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No fee required

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

(1)

Title of each class of securities to which transaction applies:

(2)

Aggregate number of securities to which transaction applies:

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

Proposed maximum aggregate value of transaction:

(5)

Total fee paid:

¨

Fee paid previously with preliminary materials.

¨

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:

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1.

The re-election of Brad A. Morrice, Michael M. Sachs and Terrence P. Sandvik as directors for three-year terms ending in 2005;

2.

The ratification of KPMG LLP’s appointment as our independent auditors for 2002;

3.

The approval of an amendment to our stock option plan that would increase the number of shares issuable under the plan by 2,000,000 shares; and

4.

Any other business properly presented at the meeting.

By

Order of the Board of Directors,

St

ergios Theologides

Se

cretary

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Q:

What am I voting on?

A:    (1)

Re-election of three directors (Brad A. Morrice, Michael M. Sachs and Terrence P. Sandvik);

(2)

Ratification of KPMG LLP’s appointment as our independent auditors for 2002; and

(3)

Approval of an amendment to our stock option plan to increase the number of shares issuable under the plan by 2,000,000 shares (see page 10 for details).

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Q:

How does the Board recommend I vote on the proposals?

A:

The Board recommends you vote FOR each of the director nominees and FOR each of the other two proposals.

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Q:

Who is entitled to vote at the meeting?

A:

Holders of shares of our Common Stock, 1998A Convertible Preferred Stock and 1999A Convertible Preferred Stock as of the close of business on the record date, March 15, 2002, are entitled to vote.

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Q:

How do I vote?

A:

Sign and date each proxy card you receive and return it in the prepaid envelope. If you return your signed proxy card but do not mark the boxes showing how you wish to vote, your shares will be voted FOR each of the three director nominees and FOR each of the other two proposals.

(1) notifying

our Corporate Secretary in writing at 18400 Von Karman, Suite 1000, Irvine, California 92612;

(2) signing

and returning a proxy card dated as of a later date; or

(3) voting

in person at the Annual Meeting.

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Q:

How will voting on any other business be conducted?

A:

Other than the three proposals described in this Proxy Statement, we know of no other business to be considered at the Annual Meeting. However, if any other matters are properly presented at the meeting, your signed proxy card authorizes Robert K. Cole, our Chairman and Chief Executive Officer, and Brad A. Morrice, our Vice Chairman, President and Chief Operating Officer, to vote on those matters according to their best judgment.

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Q:

Who will count the vote?

A:

Representatives of U.S. Stock Transfer Corporation, the independent Inspector of Elections, will count the votes.

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Q:

What does it mean if I receive more than one proxy card?

A:

It probably means your shares are registered differently and are in more than one account. Sign and return all proxy cards to ensure that all your shares are voted.

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Q:

How many shares can vote?

A:

As of the record date, there were 20,720,305 shares of Common Stock, 20,000 shares of Series 1998A Convertible Preferred Stock and 12,856 shares of Series 1999A Convertible Preferred Stock issued and outstanding. Holders of Common Stock are entitled to one vote per share for each matter before the meeting. Holders of 1998A Convertible Preferred Stock are entitled to 136.24 votes per share and holders of 1999A Convertible Preferred Stock are entitled to 69.98 votes per share. As a result, there are a total of 24,344,767 eligible votes.

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Q:

How many votes are necessary to take action at the meeting?

A:

In order for the meeting to be held, a quorum of the eligible voting shares must be present at the meeting, whether in person or represented by proxy. A “quorum” is a majority of the eligible votes. Since there were 24,344,767 eligible votes as of the record date, we will need at least 12,172,384 votes present at the meeting for a quorum to exist. The three nominees for director who receive the most votes will be elected director. In order for any other proposal to be approved, it must receive a majority of the votes present at the meeting. Finally, cumulative voting rights are not authorized and dissenters’ rights are not applicable to the matters before the meeting.

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Q:

What happens if I abstain?

A:

If you submit a properly signed proxy card and indicate your intention to “ABSTAIN” on one or more proposals, your shares will still be considered “present” for purposes of calculating a quorum. However, your abstention will not count “FOR” or “AGAINST” any matter, and your shares will not be included in the calculation of whether any matter has received a majority of the votes present at the meeting.

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Q:

How will “broker non-votes” be treated?

