interest income after provision for losses |                                     |       | 1,277   |             |  |         | 42,830      |        |   |               | 9,964 |       |                 |          | 407,232       |              |  |   |         |          |   |          | 461,303 |         |  |          | 209,812 |        
|Other operating income:                                    |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |          |   |          |         |         |  |          |        
|                                                           | Gain (loss) on sale of mortgage loans          |                                     |       |        |             |  |         | (1,312      | )      |   |               | 15    |       |                 |          | 811,418       |              |  |   | (9,512   | )        |   |          | 800,609 |         |  |          | 611,136 |        
|                                                           | Servicing fees received (paid)                 |                                     |       | (97     | )           |  |         | (7,063      | )      |   |               | (1    | )     |                 |          | 36,057        |              |  |   |         |          |   |          | 28,896  |         |  |          | 11,139  |        
|                                                           | Other income                                   |                                     |       |        |             |  |         |            |        |   |               |      |       |                 |          | 4,415         |              |  |   |         |          |   |          | 4,415   |         |  |          |        |        
|                                                           | Equity in net earnings of subsidiary           |                                     |       | 379,155 |             |  |         |            |        |   |               |      |       |                 |          |              |              |  |   | (379,155 | )        |   |          |        |         |  |          |        |        
|                                                           |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |         
|                                                           |                                                | Total other operating income (loss) |       |         | 379,058     |  |         |             | (8,375 | ) |               |       | 14    |                 |          |               | 851,890      |  |   |          | (388,667 | ) |          |         | 833,920 |  |          |         | 622,275 | 
|                                                           |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |         
|Other operating expenses:                                  |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |          |   |          |         |         |  |          |        
|                                                           | Personnel                                      |                                     |       | 64      |             |  |         |            |        |   |               |      |       |                 |          | 419,672       |              |  |   |         |          |   |          | 419,736 |         |  |          | 248,796 |        
|                                                           | General and administrative                     |                                     |       | 2,700   |             |  |         |            |        |   |               |      |       |                 |          | 143,717       |              |  |   |         |          |   |          | 146,417 |         |  |          | 105,301 |        
|                                                           | Advertising and promotion                      |                                     |       |        |             |  |         |            |        |   |               |      |       |                 |          | 65,503        |              |  |   |         |          |   |          | 65,503  |         |  |          | 26,118  |        
|                                                           | Professional services                          |                                     |       |        |             |  |         |            |        |   |               |      |       |                 |          | 27,669        |              |  |   |         |          |   |          | 27,669  |         |  |          | 28,620  |        
|                                                           | Inducement expense on convertible senior notes |                                     |       |        |             |  |         |            |        |   |               |      |       |                 |          | 24,757        |              |  |   |         |          |   |          | 24,757  |         |  |          |        |        
|                                                           |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |         
|                                                           |                                                | Total operating expenses            |       |         | 2,764       |  |         |             |       |   |               |       |      |                 |          |               | 681,318      |  |   |          |         |   |          |         | 684,082 |  |          |         | 408,835 | 
|                                                           |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |         
|                                                           |                                                | Earnings before income taxes        |       |         | 377,571     |  |         |             | 34,455 |   |               |       | 9,978 |                 |          |               | 577,804      |  |   |          | (388,667 | ) |          |         | 611,141 |  |          |         | 423,252 | 
|Income taxes                                               |                                                |                                     | 2,000 |         |             |  |        |             |        |   |              |       |       |                 | 233,570  |               |              |  |  |          |          |   | 235,570  |         |         |  | 177,769  |        
|                                                           |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |         
|                                                           | Net earnings                                   |                                     | $     | 375,571 |             |  |         | 34,455      |        |   |               | 9,978 |       |                 |          | 344,234       |              |  |   | (388,667 | )        |   |          | 375,571 |         |  |          | 245,483 |        
|                                                           |                                                |                                     |       |         |             |  |         |             |        |   |               |       |       |                 |          |               |              |  |   |          |         






|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(1) | Certain amounts related to transactions between the QRS and TRS
    are netted for elimination and consolidation purposes.



F-56



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Statements of Cash Flows


|                                                                                                  |  |                                      |          |   |             |  |         |             |  |  |                |   |  |                 |             |   |              |  |          |   |  |  |             |  
|------------------------------------------------------------------------------------------------- |  | ------------------------------------ | -------- | - | ----------- |  | ------- | ----------- |  |  | -------------- | - |  | --------------- | ----------- | - | ------------ |  | -------- | - |  |  | ----------- | -
|                                                                                                  |  | For the Year ended December 31, 2005 |         
|                                                                                                  |  |                                      |         
|                                                                                                  |  | New Century                          |          |   | New Century |  |         | New Century |  |  | New Century    |   |  |                
|                                                                                                  |  | Financial                            |          |   | Residual IV |  |         | Credit      |  |  | TRS            |   |  |                
|                                                                                                  |  | Corporation                          |          |   | Corporation |  |         | Corporation |  |  | Holdings, Inc. |   |  | Eliminations(1) |             |   | Consolidated | 
|                                                                                                  |  |                                      |          |   |             |  |         |             |  |  |                |   |  |                 |             |   |              | 
|                                                                                                  |  | (Dollars in thousands)               |         
|Cash flows from operating activities:                                                             |  |                                      |          |   |             |  |         |             |  |  |                |   |  |                 |             |   |              |  |          |   |  |  |             |  
|Net earnings                                                                                      |  | $                                    | 416,543  |   |             |  | 397,443 |             |  |  | 49,645         |   |  |                 | 20,889      |   |              |  | (467,977 | ) |  |  | 416,543     |  
|Adjustments to reconcile net earnings to net cash provided by
    (used in) operating activities: |  |                                      |          |   |             |  |         |             |  |  |                |   |  |                 |             |   |              |  |          |   |  |  |             |  
|Depreciation and amortization of office property and equipment                                    |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | 23,016      |   |              |  |         |   |  |  | 23,016      |  
|Amortization of deferred compensation                                                             |  |                                      | 3,855    |   |             |  |        |             |  |  |               |   |  |                 | 3,560       |   |              |  |         |   |  |  | 7,415       |  
|Other amortization                                                                                |  |                                      |         |   |             |  | 49,062  |             |  |  |               |   |  |                 | 52,466      |   |              |  |         |   |  |  | 101,528     |  
|Deferred income taxes                                                                             |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | 4,877       |   |              |  |         |   |  |  | 4,877       |  
|Increase in income taxes receivable                                                               |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | 93,871      |   |              |  |         |   |  |  | 93,871      |  
|NIR gains/discounts                                                                               |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | 109,565     |   |              |  |         |   |  |  | 109,565     |  
|Initial deposits to over-collateralization accounts                                               |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | (207,031    | ) |              |  |         |   |  |  | (207,031    | )
|Cash flows received from residual interests                                                       |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | 17,544      |   |              |  |         |   |  |  | 17,544      |  
|Servicing gains                                                                                   |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | (95,120     | ) |              |  |         |   |  |  | (95,120     | )
|Accretion of NIRs                                                                                 |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | (16,969     | ) |              |  |         |   |  |  | (16,969     | )
|Fair value adjustment of residual securities                                                      |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | 9,983       |   |              |  |         |   |  |  | 9,983       |  
|Provision for losses on mortgage loans held for investment                                        |  |                                      |         |   |             |  | 143,873 |             |  |  |               |   |  |                 | (3,640      | ) |              |  |         |   |  |  | 140,233     |  
|Provision for repurchase losses                                                                   |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | 17,524      |   |              |  |         |   |  |  | 17,524      |  
|Mortgage loans originated or acquired for sale                                                    |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | (45,917,934 | ) |              |  |         |   |  |  | (45,917,934 | )
|Mortgage loan sales, net                                                                          |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | 41,756,982  |   |              |  |         |   |  |  | 41,756,982  |  
|Principal payments on mortgage loans held for sale                                                |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | 275,551     |   |              |  |         |   |  |  | 275,551     |  
|Increase in credit facilities on mortgage loans held for sale                                     |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | 3,735,417   |   |              |  |         |   |  |  | 3,735,417   |  
|Due to (from) affiliates                                                                          |  |                                      | (173,600 | ) |             |  | (76,886 | )           |  |  | 134,959        |   |  |                 | 115,527     |   |              |  |         |   |  |  |            |  
|Tax benefit from non-qualified stock options                                                      |  |                                      |         |   |             |  |        |             |  |  |               |   |  |                 | 17,599      |   |              |  |         |   |  |  | 17,599      |  
|Net change in other assets and liabilities                                                        |  |                                      | 9,370    |   |             |  | 24,519  |             |  |  | (200,289       | ) |  |                 | 258,829     |   |              |  | (33,553  | ) |  |  | 58,876      |  
|Equity in undistributed earnings of subsidiaries                                                  |  |                                      | (437,521 | ) |             |  |        |             |  |  |               |   |  |                 |            |   |              |  | 437,521  |   |  |  |            |  
|                                                                                                  |  |                                      |          |   |             |  |         |             |  |  |                |   |  |                 |             |   |              | 
|Net cash provided by (used in) operating activities                                               |  |                                      | (181,353 | ) |             |  | 538,011 |             |  |  | (15,685        | ) |  |                 | 272,506     |   |              |  | (64,009  | ) |  |  | 549,470     |  
|                                                                                                  |  |                                      |          |   |             |  |         |             |  |  |                |   |  |                 |             |   |              | 

