No, you are not being sued.  This is not a lawsuit against you.  Instead, you may be a qualified class member in a class action litigation settlement involving New Century Securities purchases and sales during the Class Period.

New Century was a real estate investment trust that originated mortgage loans in the United States through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation.

Beginning on February 8, 2007, securities class action complaints were filed in the United States District Court for the Central District of California.  These actions were consolidated by Order dated June 26, 2007.  Subsequently, the Parties have participated in mediation sessions and additional discussions before the Honorable Daniel Weinstein, following which the Parties were able to reach agreements in principle to settle this Consolidated Action.

On August 17, 2010, the Court entered an Order Preliminarily Approving Settlements which preliminarily approved the Settlements and authorized this Notice to be sent to potential Class Members.  Subsequently, the Court scheduled the Settlement Hearing to consider whether to grant final approval to the Settlements.

The persons or entities that are suing are called plaintiffs, and those who are being sued are called defendants. In this case, the plaintiffs are referred to as Lead Plaintiffs, on behalf of themselves and the Class.  Defendants are KPMG, the Underwriter Defendants and the Individual Defendants.

Defendants deny any wrongdoing.  The proposed Settlements are neither an admission of wrongdoing nor an acknowledgement that any law was violated.  Instead, the parties entered into this settlement agreement to avoid further expense, inconvenience, and uncertainty associated with a court trial.

The detailed terms of the Proposed Settlement are contained in the Notice.

Pursuant to the respective Stipulations, the Individual Defendants have agreed to collectively pay $65,077,088.00; the Underwriter Defendants have agreed to collectively pay $15,000,000.00; and KPMG has agreed to pay $44,750,000.00.  Collectively, Defendants have agreed to pay a total amount of $124,827,088.00 in cash.

At this time, it is not possible to make any determination as to how much any Class Member may receive from the Settlements.

To be eligible for any payment, your timely, complete, and documented Proof of Claim and Release must be postmarked on or before December 15, 2010. All forms postmarked after this date will be late and may be denied.

You may be a Class Member if:

1. You purchased or otherwise acquired New Century Common Stock, New Century Series A Preferred Stock, New Century Series B Preferred Stock, and/or New Century Call Options and/or sold New Century Put Options, during the time period from May 5, 2005, through and including March 13, 2007, either in the Offerings, pursuant to a registration statement, or in the market; and,
2. You were damaged thereby (in other words, your stocks incurred losses); and,
3. You are not excluded by the definition of the Class and you do not elect to exclude yourself from the Class.

If and only if all these terms apply, then you are a class member and will be bound by the proposed applicable Settlements if the Court approves them, and by any judgments or determination of the Court affecting the Class.

For purposes of the Plan of Allocation, the Net Settlement Fund is divided into two components:  the “Underwriter Allotment” (composed of the settlement fund from the settlement with the Underwriter Defendants net of Court-approved fees and expenses), and the “Individual-Auditor Allotment” (composed of the settlement funds from the settlement with the Individual Defendants and KPMG, net of Court-approved fees and expenses).  All Class Members may be eligible to receive distributions from the Individual-Auditor Allotment.  Only Class Members who purchased Series A Preferred Stock and/or Series B Preferred Stock during the Class Period and were damaged thereby may be eligible to receive distributions from the Underwriter Allotment based on those purchases.

If you are a Class Member, you will be required to submit a Proof of Claim and Release and supporting documentation to establish your entitlement to share in the respective Net Settlement Funds.  A Proof of Claim and Release is included with the Notice, or you may download a copy from the Case Documents page or request by phone that a Claim Form be mailed to you.  The Claim Form can also be downloaded from Lead Counsel’s website at www.blbglaw.com.  Those who exclude themselves from the Class and those who do not submit timely and valid Claim Forms with adequate supporting documentation will not be entitled to share in the Net Settlement Funds.  Please retain all records of your ownership of and transactions in New Century Securities, as they may be needed to document your Claim.

According to the terms of the settlement, you have five options:

First, you may submit a claim.  This is the only way to get a payment. If you wish to obtain a payment as a Class Member, you will need to file a Proof of Claim and Release form with the Claims Administrator postmarked no later than December 15, 2010 .  You may download a Proof of Claim and Release form from this website.  This option requires you to submit the completed Proof of Claim and Release along with supporting documentation to the Claims Administrator no later than December 15, 2010.