A:

In some cases, brokers and nominees will return proxy cards indicating that they never received specific voting instructions from the beneficial owner and that they lack the discretionary power to vote the shares on behalf of the beneficial owner. These are called “broker non-votes.” Like abstentions, broker non-votes are considered “present” for purposes of calculating a quorum but are not included in the calculation of whether any matter has received a majority of the votes present.

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Q:

Who can attend the Annual Meeting?

A:

All stockholders as of the record date can attend the Annual Meeting, although seating is limited. If your shares are issued in your name and not held through a brokerage account and you wish to attend the meeting, please check the box on your proxy card. If your shares are held through a broker and you would like to attend, please (1) write or e-mail Carrie Marrelli, our Vice President of Investor Relations, at 18400 Von Karman, Suite 1000, Irvine, California 92612, or at cmarrell@ncen.com, and (2) bring a copy of your brokerage account statement or an omnibus proxy (which you can get from your broker) to the meeting.

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Q:

When are stockholder proposals due for the 2003 Annual Meeting?

A:

In order to include a proposal in next year’s proxy statement, you must submit your proposal in writing to our Secretary at New Century Financial Corporation, 18400 Von Karman Avenue, Suite 1000, Irvine, California 92612. We must receive your proposal no later than December 5, 2002. For more information on how to include a proposal in next year’s proxy statement, please see Rule 14a-8 of the Securities Exchange Act of 1934, as amended.

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Q:

How are proxies being solicited?

A:

We are soliciting proxies by mailing this Proxy Statement and proxy card to our stockholders of record as of March 15, 2002. In addition, some of our directors, officers and regular employees may, without extra pay, make additional solicitations by telephone or in person. We will also reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for forwarding proxy materials to beneficial owners. Lastly, we might hire a proxy solicitation company to help solicit votes. We expect that the fee of the solicitor will not exceed $5,000.

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Q:

How do I obtain a copy of your Annual Report on Form 10-K?

A:

Our 10-K is actually part of the Annual Report that is being mailed to you with this Proxy Statement. If, for whatever reason, you need another copy, please write or e-mail Carrie Marrelli, Vice President - Investor Relations, at 18400 Von Karman, Suite 1000, Irvine, California 92612, or at cmarrell@ncen.com.

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(1)

All of the options granted to Executive Officers and 400,000 of the options granted to Non-Executive Officers were granted on February 27, 2002 at an exercise price of $15.71 per share. The remaining 50,000 options granted to Non-Executive Officers were granted on October 5, 2001 at an exercise price of $11.30 per share. All options vest over a five-year period, with 20% vesting on the first anniversary of the grant date and 5% vesting on the last day of each succeeding calendar quarter. The final 5% vests on the fifth anniversary of the grant date.

(2)

These shares were granted on February 22, 2002 for a purchase price of $0.01 per share. The awards vest 25% on the first and second anniversaries of the grant date and the remaining 50% vests on the third anniversary.

(3)

These options and restricted shares were issued to a group of 20 employees.

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•

Stock Options;

•

Restricted Stock;

•

Stock Appreciation Rights (“SARs”); and

•

Performance Share Awards.

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1.

If the restrictions involve a substantial risk of forfeiture, then the participant may defer recognizing income until the date upon which the substantial risk of forfeiture lapses. However, even in such case, the participant may elect to recognize income immediately in the amount equal to the difference between the fair market value of the stock on the date of grant and the purchase price, if any. If there is no substantial risk of forfeiture, then income is automatically recognized on the date of grant.

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(1)

each known beneficial owner of more than 5% of our Common Stock;

(2)

each director;

(3)

each nominee for election to the Board of Directors;

(4)

each executive officer named in the Summary Compensation Table; and

(5)

all directors and executive officers as a group.

*

Less than 1%.

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(1)

Each of the directors and executive officers listed can be reached through the company at 18400 Von Karman, Suite 1000, Irvine, California 92612.

(2)

If a stockholder holds options or other securities that are exercisable or otherwise convertible into our common stock within 60 days of March 16, 2002, we treat the common stock underlying those securities as owned by that stockholder, and as outstanding shares when we calculate that stockholder’s percentage ownership of our common stock. However, we do not consider that common stock to be outstanding when we calculate the percentage ownership of any other stockholder.