F-57



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                                                   |  |                                      |          |   |             |  |             |             |  |  |                |   |  |                 |            |   |              |  |        |   |  |  |             |  
|---------------------------------------------------------------------------------- |  | ------------------------------------ | -------- | - | ----------- |  | ----------- | ----------- |  |  | -------------- | - |  | --------------- | ---------- | - | ------------ |  | ------ | - |  |  | ----------- | -
|                                                                                   |  | For the Year ended December 31, 2005 |         
|                                                                                   |  |                                      |         
|                                                                                   |  | New Century                          |          |   | New Century |  |             | New Century |  |  | New Century    |   |  |                
|                                                                                   |  | Financial                            |          |   | Residual IV |  |             | Credit      |  |  | TRS            |   |  |                
|                                                                                   |  | Corporation                          |          |   | Corporation |  |             | Corporation |  |  | Holdings, Inc. |   |  | Eliminations(1) |            |   | Consolidated | 
|                                                                                   |  |                                      |          |   |             |  |             |             |  |  |                |   |  |                 |            |   |              | 
|                                                                                   |  | (Dollars in thousands)               |         
|Cash flows from investing activities:                                              |  |                                      |          |   |             |  |             |             |  |  |                |   |  |                 |            |   |              |  |        |   |  |  |             |  
|Mortgage loans originated or acquired for investment, net                          |  |                                      |         |   |             |  | (11,218,723 | )           |  |  | 780,779        |   |  |                 | 91,408     |   |              |  | 72,894 |   |  |  | (10,273,642 | )
|Principal payments on mortgage loans held for investment                           |  |                                      |         |   |             |  | 5,626,916   |             |  |  | (2,291         | ) |  |                 | 1,497,433  |   |              |  |       |   |  |  | 7,122,058   |  
|Sale of mortgage servicing rights                                                  |  |                                      |         |   |             |  |            |             |  |  |               |   |  |                 | 24,877     |   |              |  |       |   |  |  | 24,877      |  
|Purchases of office property and equipment                                         |  |                                      |         |   |             |  |            |             |  |  |               |   |  |                 | (60,530    | ) |              |  |       |   |  |  | (60,530     | )
|Acquisition of net assets                                                          |  |                                      |         |   |             |  |            |             |  |  |               |   |  |                 | (80,573    | ) |              |  |       |   |  |  | (80,573     | )
|                                                                                   |  |                                      |          |   |             |  |             |             |  |  |                |   |  |                 |            |   |              | 
|Net cash provided by (used in) investing activities                                |  |                                      |         |   |             |  | (5,591,807  | )           |  |  | 778,488        |   |  |                 | 1,472,615  |   |              |  | 72,894 |   |  |  | (3,267,810  | )
|                                                                                   |  |                                      |          |   |             |  |             |             |  |  |                |   |  |                 |            |   |              | 
|Cash flows from financing activities:                                              |  |                                      |          |   |             |  |             |             |  |  |                |   |  |                 |            |   |              |  |        |   |  |  |             |  
|Proceeds from issuance of financing on mortgage loans held for
    investment, net |  |                                      |         |   |             |  | 10,575,678  |             |  |  | (762,803       | ) |  |                 | (13,159    | ) |              |  | (8,885 | ) |  |  | 9,790,831   |  
|Repayments of financing on mortgage loans held for investment                      |  |                                      |         |   |             |  | (5,210,703  | )           |  |  |               |   |  |                 | (1,665,110 | ) |              |  |       |   |  |  | (6,875,813  | )
|Net proceeds from issuance of stock                                                |  |                                      | 26,459   |   |             |  |            |             |  |  |               |   |  |                 |           |   |              |  |       |   |  |  | 26,459      |  
|Proceeds from issuance of preferred stock                                          |  |                                      | 108,664  |   |             |  |            |             |  |  |               |   |  |                 |           |   |              |  |       |   |  |  | 108,664     |  
|(Increase) decrease in restricted cash                                             |  |                                      | 9,000    |   |             |  | (311,179    | )           |  |  |               |   |  |                 | 29,517     |   |              |  |       |   |  |  | (272,662    | )
|Increases in notes payable                                                         |  |                                      |         |   |             |  |            |             |  |  |               |   |  |                 | 1,502      |   |              |  |       |   |  |  | 1,502       |  
|Payments of dividends on preferred stock                                           |  |                                      | (5,418   | ) |             |  |            |             |  |  |               |   |  |                 |           |   |              |  |       |   |  |  | (5,418      | )
|Payments of dividends on common stock                                              |  |                                      | (352,464 | ) |             |  |            |             |  |  |               |   |  |                 |           |   |              |  |       |   |  |  | (352,464    | )
|Purchases of common stock                                                          |  |                                      | (41,890  | ) |             |  |            |             |  |  |               |   |  |                 |           |   |              |  |       |   |  |  | (41,890     | )
|                                                                                   |  |                                      |          |   |             |  |             |             |  |  |                |   |  |                 |            |   |              | 
|Net cash provided by (used in) financing activities                                |  |                                      | (255,649 | ) |             |  | 5,053,796   |             |  |  | (762,803       | ) |  |                 | (1,647,250 | ) |              |  | (8,885 | ) |  |  | 2,379,209   |  
|                                                                                   |  |                                      |          |   |             |  |             |             |  |  |                |   |  |                 |            |   |              | 
|Net increase (decrease) in cash and cash equivalents                               |  |                                      | (437,002 | ) |             |  |            |             |  |  |               |   |  |                 | 97,871     |   |              |  |       |   |  |  | (339,131    | )
|Cash and cash equivalents, beginning of year                                       |  |                                      | 742,239  |   |             |  |            |             |  |  | 1,000          |   |  |                 | 99,615     |   |              |  |       |   |  |  | 842,854     |  
|                                                                                   |  |                                      |          |   |             |  |             |             |  |  |                |   |  |                 |            |   |              | 
|Cash and cash equivalents, end of year                                             |  | $                                    | 305,237  |   |             |  |            |             |  |  | 1,000          |   |  |                 | 197,486    |   |              |  |       |   |  |  | 503,723     |  
|                                                                                   |  |                                      |          |   |             |  |             |             |  |  |                |   |  |                 |            |   |              | 






