New Century Financial, America’s second-largest provider of high-risk mortgages, known as subprime, which is on the verge of collapse after key lenders called in their debts,  has said that the US Securities & Exchange Commission, informed it on Monday that it was ``conducting a preliminary investigation involving the company and requesting production of certain documents."

``The staff of the SEC had also previously requested a meeting with the company to discuss the events leading up to the company's previous announcement of the need to restate certain of its historical financial statements,'' it said. ``The company intends to cooperate with the requests of the SEC.''

The bank, which last week ceased making new home loans after a surge in defaults on subprime mortgages, also on Monday disclosed that it would be unable to repay creditors, which also include Morgan Stanley, Credit Suisse and Bank of America.

In another SEC filing, New Century said the correct estimate of the obligation to repurchase mortgage loans financed under a pact with Credit Suisse First Boston was $1.4 billion, not $900 million as it had previously disclosed. The company said the error was inadvertent.

The New York Stock Exchange has just announced that it has delisted New Century.

Subprime-loan originations totaled about $605 billion in 2006, or about a fifth of the overall market for US home loans, according to trade publication Inside Mortgage Finance.

New Century said on Monday that begining last Wednesday, it had received a wave of default notices from its major Wall Street creditors, and may owe creditors a combined $8.4 billion for mortgage repurchases. It said if all its lenders demand repurchases, it can't afford to pay. That could force the company into bankruptcy proceedings, where it would join scores of others hurt by the industry meltdown.

OceanFirst Bank on Monday became the latest lender to report subprime troubles when it said it would need to revise its 2006 earnings because of problems relating to its high-risk home loans. Countrywide Financial, America’s biggest mortgage provider, instructed its brokers on Monday  to stop offering borrowers the option of no-deposit home loans.

It's reported that more than two dozen lenders have closed or sold part of their operations in recent months as increasingly lax lending criteria pushed bad US subprime mortgages to a seven-year high.

Last Friday, General Electric said it would lay off 460 staff in its WMC Mortgage division and would cease to make home loans with no down payments.

In early February, global bank HSBC announced provisions of almost $11 billion dollars arising from rising defaults in the US subprime market where borrowers with dodgy credit histories, were able to get 100% loans with limited supporting documentation.

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