New Century stock falls (Jonathan Stempel)

  New Century Financial Corp. shares fell 17.1 percent to an eight-year low Friday after analysts said the largest independent U.S. subprime mortgage lender, which faces a criminal probe and has stopped making new loans, may soon seek bankruptcy protection.

  by Jonathan Stempel

  NEW YORK (Reuters) -- New Century Financial Corp. (NEW.N: Quote, Profile, Research) shares fell 17.1 percent to an eight-year low Friday after analysts said the largest independent U.S. subprime mortgage lender, which faces a criminal probe and has stopped making new loans, may soon seek bankruptcy protection.

  The subprime sector, whose lenders offer financing to people with poor credit histories, suffered a further blow as General Electric Co.'s (GE.N: Quote, Profile, Research) WMC Mortgage unit said it would lay off 460 people, or 20 percent of its work force.

  Shares of Irvine, California-based New Century fell a day after it said it stopped taking loan applications, lined up $265 million of funding secured by its mortgage loan portfolio and other assets, and would refinance $710 million of loans.

  Morgan Stanley provided the financing, people familiar with the matter said.

  Analysts said New Century probably would be unable to resolve disputes with other lenders, including at least five that have so far refused to waive borrowing covenants.

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