|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(1) | Certain amounts related to transactions between the QRS and TRS
    are netted for elimination and consolidation purposes.

F-58



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Statements of Cash Flows


|                                                                                                  |  |                                                |         |  |             |  |        |             |  |  |               |  |  |                 |             |               |              |  |          |      |  |  |             |   |  |  |             |  
|------------------------------------------------------------------------------------------------- |  | ---------------------------------------------- | ------- |  | ----------- |  | ------ | ----------- |  |  | ------------- |  |  | --------------- | ----------- | ------------- | ------------ |  | -------- | ---- |  |  | ----------- | - |  |  | ----------- | -
|                                                                                                  |  | For the Years ended December 31, 2004 and 2003 |        
|                                                                                                  |  |                                                |        
|                                                                                                  |  | 2004                                           |         |  | 2003        | 
|                                                                                                  |  |                                                |         |  |             | 
|                                                                                                  |  | New Century                                    |         |  | New Century |  |        | New Century |  |  | New Century   |  |  |                 |             | New Century   |             
|                                                                                                  |  | Financial                                      |         |  | Residual IV |  |        | Credit      |  |  | TRS Holdings, |  |  |                 |             | TRS Holdings, |             
|                                                                                                  |  | Corporation                                    |         |  | Corporation |  |        | Corporation |  |  | Inc.          |  |  | Eliminations(1) |             |               | Consolidated |  |          | Inc. | 
|                                                                                                  |  |                                                |         |  |             |  |        |             |  |  |               |  |  |                 |             |               |              |  |          |      | 
|                                                                                                  |  | (Dollars in thousands)                         |        
|Cash flows from operating activities:                                                             |  |                                                |         |  |             |  |        |             |  |  |               |  |  |                 |             |               |              |  |          |      |  |  |             |   |  |  |             |  
|Net earnings                                                                                      |  | $                                              | 375,571 |  |             |  | 34,455 |             |  |  | 9,978         |  |  |                 | 344,234     |               |              |  | (388,667 | )    |  |  | 375,571     |   |  |  | 245,483     |  
|Adjustments to reconcile net earnings to net cash provided by
    (used in) operating activities: |  |                                                |         |  |             |  |        |             |  |  |               |  |  |                 |             |               |              |  |          |      |  |  |             |   |  |  |             |  
|Depreciation and amortization of office property and equipment                                    |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | 15,246      |               |              |  |         |      |  |  | 15,246      |   |  |  | 10,652      |  
|Amortization of deferred compensation                                                             |  |                                                | 65      |  |             |  |       |             |  |  |              |  |  |                 | 4,879       |               |              |  |         |      |  |  | 4,944       |   |  |  | 3,326       |  
|Other amortization                                                                                |  |                                                |        |  |             |  | 17,784 |             |  |  |              |  |  |                 | 36,148      |               |              |  |         |      |  |  | 53,932      |   |  |  | 9,927       |  
|Deferred income taxes                                                                             |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | 42,959      |               |              |  |         |      |  |  | 42,959      |   |  |  | (98,347     | )
|Increase in income taxes receivable                                                               |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | (129,871    | )             |              |  |         |      |  |  | (129,871    | ) |  |  |            |  
|Cash flows received from residual interests                                                       |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | 41,453      |               |              |  |         |      |  |  | 41,453      |   |  |  | 72,331      |  
|Servicing gains                                                                                   |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | (7,923      | )             |              |  |         |      |  |  | (7,923      | ) |  |  | (7,777      | )
|Accretion of NIRs                                                                                 |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | (17,673     | )             |              |  |         |      |  |  | (17,673     | ) |  |  | (24,228     | )
|Fair value adjustment of residual securities                                                      |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | 7,697       |               |              |  |         |      |  |  | 7,697       |   |  |  | 19,363      |  
|Provision for losses on mortgage loans held for investment                                        |  |                                                |        |  |             |  | 17,808 |             |  |  |              |  |  |                 | 52,442      |               |              |  |         |      |  |  | 70,250      |   |  |  | 26,304      |  
|Provision for repurchase losses                                                                   |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | 2,736       |               |              |  |         |      |  |  | 2,736       |   |  |  | 5,868       |  
|Mortgage loans originated or acquired for sale                                                    |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | (31,292,846 | )             |              |  |         |      |  |  | (31,292,846 | ) |  |  | (22,458,565 | )
|Mortgage loan sales, net                                                                          |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | 30,329,278  |               |              |  |         |      |  |  | 30,329,278  |   |  |  | 20,835,105  |  
|Principal payments on mortgage loans held for sale                                                |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | 461,208     |               |              |  |         |      |  |  | 461,208     |   |  |  | 115,777     |  
|Increase in credit facilities on mortgage loans held for sale                                     |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | 392,431     |               |              |  |         |      |  |  | 392,431     |   |  |  | 1,426,339   |  
|Tax benefit from non-qualified stock options                                                      |  |                                                |        |  |             |  |       |             |  |  |              |  |  |                 | 8,587       |               |              |  |         |      |  |  | 8,587       |   |  |  | 5,300       |  

