DaytonDailyNews.com

Ohio authorities obtained a new court order on Wednesday to prevent New Century Financial Corp., a struggling provider of mortgage loans, from foreclosing on any homes or granting any new loans without first going through state reviews.

"That was our goal, to have a review process," said Ed Kraus, assistant chief of consumer protection for state Attorney General Marc Dann's office.

Ohio regulators have accused New Century, which specializes in making loans to borrowers with weak credit, of making false statements and accepting consumer money to process loans that the company knew it could not afford to fund. Dayton-area customers of New Century have reported problems in their dealings with the company.

The order signed by a Cuyahoga County Common Pleas Court judge in Cleveland, the area where New Century does the bulk of its Ohio business, will be in effect for 90 days. It requires New Century to submit its loan documents to the attorney general for review to ensure that there are no violations of Ohio's consumer protection and mortgage lending laws, Kraus said.

He said that lawyers for New Century agreed to the terms, which extended a 14-day, temporary order the state obtained against the company on March 14. The judge scheduled a follow-up hearing on June 26.

Laura Oberhelman, a spokeswoman at New Century's headquarters in Irvine, Calif., did not return calls for comment on Wednesday. The company provides mortgage loans to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corp. and Home123 Corp.

Ohio focused on New Century because of the company's well-documented problems in the struggling subprime lending industry, Kraus said. The company has about 650 loan applications in the processing stage, plus an unknown number of loans already in effect, he said.

New Century stopped making loans in mid-March after Wall Street banks closed off its financing. The company has stated that the U.S. Securities and Exchange Commission and a federal grand jury are seeking documents in investigations of accounting errors that New Century has acknowledged.

Regulators in Massachusetts, New Hampshire, New Jersey and New York have ordered New Century to stop taking applications for mortgage loans and to cease various alleged violations of law in those states, New Century told the SEC this month.

Contact this reporter at (937) 225-2242 or jnolan@DaytonDailyNews.com.