A settlement has been proposed by the parties regarding In re New Century, Case No. 2:07-cv00931-DDP (FMOx) (Lead Case), a class action lawsuit in the United States District Court, for the Central District of California.  This lawsuit concerns you, if, during the period from May 5, 2005, through and including March 13, 2007, you purchased or acquired Common Stock, 9.125% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”), 9.75% Series B Cumulative Redeemable Preferred Stock (“Series B Preferred Stock”), and/or Call Options and/or sold Put Options of New Century Financial Corporation (“New Century” or the “Company”).

The settlement relates to three proposed Settlements regarding claims against the Individual Defendants, the Underwriter Defendants, and KPMG (collectively “Defendants”) in the Consolidated Action. The proposed Settlements, if approved by the Court, will resolve all claims and potential claims of Class Members against the Defendants and the other applicable Released Parties, and will provide relief to all persons and entities who purchased or otherwise acquired New Century Common Stock, Series A Preferred Stock, Series B Preferred Stock (Series A Preferred Stock and Series B Preferred Stock are collectively referred to as “Preferred Stock”), and/or New Century Call Options and/or who 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 who, upon disclosure of certain facts alleged in the Complaint, were injured thereby (the “Class”).

Subject to Court approval, the settlement creates three funds totaling $124,827,088.00, (the “Settlement Funds”).  These funds will be used to resolve all claims arising from the purchase or acquisition of New Century Securities during the Class Period.  The Settlement Funds will be distributed, if at all, to qualified claimants according to the Plan of Allocation explained in detail within the Notice.

The Court has not ruled on the merits of the positions taken by either Plaintiffs or Defendants.

To reduce the time, expense, and uncertainty of trial, the parties submitted Proposed Settlements for the Court’s approval.  A Settlement Hearing was held on November 8, 2010 before the Honorable Dean D. Pregerson, at the United States District Court for the Central District of California.  On November 15, 2010, the Court entered orders of final judgment affirming certification of the class and approving the Officer and Director Stipulation of Settlement, the Underwriter Stipulation of Settlement, and the KPMG Stipulation of Settlement.

The information provided above is in summary form and not intended as a complete explanation of your rights. For additional details, please review the documents provided in the Case Documents section.