F-59



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                                                   |  |                                                |          |   |             |  |            |             |  |  |               |   |  |                 |            |               |              |  |         |      |  |  |             |   |  |  |            |  
|---------------------------------------------------------------------------------- |  | ---------------------------------------------- | -------- | - | ----------- |  | ---------- | ----------- |  |  | ------------- | - |  | --------------- | ---------- | ------------- | ------------ |  | ------- | ---- |  |  | ----------- | - |  |  | ---------- | -
|                                                                                   |  | For the Years ended December 31, 2004 and 2003 |         
|                                                                                   |  |                                                |         
|                                                                                   |  | 2004                                           |          |   | 2003        | 
|                                                                                   |  |                                                |          |   |             | 
|                                                                                   |  | New Century                                    |          |   | New Century |  |            | New Century |  |  | New Century   |   |  |                 |            | New Century   |             
|                                                                                   |  | Financial                                      |          |   | Residual IV |  |            | Credit      |  |  | TRS Holdings, |   |  |                 |            | TRS Holdings, |             
|                                                                                   |  | Corporation                                    |          |   | Corporation |  |            | Corporation |  |  | Inc.          |   |  | Eliminations(1) |            |               | Consolidated |  |         | Inc. | 
|                                                                                   |  |                                                |          |   |             |  |            |             |  |  |               |   |  |                 |            |               |              |  |         |      | 
|                                                                                   |  | (Dollars in thousands)                         |         
|Net change in other assets and liabilities                                         |  |                                                | 68,839   |   |             |  | (92,675    | )           |  |  | 17,825        |   |  |                 | (44,291    | )             |              |  | (18,267 | )    |  |  | (68,569     | ) |  |  | 16,146     |  
|Equity in undistributed earnings of subsidiaries                                   |  |                                                | (379,155 | ) |             |  |           |             |  |  |              |   |  |                 |           |               |              |  | 379,155 |      |  |  |            |   |  |  |           |  
|                                                                                   |  |                                                |          |   |             |  |            |             |  |  |               |   |  |                 |            |               |              |  |         |      | 
|Net cash provided by (used in) operating activities                                |  |                                                | 65,320   |   |             |  | (22,628    | )           |  |  | 27,803        |   |  |                 | 246,694    |               |              |  | (27,779 | )    |  |  | 289,410     |   |  |  | 203,004    |  
|                                                                                   |  |                                                |          |   |             |  |            |             |  |  |               |   |  |                 |            |               |              |  |         |      | 
|Cash flows from investing activities:                                              |  |                                                |          |   |             |  |            |             |  |  |               |   |  |                 |            |               |              |  |         |      |  |  |             |   |  |  |            |  
|Mortgage loans originated or acquired for investment, net                          |  |                                                |         |   |             |  | (8,731,100 | )           |  |  | (806,479      | ) |  |                 | (1,510,477 | )             |              |  | 27,779  |      |  |  | (11,020,277 | ) |  |  | (4,996,609 | )
|Principal payments on mortgage loans held for investment                           |  |                                                |         |   |             |  | 564,286    |             |  |  |              |   |  |                 | 1,883,912  |               |              |  |        |      |  |  | 2,448,198   |   |  |  | 219,170    |  
|Sale of mortgage loans to REIT                                                     |  |                                                | (450,152 | ) |             |  |           |             |  |  |              |   |  |                 | 450,152    |               |              |  |        |      |  |  |            |   |  |  |           |  
|Sale of mortgage servicing rights                                                  |  |                                                |         |   |             |  |           |             |  |  |              |   |  |                 | 15,184     |               |              |  |        |      |  |  | 15,184      |   |  |  | 15,568     |  
|Purchases of office property and equipment                                         |  |                                                |         |   |             |  |           |             |  |  |              |   |  |                 | (28,977    | )             |              |  |        |      |  |  | (28,977     | ) |  |  | (22,574    | )
|Acquisition of net assets                                                          |  |                                                |         |   |             |  |           |             |  |  |              |   |  |                 | (3,991     | )             |              |  |        |      |  |  | (3,991      | ) |  |  |           |  
|                                                                                   |  |                                                |          |   |             |  |            |             |  |  |               |   |  |                 |            |               |              |  |         |      | 
|Net cash provided by (used in) investing activities                                |  |                                                | (450,152 | ) |             |  | (8,166,814 | )           |  |  | (806,479      | ) |  |                 | 805,803    |               |              |  | 27,779  |      |  |  | (8,589,863  | ) |  |  | (4,784,445 | )
|                                                                                   |  |                                                |          |   |             |  |            |             |  |  |               |   |  |                 |            |               |              |  |         |      | 
|Cash flows from financing activities:                                              |  |                                                |          |   |             |  |            |             |  |  |               |   |  |                 |            |               |              |  |         |      |  |  |             |   |  |  |            |  
|Proceeds form issuance of financing on mortgage loans held for
    investment, net |  |                                                |         |   |             |  | 8,909,186  |             |  |  | 776,676       |   |  |                 | 883,804    |               |              |  |        |      |  |  | 10,569,666  |   |  |  | 4,918,204  |  
|Repayments of financing on mortgage loans held for investment                      |  |                                                |         |   |             |  | (445,336   | )           |  |  |              |   |  |                 | (1,726,252 | )             |              |  |        |      |  |  | (2,171,588  | ) |  |  | (235,487   | )
|Net proceeds from issuance of stock                                                |  |                                                | 770,541  |   |             |  |           |             |  |  | 3,000         |   |  |                 | 14,812     |               |              |  |        |      |  |  | 788,353     |   |  |  | 10,595     |  
|Convertible debt proceeds, net                                                     |  |                                                | 379,608  |   |             |  |           |             |  |  |              |   |  |                 | (379,608   | )             |              |  |        |      |  |  |            |   |  |  | 204,315    |  
|Increase in restricted cash                                                        |  |                                                | (9,000   | ) |             |  | (274,408   | )           |  |  |              |   |  |                 | (53,744    | )             |              |  |        |      |  |  | (337,152    | ) |  |  | (110,628   | )
|Call options sold                                                                  |  |                                                |         |   |             |  |           |             |  |  |              |   |  |                 | 29,777     |               |              |  |        |      |  |  | 29,777      |   |  |  |           |  

F-60



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                     |  |                                                |           |   |             |  |           |             |  |  |               |  |  |                 |            |               |              |  |   |      |  |  |           |   |  |  |           |  
|---------------------------------------------------- |  | ---------------------------------------------- | --------- | - | ----------- |  | --------- | ----------- |  |  | ------------- |  |  | --------------- | ---------- | ------------- | ------------ |  | - | ---- |  |  | --------- | - |  |  | --------- | -
|                                                     |  | For the Years ended December 31, 2004 and 2003 |          
|                                                     |  |                                                |          
|                                                     |  | 2004                                           |           |   | 2003        | 
|                                                     |  |                                                |           |   |             | 
|                                                     |  | New Century                                    |           |   | New Century |  |           | New Century |  |  | New Century   |  |  |                 |            | New Century   |             
|                                                     |  | Financial                                      |           |   | Residual IV |  |           | Credit      |  |  | TRS Holdings, |  |  |                 |            | TRS Holdings, |             
|                                                     |  | Corporation                                    |           |   | Corporation |  |           | Corporation |  |  | Inc.          |  |  | Eliminations(1) |            |               | Consolidated |  |   | Inc. | 
|                                                     |  |                                                |           |   |             |  |           |             |  |  |               |  |  |                 |            |               |              |  |   |      | 
|                                                     |  | (Dollars in thousands)                         |          
|Proceeds from sale of warrants                       |  |                                                |          |   |             |  |          |             |  |  |              |  |  |                 |           |               |              |  |  |      |  |  |          |   |  |  | 24,389    |  
|Purchase of call options                             |  |                                                |          |   |             |  |          |             |  |  |              |  |  |                 |           |               |              |  |  |      |  |  |          |   |  |  | (46,819   | )
|Increases in notes payable                           |  |                                                |          |   |             |  |          |             |  |  |              |  |  |                 | 18,661     |               |              |  |  |      |  |  | 18,661    |   |  |  | 2,278     |  
|Payments of dividends on common stock                |  |                                                | (7,703    | ) |             |  |          |             |  |  |              |  |  |                 | (18,930    | )             |              |  |  |      |  |  | (26,633   | ) |  |  | (11,515   | )
|Purchase of common stock                             |  |                                                | (6,375    | ) |             |  |          |             |  |  |              |  |  |                 |           |               |              |  |  |      |  |  | (6,375    | ) |  |  | (71,962   | )
|                                                     |  |                                                |           |   |             |  |           |             |  |  |               |  |  |                 |            |               |              |  |   |      | 
|Net cash provided by (used in) financing activities  |  |                                                | 1,127,071 |   |             |  | 8,189,442 |             |  |  | 779,676       |  |  |                 | (1,231,480 | )             |              |  |  |      |  |  | 8,864,709 |   |  |  | 4,683,370 |  
|                                                     |  |                                                |           |   |             |  |           |             |  |  |               |  |  |                 |            |               |              |  |   |      | 
|Net increase (decrease) in cash and cash equivalents |  |                                                | 742,239   |   |             |  |          |             |  |  | 1,000         |  |  |                 | (178,983   | )             |              |  |  |      |  |  | 564,256   |   |  |  | 101,929   |  
|Cash and cash equivalents, beginning of year         |  |                                                |          |   |             |  |          |             |  |  |              |  |  |                 | 278,598    |               |              |  |  |      |  |  | 278,598   |   |  |  | 176,669   |  
|                                                     |  |                                                |           |   |             |  |           |             |  |  |               |  |  |                 |            |               |              |  |   |      | 
|Cash and cash equivalents, end of year               |  | $                                              | 742,239   |   |             |  |          |             |  |  | 1,000         |  |  |                 | 99,615     |               |              |  |  |      |  |  | 842,854   |   |  |  | 278,598   |  
|                                                     |  |                                                |           |   |             |  |           |             |  |  |               |  |  |                 |            |               |              |  |   |      | 






