New Century assets are sold

A hedge fund made a $58-million winning bid for the remaining mortgage portfolio of bankrupt sub-prime lender New Century Financial, topping five other offers, the fund and New Century creditors said Friday.

Ellington Management Group’s bid amounted to only 34 cents on the dollar but easily exceeded the $47.3-million price at which New Century last month agreed to sell the assets to a Royal Bank of Scotland unit. The portfolio includes home loans and mortgage securities with a face value of $170 million.

U.S. Bankruptcy Judge Kevin J. Carey in Wilmington, Del., had approved the sale to the Royal Bank of Scotland unit but invited higher bids. Carey will be asked to OK the sale to Ellington at a hearing Monday.

Many of the loans are in default, and “some are probably worth nothing,” said Larry Penn, vice chairman of Ellington, based in Old Greenwich, Conn.

Irvine-based New Century stopped writing mortgages in March after Wall Street firms cut off its own credit. Rising interest rates, loose lending standards and falling home prices pushed delinquencies on sub-prime loans to a four-year high late last year.