Which U.S. mortgage lender failed in 2007, helping trigger the subprime mortgage crisis?

New Century Financial failed in 2007, helping trigger the subprime mortgage crisis.

The California-based lender specialized in subprime mortgages, which were made to borrowers with weaker credit histories. As U.S. house prices stopped rising and mortgage defaults increased, investors became unwilling to finance the loans that New Century originated. The company filed for Chapter 11 bankruptcy protection on April 2, 2007, becoming one of the earliest major casualties of the crisis.

New Century’s failure preceded the much larger 2008 collapses and rescues that brought the crisis to global attention. It did not single-handedly cause the financial crash. Rather, it exposed weaknesses in mortgage underwriting, securitization, short-term funding, and the assumption that national house prices would keep rising. Bear Stearns failed soon afterward, and Lehman Brothers collapsed in September 2008. New Century is therefore an important early marker, not the final event, of the subprime crisis.