|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(1) | Certain amounts related to transactions between the QRS and TRS
    are netted for elimination and consolidation purposes.

(23) Segment and Related Information








F-61



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                           |                                 |                                                |            |                         |           |   |                          |           |        |       |            |         |           |           |           |         |              |   |        |              |        |  |         |          |          |   |            |         |         | 
|---------------------------------------------------------- | ------------------------------- | ---------------------------------------------- | ---------- | ----------------------- | --------- | - | ------------------------ | --------- | ------ | ----- | ---------- | ------- | --------- | --------- | --------- | ------- | ------------ | - | ------ | ------------ | ------ |  | ------- | -------- | -------- | - | ---------- | ------- | ------- | 
|                                                           |                                 | 2005                                           |           
|                                                           |                                 |                                                |           
|                                                           |                                 |                                                |            | Taxable REIT Subsidiary |           |   |                         
|                                                           |                                 |                                                |            |                         |           |   |                         
|                                                           |                                 | REIT &                                         |            |                         |           |   | Mortgage Loan Operations |           |        |       |            |        
|                                                           |                                 | Qualified                                      |            |                         |           |   |                          |           |        |       |           
|                                                           |                                 | REIT                                           |            |                         |           |   |                          |           |        |       |            |        
|                                                           |                                 | Subsidiaries                                   |            |                         |           |   | Total                    |           |        | Total |            |         | Servicing |           |           |         |              |  
|                                                           |                                 | Portfolio                                      |            |                         | Portfolio |   |                          | Wholesale |        |       | Retail     |         |           | and Other |           |         | Eliminations |   |        | Consolidated |       
|                                                           |                                 |                                                |            |                         |           |   |                          |           |        |       |            |         |           |           |           |         |              |   |        |              |       
|Interest income                                            |                                 | $                                              | 1,017,696  |                         |           |   | 222,751                  |           |        |       | 462,483    |         |           |           | 56,637    |         |              |   |       |              |        |  |        |          |          |   | 1,759,567  |        
|Interest expense                                           |                                 |                                                | (508,426   | )                       |           |   | (147,331                 | )         |        |       | (294,007   | )       |           |           | (38,359   | )       |              |   |       |              |        |  |        |          |          |   | (988,123   | )      
|                                                           |                                 |                                                |            |                         |           |   |                          |           |        |       |            |         |           |           |           |         |              |   |        |              |       
|                                                           |                                 | Net interest income                            |            |                         | 509,270   |   |                          |           | 75,420 |       |            |         | 168,476   |           |           |         | 18,278       |   |        |              |       |  |         |          |         |   |            |         | 771,444 | 
|Provision for losses on mortgage loans held for investment |                                 |                                                | (139,162   | )                       |           |   | (1,071                   | )         |        |       |           |         |           |           |          |         |              |   |       |              |        |  |        |          |          |   | (140,233   | )      
|                                                           |                                 |                                                |            |                         |           |   |                          |           |        |       |            |         |           |           |           |         |              |   |        |              |       
|                                                           |                                 | Net interest income after provision for losses |            |                         | 370,108   |   |                          |           | 74,349 |       |            |         | 168,476   |           |           |         | 18,278       |   |        |              |       |  |         |          |         |   |            |         | 631,211 | 
|Other operating income (loss):                             |                                 |                                                |            |                         |           |   |                          |           |        |       |            |         |           |           |           |         |              |   |        |              |        |  |         |          |          |   |            |        
|                                                           | Gain on sale of mortgage loans  |                                                |            |                        |           |   |                          |          |        |       |            | 642,428 |           |           |           | 260,668 |              |   |        |             |        |  |         | (280,479 | )        |   |            | 622,617 |        
|                                                           | Servicing & other income (loss) |                                                |            | (8,179                  | )         |   |                          |          |        |       |            | (4      | )         |           |           | (185    | )            |   |        | 69,282       |        |  |         |         |          |   |            | 60,914  |        
|                                                           |                                 |                                                |            |                         |           |   |                          |           |        |       |            |         |           |           |           |         |              |   |        |              |       
|                                                           |                                 | Total other operating income (loss)            |            |                         | (8,179    | ) |                          |           |       |       |            |         | 642,424   |           |           |         | 260,483      |   |        |              | 69,282 |  |         |          | (280,479 | ) |            |         | 683,531 | 
|Operating expenses:                                        |                                 |                                                | 23,930     |                         |           |   |                         |           |        |       | 503,889    |         |           |           | 289,265   |         |              |   | 54,281 |              |        |  |        |          |          |   | 871,365    |        
|                                                           |                                 |                                                |            |                         |           |   |                          |           |        |       |            |         |           |           |           |         |              |   |        |              |       
|                                                           |                                 | Earnings (losses) before income taxes          |            | $                       | 337,999   |   |                          |           | 74,349 |       |            |         | 307,011   |           |           |         | (10,504      | ) |        |              | 15,001 |  |         |          | (280,479 | ) |            |         | 443,377 | 
|                                                           |                                 |                                                |            |                         |           |   |                          |           |        |       |            |         |           |           |           |         |              |   |        |              |       
|Funding Volume                                             |                                 | $                                              |           |                         |           |   |                         |           |        |       | 49,224,321 |         |           |           | 6,883,920 |         |              |   |       |              |        |  |        |          |          |   | 56,108,241 |        
|                                                           |                                 |                                                |            |                         |           |   |                          |           |        |       |            |         |           |           |           |         |              |   |        |              |       
|Securitizations structured as financings                   |                                 | $                                              | 10,961,958 |                         |           |   |                         |           |        |       |           |         |           |           |          |         |              |   |       |              |        |  |        |          |          |   | 10,961,958 |        
|                                                           |                                 |                                                |            |                         |           |   |                          |           |        |       |            |         |           |           |           |         |              |   |        |              |       
|Total assets at December 31, 2005                          |                                 | $                                              | 15,286,085 |                         |           |   | 2,274,224                |           |        |       | 7,576,147  |         |           |           | 1,059,508 |         |              |   |       |              |        |  | (48,874 | )        |          |   | 26,147,090 |        
|                                                           |                                 |                                                |            |                         |           |   |                          |           |        |       |            |         |           |           |           |         |              |   |        |              |       