(3)

In a Schedule 13F filed with the SEC on February 16, 2001, Brookhaven Capital Management Co. Ltd. indicated that it and its affiliates owned 8,077,527 shares of Common Stock. To our knowledge, Brookhaven has not made any subsequent filings. Nevertheless, based on conversations with Brookhaven management, we believe that Brookhaven and its affiliates beneficially own less than 5% of our Common Stock. As a result, we have not included this stockholder in the table above.

(4)

U.S. Bancorp is located at U.S. Bank Place, 601 Second Avenue South, Minneapolis, Minnesota 55402. The share information reflected is based on the Schedule 13D Amendment filed on November 28, 2001 and consists of 2,724,800 shares of Common Stock issuable upon the conversion of 20,000 shares of Series 1998A Convertible Preferred Stock and 899,662 shares of Common Stock issuable upon the conversion of 12,856 shares of Series 1999A Convertible Preferred Stock. U.S. Bancorp entered into an agreement in February 2002 whereby it will sell all of the shares to a series of investors in a private placement. We expect this transaction to close on or before April 30, 2002.

(5)

Thomson Horstmann & Bryant, Inc. is located at Park 80 West Plaza One, 5th Floor, Saddle Brook, New Jersey 07663. The share information reflected is based on the Schedule 13G filed on January 23, 2002.

(6)

Dimensional Fund Advisors, Inc. is located at 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401. The share information reflected is based on the Schedule 13G Amendment filed on February 12, 2002.

(7)

Awad Asset Management, Inc., 250 Park Avenue, 2nd Floor, New York, New York 10177. The share information reflected is based on the Schedule 13G filed on February 5, 2002.

(8)

Includes 212,305 shares of common stock issuable pursuant to options exercisable within 60 days of March 16, 2002.

(9)

Includes 132,098 shares of common stock issuable pursuant to options exercisable within 60 days of March 16, 2002 and 16,103 shares owned by the Samantha H. Morrice Trust, the sole beneficiary of which is Mr. Morrice’s daughter.

(10)

Includes 252,305 shares of common stock issuable pursuant to options exercisable within 60 days of March 16, 2002.

(11)

Includes 33,334 shares of common stock issuable pursuant to options exercisable within 60 days of March 16, 2002.

(12)

Includes 23,334 shares of common stock issuable pursuant to options exercisable within 60 days of March 16, 2002.

(13)

Includes 13,334 shares of common stock issuable pursuant to options exercisable within 60 days of March 16, 2002.

(14)

Includes 13,334 shares of common stock issuable pursuant to options exercisable within 60 days of March 16, 2002.

(15)

Includes 752,694 shares of common stock issuable pursuant to options exercisable within 60 days of March 16, 2002.

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(1)

Assumes that $100.00 was invested on June 26, 1997 in our Common Stock at the closing price of $13.63 per share and at the closing price for each index on that date and that all dividends were reinvested. Prior to January 2002, we did not pay any dividends on our Common Stock. On January 15, 2002, we paid our first quarterly cash dividend of $0.05 per share. Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.

(2)

The Peer Group Index consists of the following publicly traded companies engaged in the business of sub-prime mortgage banking: Aames Financial Corporation, American Business Financial Services, Delta Financial Corporation, Novastar Financial and Saxon Capital. We dropped Advanta Corp. and Ocwen Financial from our peer group this year because they no longer are engaged in the business of originating sub-prime mortgage loans.

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(1)

Compensation levels should be appropriate to attract, retain and motivate talented executives and should be competitive with levels for executive officers of similar companies.

(2)

A substantial portion of each executive officer’s annual compensation should be linked to New Century’s overall financial performance.

(3)

Executive officers should have a strong incentive to advance long-term strategic and financial goals, and not merely be concerned with shorter-term financial performance.

(4)

Recognizing the importance of the unique partnership-like working relationship of the Founding Managers – Messrs. Cole, Morrice and Gotschall – the Committee strives to provide them with substantially equal compensation arrangements.

(5)

The tax implications to New Century and its executive officers of various payments and benefits should be considered in structuring total executive compensation.

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(1)

his base salary through the end of the current month plus credit for any vacation earned but not taken;

(2)

severance pay equal to (a) his base salary through the expiration of the current term of the employment agreement (however, this component will not be less than six months salary); plus (b) the average of his last three years’ incentive bonus compensation;

(3)

continued coverage under our medical insurance and other benefit programs until the expiration of his term of employment or his commencement of full-time employment with a new employer; and

(4)

up to $20,000 for the cost of a senior executive outplacement program.

