Lender’s ’05 profit likely inflated

New Century Financial Corp. said it probably inflated 2005 net income because of accounting errors and doesn’t expect to finish revising the numbers before it shuts down.

The mistakes were tied to losses on loan repurchases and the valuation of other mortgage-related assets, the Irvine-based lender said in a regulatory filing Thursday.

New Century previously said it would have to restate 2006 results. U.S. prosecutors are conducting a criminal probe of accounting errors at New Century and trading in its securities, the company said March 2 in a filing with the Securities and Exchange Commission.

“As the company is currently in liquidation proceedings under Chapter 11 of the Bankruptcy Code, the company does not expect to complete a restatement of either the 2005 financial statements or the interim financial statements,” the filing said.

New Century is among more than 50 lenders that have halted operations, filed for bankruptcy protection or sought buyers since the start of 2006.

Sub-prime loans are made to borrowers with poor credit ratings or high debt burdens. They’re ranked among the riskiest loans because they tend to default more often than conventional mortgages.