F-62



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                           |                                                |                                       |            |                         |           |   |                          |           |         |       |            |           |           |           |           |         |              |   |         |              |        |  |        |          |          |   |            |         |         | 
|---------------------------------------------------------- | ---------------------------------------------- | ------------------------------------- | ---------- | ----------------------- | --------- | - | ------------------------ | --------- | ------- | ----- | ---------- | --------- | --------- | --------- | --------- | ------- | ------------ | - | ------- | ------------ | ------ |  | ------ | -------- | -------- | - | ---------- | ------- | ------- | 
|                                                           |                                                | 2004                                  |           
|                                                           |                                                |                                       |           
|                                                           |                                                |                                       |            | Taxable REIT Subsidiary |           |   |                         
|                                                           |                                                |                                       |            |                         |           |   |                         
|                                                           |                                                | REIT &                                |            |                         |           |   | Mortgage Loan Operations |           |         |       |            |          
|                                                           |                                                | Qualified                             |            |                         |           |   |                          |           |         |       |           
|                                                           |                                                | REIT                                  |            |                         |           |   |                          |           |         |       |            |          
|                                                           |                                                | Subsidiaries                          |            |                         |           |   | Total                    |           |         | Total |            |           | Servicing |           |           |         |              |  
|                                                           |                                                | Portfolio                             |            |                         | Portfolio |   |                          | Wholesale |         |       | Retail     |           |           | and Other |           |         | Eliminations |   |         | Consolidated |       
|                                                           |                                                |                                       |            |                         |           |   |                          |           |         |       |            |           |           |           |           |         |              |   |         |              |       
|Interest income                                            |                                                | $                                     | 119,750    |                         |           |   | 426,856                  |           |         |       | 318,060    |           |           |           | 33,981    |         |              |   |        |              |        |  |       |          |          |   | 898,647    |        
|Interest expense                                           |                                                |                                       | (47,871    | )                       |           |   | (174,651                 | )         |         |       | (130,617   | )         |           |           | (13,955   | )       |              |   |        |              |        |  |       |          |          |   | (367,094   | )      
|                                                           |                                                |                                       |            |                         |           |   |                          |           |         |       |            |           |           |           |           |         |              |   |         |              |       
|                                                           | Net interest income                            |                                       |            | 71,879                  |           |   |                          | 252,205   |         |       |            | 187,443   |           |           |           | 20,026  |              |   |         |             |        |  |        |         |          |   |            | 531,553 |        
|Provision for losses on mortgage loans held for investment |                                                |                                       | (17,808    | )                       |           |   | (52,442                  | )         |         |       |           |           |           |           |          |         |              |   |        |              |        |  |       |          |          |   | (70,250    | )      
|                                                           |                                                |                                       |            |                         |           |   |                          |           |         |       |            |           |           |           |           |         |              |   |         |              |       
|                                                           | Net interest income after provision for losses |                                       |            | 54,071                  |           |   |                          | 199,763   |         |       |            | 187,443   |           |           |           | 20,026  |              |   |         |             |        |  |        |         |          |   |            | 461,303 |        
|Other operating income (loss):                             |                                                |                                       |            |                         |           |   |                          |           |         |       |            |           |           |           |           |         |              |   |         |              |        |  |        |          |          |   |            |        
|                                                           | Gain on sale of mortgage loans                 |                                       |            |                        |           |   |                          |          |         |       |            | 1,137,892 |           |           |           | 115,342 |              |   |         |             |        |  |        | (452,625 | )        |   |            | 800,609 |        
|                                                           | Servicing & other income (loss)                |                                       |            | (7,161                  | )         |   |                          |          |         |       |            | (1,366    | )         |           |           | (111    | )            |   |         | 41,949       |        |  |        |         |          |   |            | 33,311  |        
|                                                           |                                                |                                       |            |                         |           |   |                          |           |         |       |            |           |           |           |           |         |              |   |         |              |       
|                                                           |                                                | Total other operating income (loss)   |            |                         | (7,161    | ) |                          |           |        |       |            |           | 1,136,526 |           |           |         | 115,231      |   |         |              | 41,949 |  |        |          | (452,625 | ) |            |         | 833,920 | 
|Operating expenses:                                        |                                                |                                       | 2,764      |                         |           |   |                         |           |         |       | 522,694    |           |           |           | 198,825   |         |              |   | (40,201 | )            |        |  |       |          |          |   | 684,082    |        
|                                                           |                                                |                                       |            |                         |           |   |                          |           |         |       |            |           |           |           |           |         |              |   |         |              |       
|                                                           |                                                | Earnings (losses) before income taxes |            | $                       | 44,146    |   |                          |           | 199,763 |       |            |           | 801,275   |           |           |         | (63,568      | ) |         |              | 82,150 |  |        |          | (452,625 | ) |            |         | 611,141 | 
|                                                           |                                                |                                       |            |                         |           |   |                          |           |         |       |            |           |           |           |           |         |              |   |         |              |       
|Funding Volume                                             |                                                | $                                     |           |                         |           |   |                         |           |         |       | 38,126,322 |           |           |           | 4,073,318 |         |              |   |        |              |        |  |       |          |          |   | 42,199,640 |        
|                                                           |                                                |                                       |            |                         |           |   |                          |           |         |       |            |           |           |           |           |         |              |   |         |              |       
|Securitizations structured as financings                   |                                                | $                                     | 8,431,734  |                         |           |   | 1,679,397                |           |         |       |           |           |           |           |          |         |              |   |        |              |        |  |       |          |          |   | 10,111,131 |        
|                                                           |                                                |                                       |            |                         |           |   |                          |           |         |       |            |           |           |           |           |         |              |   |         |              |       
|Total assets at December 31, 2004                          |                                                | $                                     | 10,554,533 |                         |           |   | 3,834,614                |           |         |       | 4,221,333  |           |           |           | 450,996   |         |              |   |        |              |        |  | (9,532 | )        |          |   | 19,051,944 |        
|                                                           |                                                |                                       |            |                         |           |   |                          |           |         |       |            |           |           |           |           |         |              |   |         |              |       