Second, you may exclude yourself from the settlement.  If you wish to exclude yourself from the settlement, you must send a letter to the Claims Administrator, received no later than October 18, 2010, and following the instructions listed in paragraphs 99 to 102 of the Notice. If you exclude yourself from the Class, you will not be eligible to receive any benefit from the Settlement and you should not submit a Proof of Claim and Release, you will retain the right to be a part of any other lawsuit, but you will receive no payment or other benefit from this litigation.

Third, you may object to the settlement.  If you wish to object to any part of the settlement, you must send a signed letter stating that you object to the proposed settlement.  A copy of the objection letter must be received by the Court and all parties listed in paragraph 105 of the Notice no later than October 18, 2010.

Fourth, you may go the hearing.  If you wish to go to the hearing and ask to speak in Court about the fairness of the Settlements, the proposed Plan of Allocation, or request for attorney’s fees and reimbursement of expenses, you must file a notice of intention to appear.  A copy of the notice to appear must be received by the Court and all parties listed in paragraph 105 of the Notice no later than October 18, 2010.  See also paragraph 108 of the Notice for additional details regarding your intent to appear in Court.

Finally, you may do nothing.  If you do nothing you will still be bound by the terms of the settlement, but will not receive payment from the Settlement Fund.

To be eligible for any payment, your timely, complete, and documented Proof of Claim and Release must be mailed to the Claims Administrator postmarked on or before December 15, 2010. All forms postmarked after this date will be marked “late” and the claim may be denied.

Yes—as a Class Member you are represented by Lead Plaintiffs and Lead Counsel, the law firm of Bernstein Litowitz Berger & Grossmann LLP.

Lead Counsel will represent your interests unless you enter an appearance through counsel of your own choice at your own expense.  You are not required to retain your own counsel, but if you choose to do so, such counsel must file a notice of appearance with the Court and serve it on Lead Counsel and the applicable Settling Defendants’ Counsel so that the notice is received on or before October 18, 2010.

Any questions for Lead Counsel should be directed to:

Salvatore J. Graziano , Esq.
BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP
1285 Avenue of the Americas
New York, NY 10019
(866) 648-2524
blbg@blbglaw.com

You do not need to retain a lawyer because Lead Counsel represents the interests of all class members.  However, you may retain your own lawyer, but must do so at your own expense.

At the Settlement Hearing, the Court will determine whether the Settlement and Plan of Allocation should be approved as fair, reasonable, and adequate.  You are not required to attend the Settlement Hearing.  Lead Counsel will attend and present on behalf of all potential Class Members.

The Court will also consider whether the Lead Counsel’s motion for attorneys’ fees and litigation expenses should be approved, and, whether the litigation should be dismissed and the claims released.

The Settlement Hearing will be held on November 8, 2010, at 10:00 a.m. before the Honorable Dean D. Pregerson, at the United States District Court for the Central District of California, 312 North Spring Street, Courtroom 3, Los Angeles, California  90012.  The Court reserves the right to approve the Settlements at or after the Settlement Hearing without further notice to the members of the Class.

You have the right to exclude yourself—otherwise known as “opting-out”—from the Settlement.  By excluding yourself, you will receive no payment or other benefit, if any, from this litigation, but retain the right to file a separate lawsuit at your own expense.

To be valid, your completed request for exclusion must be received by the Claims Administrator on or before October 18, 2010.  Requests for exclusion must comply with all instructions beginning on paragraph 99 of the Notice.

To object to approval of any of the Settlements, the proposed Plan of Allocation or Lead Counsel’s request for an award of attorneys’ fees and reimbursement of expenses, you must remain a class member (e.g., you cannot exclude yourself form the litigation) and submit written notice of objection to the Court.  Your objection must follow all of the requirements beginning on paragraph 105 of the Notice.

Your complete objection submission, including all documents and briefs you wish considered in support of your objection, must be received by each of the parties listed below no later than October 18, 2010:

First, review all the documents provided in the Case Documents section.  If questions remain unanswered, please contact the Claims Administrator through the In re New Century toll-free hotline at 1-866-308-7615.

All legal questions should be directed to Lead Counsel.