F-63



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                           |                                                |                                       |           |                          |           |  |            |         |         |           |           |         |         |              |          |        |              |  |   |          |          |   |            |         |         | 
|---------------------------------------------------------- | ---------------------------------------------- | ------------------------------------- | --------- | ------------------------ | --------- |  | ---------- | ------- | ------- | --------- | --------- | ------- | ------- | ------------ | -------- | ------ | ------------ |  | - | -------- | -------- | - | ---------- | ------- | ------- | 
|                                                           |                                                | 2003                                  |          
|                                                           |                                                |                                       |          
|                                                           |                                                | Taxable REIT Subsidiary               |           |                          |          
|                                                           |                                                |                                       |           |                          |          
|                                                           |                                                |                                       |           | Mortgage Loan Operations |           |  |            |         |        
|                                                           |                                                |                                       |           |                          |           |  |            |         |        
|                                                           |                                                |                                       |           | Total                    |           |  | Total      |         |         | Servicing |           |         |         |              |         
|                                                           |                                                | Portfolio                             |           |                          | Wholesale |  |            | Retail  |         |           | and Other |         |         | Eliminations |          |        | Consolidated | 
|                                                           |                                                |                                       |           |                          |           |  |            |         |         |           |           |         |         |              |          |        |              | 
|Interest income                                            |                                                | $                                     | 128,934   |                          |           |  | 206,738    |         |         |           | 18,019    |         |         |              |         |        |              |  |  |          |          |   | 353,691    |        
|Interest expense                                           |                                                |                                       | (36,836   | )                        |           |  | (74,266    | )       |         |           | (6,473    | )       |         |              |         |        |              |  |  |          |          |   | (117,575   | )      
|                                                           |                                                |                                       |           |                          |           |  |            |         |         |           |           |         |         |              |          |        |              | 
|                                                           | Net interest income                            |                                       |           | 92,098                   |           |  |            | 132,472 |         |           |           | 11,546  |         |              |          |       |              |  |   |         |          |   |            | 236,116 |        
|Provision for losses on mortgage loans held for investment |                                                |                                       | (26,304   | )                        |           |  |           |         |         |           |          |         |         |              |         |        |              |  |  |          |          |   | (26,304    | )      
|                                                           |                                                |                                       |           |                          |           |  |            |         |         |           |           |         |         |              |          |        |              | 
|                                                           | Net interest income after provision for losses |                                       |           | 65,794                   |           |  |            | 132,472 |         |           |           | 11,546  |         |              |          |       |              |  |   |         |          |   |            | 209,812 |        
|Other operating income (loss):                             |                                                |                                       |           |                          |           |  |            |         |         |           |           |         |         |              |          |        |              |  |   |          |          |   |            |        
|                                                           | Gain on sale of mortgage loans                 |                                       |           |                         |           |  |            | 833,690 |         |           |           | 182,773 |         |              |          |       |              |  |   | (405,327 | )        |   |            | 611,136 |        
|                                                           | Servicing & other income (loss)                |                                       |           |                         |           |  |            |        |         |           |           |        |         |              |          | 11,139 |              |  |   |         |          |   |            | 11,139  |        
|                                                           |                                                |                                       |           |                          |           |  |            |         |         |           |           |         |         |              |          |        |              | 
|                                                           |                                                | Total other operating income (loss)   |           |                          |          |  |            |         | 833,690 |           |           |         | 182,773 |              |          |        | 11,139       |  |   |          | (405,327 | ) |            |         | 622,275 | 
|Operating expenses:                                        |                                                |                                       |          |                          |           |  | 382,430    |         |         |           | 148,571   |         |         |              | (122,166 | )      |              |  |  |          |          |   | 408,835    |        
|                                                           |                                                |                                       |           |                          |           |  |            |         |         |           |           |         |         |              |          |        |              | 
|                                                           |                                                | Earnings (losses) before income taxes |           | $                        | 65,794    |  |            |         | 583,732 |           |           |         | 45,748  |              |          |        | 133,305      |  |   |          | (405,327 | ) |            |         | 423,252 | 
|                                                           |                                                |                                       |           |                          |           |  |            |         |         |           |           |         |         |              |          |        |              | 
|Funding Volume                                             |                                                | $                                     |          |                          |           |  | 25,187,569 |         |         |           | 2,195,269 |         |         |              |         |        |              |  |  |          |          |   | 27,382,838 |        
|                                                           |                                                |                                       |           |                          |           |  |            |         |         |           |           |         |         |              |          |        |              | 
|Securitizations structured as financings                   |                                                | $                                     | 4,946,781 |                          |           |  |           |         |         |           |          |         |         |              |         |        |              |  |  |          |          |   | 4,946,781  |        
|                                                           |                                                |                                       |           |                          |           |  |            |         |         |           |           |         |         |              |          |        |              | 
|Total assets at December 31, 2003                          |                                                | $                                     | 4,745,937 |                          |           |  | 3,861,449  |         |         |           | 336,552   |         |         |              |         |        |              |  |  |          |          |   | 8,943,938  |        
|                                                           |                                                |                                       |           |                          |           |  |            |         |         |           |           |         |         |              |          |        |              | 

(24) Subsequent Events




F-64



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |                                              
|---- | ---------------------------------------------
|(25) | Selected Quarterly Financial Data (Unaudited)



|                                                           |                                                |                              |          |         |          |  |          |               |         |  |              |         |         |  |          |         |         | 
|---------------------------------------------------------- | ---------------------------------------------- | ---------------------------- | -------- | ------- | -------- |  | -------- | ------------- | ------- |  | ------------ | ------- | ------- |  | -------- | ------- | ------- | 
|                                                           |                                                | March 31,                    |          |         | June 30, |  |          | September 30, |         |  | December 31, |        
|                                                           |                                                | 2005                         |          |         | 2005     |  |          | 2005          |         |  | 2005         |        
|                                                           |                                                |                              |          |         |          |  |          |               |         |  |              |        
|Interest income                                            |                                                | $                            | 331,071  |         |          |  | 420,861  |               |         |  | 494,621      |         |         |  | 513,014  |        
|Interest expense                                           |                                                |                              | (162,081 | )       |          |  | (222,171 | )             |         |  | (293,059     | )       |         |  | (310,812 | )      
|                                                           |                                                |                              |          |         |          |  |          |               |         |  |              |        
|                                                           | Net interest income                            |                              |          | 168,990 |          |  |          | 198,690       |         |  |              | 201,562 |         |  |          | 202,202 |        
|Provision for losses on mortgage loans held for investment |                                                |                              | (30,238  | )       |          |  | (36,875  | )             |         |  | (38,542      | )       |         |  | (34,578  | )      
|                                                           |                                                |                              |          |         |          |  |          |               |         |  |              |        
|                                                           | Net interest income after provision for losses |                              |          | 138,752 |          |  |          | 161,815       |         |  |              | 163,020 |         |  |          | 167,624 |        
|Other operating income:                                    |                                                |                              |          |         |          |  |          |               |         |  |              |         |         |  |          |        
|                                                           | Gain on sale of mortgage loans                 |                              |          | 139,752 |          |  |          | 138,704       |         |  |              | 176,241 |         |  |          | 167,920 |        
|                                                           | Servicing and other income                     |                              |          | 10,595  |          |  |          | 13,645        |         |  |              | 17,349  |         |  |          | 19,325  |        
|                                                           |                                                |                              |          |         |          |  |          |               |         |  |              |        
|                                                           |                                                | Total other operating income |          |         | 150,347  |  |          |               | 152,349 |  |              |         | 193,590 |  |          |         | 187,245 | 
|Operating expenses:                                        |                                                |                              |          |         |          |  |          |               |         |  |              |         |         |  |          |        
|                                                           | Personnel                                      |                              |          | 128,522 |          |  |          | 148,061       |         |  |              | 146,575 |         |  |          | 128,622 |        
|                                                           | General and administrative                     |                              |          | 41,775  |          |  |          | 42,281        |         |  |              | 49,823  |         |  |          | 59,173  |        
|                                                           | Inducement expense  convertible senior notes  |                              |          |        |          |  |          | 43            |         |  |              |        |         |  |          |        |        
|                                                           | Advertising and promotion                      |                              |          | 19,832  |          |  |          | 20,711        |         |  |              | 25,661  |         |  |          | 17,534  |        
|                                                           | Professional services                          |                              |          | 7,806   |          |  |          | 9,677         |         |  |              | 11,580  |         |  |          | 13,689  |        
|                                                           |                                                |                              |          |         |          |  |          |               |         |  |              |        
|                                                           |                                                | Total operating expenses     |          |         | 197,935  |  |          |               | 220,773 |  |              |         | 233,639 |  |          |         | 219,018 | 
|                                                           |                                                |                              |          |         |          |  |          |               |         |  |              |        
|                                                           |                                                | Earnings before income taxes |          |         | 91,164   |  |          |               | 93,391  |  |              |         | 122,971 |  |          |         | 135,851 | 
|Income tax benefit                                         |                                                |                              | 6,404    |         |          |  | (1,688   | )             |         |  | 2,867        |         |         |  | 19,251   |        
|                                                           |                                                |                              |          |         |          |  |          |               |         |  |              |        
|                                                           |                                                | Net earnings                 |          | $       | 84,760   |  |          |               | 95,079  |  |              |         | 120,104 |  |          |         | 116,600 | 
|Dividends on preferred stock                               |                                                | $                            |         |         |          |  | 285      |               |         |  | 2,567        |         |         |  | 2,566    |        
|                                                           |                                                |                              |          |         |          |  |          |               |         |  |              |        
|Net earnings available to common stockholders              |                                                | $                            | 84,760   |         |          |  | 94,794   |               |         |  | 117,537      |         |         |  | 114,034  |        
|                                                           |                                                |                              |          |         |          |  |          |               |         |  |              |        
|Basic earnings per share                                   |                                                | $                            | 1.55     |         |          |  | 1.71     |               |         |  | 2.10         |         |         |  | 2.05     |        
|Diluted earnings per share                                 |                                                | $                            | 1.48     |         |          |  | 1.65     |               |         |  | 2.04         |         |         |  | 2.00     |        

F-65



---



##### Table of Contents



NEW CENTURY FINANCIAL CORPORATION


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                           |                                                |                              |         |         |          |  |         |               |         |  |              |         |         |  |          |         |         | 
|---------------------------------------------------------- | ---------------------------------------------- | ---------------------------- | ------- | ------- | -------- |  | ------- | ------------- | ------- |  | ------------ | ------- | ------- |  | -------- | ------- | ------- | 
|                                                           |                                                | March 31,                    |         |         | June 30, |  |         | September 30, |         |  | December 31, |        
|                                                           |                                                | 2004                         |         |         | 2004     |  |         | 2004          |         |  | 2004         |        
|                                                           |                                                |                              |         |         |          |  |         |               |         |  |              |        
|Interest income                                            |                                                | $                            | 153,128 |         |          |  | 191,135 |               |         |  | 264,923      |         |         |  | 289,461  |        
|Interest expense                                           |                                                |                              | (55,964 | )       |          |  | (67,306 | )             |         |  | (106,784     | )       |         |  | (137,040 | )      
|                                                           |                                                |                              |         |         |          |  |         |               |         |  |              |        
|                                                           | Net interest income                            |                              |         | 97,164  |          |  |         | 123,829       |         |  |              | 158,139 |         |  |          | 152,421 |        
|Provision for losses on mortgage loans held for investment |                                                |                              | (19,869 | )       |          |  | (17,112 | )             |         |  | (25,769      | )       |         |  | (7,500   | )      
|                                                           |                                                |                              |         |         |          |  |         |               |         |  |              |        
|                                                           | Net interest income after provision for losses |                              |         | 77,295  |          |  |         | 106,717       |         |  |              | 132,370 |         |  |          | 144,921 |        
|Other operating income:                                    |                                                |                              |         |         |          |  |         |               |         |  |              |         |         |  |          |        
|                                                           | Gain on sale of mortgage loans                 |                              |         | 201,976 |          |  |         | 215,051       |         |  |              | 203,390 |         |  |          | 180,192 |        
|                                                           | Servicing and other income                     |                              |         | 5,896   |          |  |         | 8,582         |         |  |              | 10,518  |         |  |          | 8,315   |        
|                                                           |                                                |                              |         |         |          |  |         |               |         |  |              |        
|                                                           |                                                | Total other operating income |         |         | 207,872  |  |         |               | 223,633 |  |              |         | 213,908 |  |          |         | 188,507 | 
|Operating expenses:                                        |                                                |                              |         |         |          |  |         |               |         |  |              |         |         |  |          |        
|                                                           | Personnel                                      |                              |         | 80,966  |          |  |         | 109,000       |         |  |              | 99,038  |         |  |          | 130,732 |        
|                                                           | General and administrative                     |                              |         | 29,832  |          |  |         | 34,551        |         |  |              | 40,783  |         |  |          | 41,251  |        
|                                                           | Inducement expense  convertible senior notes  |                              |         |        |          |  |         |              |         |  |              |        |         |  |          | 24,757  |        
|                                                           | Advertising and promotion                      |                              |         | 13,565  |          |  |         | 15,684        |         |  |              | 16,978  |         |  |          | 19,276  |        
|                                                           | Professional services                          |                              |         | 4,337   |          |  |         | 8,729         |         |  |              | 7,367   |         |  |          | 7,236   |        
|                                                           |                                                |                              |         |         |          |  |         |               |         |  |              |        
|                                                           |                                                | Total operating expenses     |         |         | 128,700  |  |         |               | 167,964 |  |              |         | 164,166 |  |          |         | 223,252 | 
|                                                           |                                                |                              |         |         |          |  |         |               |         |  |              |        
|                                                           |                                                | Earnings before income taxes |         |         | 156,467  |  |         |               | 162,386 |  |              |         | 182,112 |  |          |         | 110,176 | 
|Income taxes                                               |                                                |                              | 69,222  |         |          |  | 60,009  |               |         |  | 74,833       |         |         |  | 31,506   |        
|                                                           |                                                |                              |         |         |          |  |         |               |         |  |              |        
|Net earnings available to common stockholders              |                                                | $                            | 87,245  |         |          |  | 102,377 |               |         |  | 107,279      |         |         |  | 78,670   |        
|                                                           |                                                |                              |         |         |          |  |         |               |         |  |              |        
|Basic earnings per share                                   |                                                | $                            | 2.64    |         |          |  | 3.07    |               |         |  | 3.21         |         |         |  | 1.66     |        
|Diluted earnings per share                                 |                                                | $                            | 2.11    |         |          |  | 2.46    |               |         |  | 2.53         |         |         |  | 1.44     |        

F-66