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(1)

Amounts shown include cash compensation earned and received by the executive officers. The amounts do not include the value of certain perquisites, which in the aggregate did not exceed the lesser of either $50,000 or 10 percent of the total of annual salary and bonus reported for the named executive officer.

(2)

Amounts reported for 1999 represent amounts earned pursuant to the Founding Managers’ Incentive Compensation Plan and amounts reported for 2000 and 2001 represent amounts earned pursuant to the 1999 Incentive Compensation Plan, even though portions of the cash bonus and restricted stock were paid and issued in the following year. For 2001, each named executive officer received a cash bonus of $735,000 and 5,665 shares of restricted stock. The value of these shares was $97,098 based on the closing price of $17.14 on March 1, 2002, the date of grant. The restricted stock vests in three equal annual installments.

(3)

Amounts reported for 2001 represent a $6,000 automobile allowance for each named executive officer and contributions of $2,625 made by New Century to a 401(k) profit sharing plan for each named executive officer. Amounts reported for 2000 represent a $6,000 automobile allowance for each named executive officer and contributions made by New Century to a 401(k) profit sharing plan of $2,625 for Mr. Cole, $115 for Mr. Morrice, and $2,370 for Mr. Gotschall. Amounts reported for 1999 represent a $6,000 automobile allowance for each named executive officer and contributions made by New Century to a 401(k) profit sharing plan of $2,500 for Mr. Cole, $2,154 for Mr. Morrice, and $2,500 for Mr. Gotschall.

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(1)

All options were granted “at market” on the date of grant and are exercisable 20% on the first anniversary of the grant date, and 5% on the last day of each succeeding calendar quarter. The remaining 5% become exercisable on the fifth anniversary of the grant date.

(2)

The exercise price and tax withholding obligations related to exercise can be paid by delivery of already owned shares of Common Stock, subject to certain conditions.

(3)

This column shows the hypothetical gains or “option spreads” of the options granted based on the per-share market price of the Common Stock at the time of the grant and assumes annual compound stock appreciation rates of 5% and 10% over the full 10-year term of the options. The 5% and 10% assumed rates of appreciation are mandated by the rules of the Securities and Exchange Commission and do not represent our projections. The gains shown are net of the option exercise price, but do not include deductions for taxes or other expenses. The actual gains, if any, on the exercise of stock options will depend on the future performance of the Common Stock, the option holder’s continued employment, and the date on which the options are exercised.

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(1)

The amounts set forth represent the difference between the estimated fair market value of $13.53 per share as of December 31, 2001 and the exercise price of the in-the-money options, multiplied by the applicable number of shares underlying such options.

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I.

THE PLAN.

1.1

Purpose.

1.2

Administration.

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1.3

Participation.

1.4

Shares Available Under the Plan.

*

Reflects proposed share increase to be considered by stockholders at 2002 Annual Meeting

1.5

Grant of Awards.

1.6

Exercise of Awards.

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1.7

No Transferability; Limited Exception to Transfer Restrictions.

II.

OPTIONS.

2.1

Grants.

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2.2

Option Price.

2.3

Option Period.

2.4

Exercise of Options.

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2.5

Limitations on Grant of Incentive Stock Options.

2.6

Non-Employee Director Options.

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2.7

No Repricing.

III.

STOCK APPRECIATION RIGHTS.

3.1

Grants.

3.2

Exercise of Stock Appreciation Rights.

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3.3

Payment.

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IV.

RESTRICTED STOCK AWARDS.

4.1

Grants.

4.2

Restrictions.

V.

PERFORMANCE SHARE AWARDS.

5.1

Grants of Performance Share Awards.

5.2

Grants of Performance-Based Share Awards.

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VI.

OTHER PROVISIONS.

6.1

Rights of Eligible Employees, Participants and Beneficiaries.

6.2

Adjustments Upon Changes in Capitalization.

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6.3

Termination of Employment.

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6.4

Acceleration of Awards.

6.5

Government Regulations.

6.6

Tax Withholding.

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6.7

Amendment, Termination and Suspension.

6.8

Privileges of Stock Ownership.

6.9

Effective Date of the Plan.

6.10

Term of the Plan.

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6.11

Governing Law.

6.12

Plan Construction.

6.13

Non-Exclusivity of Plan.

VII.

DEFINITIONS.

7.1

Definitions.

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1.

Nominees for a three-year term as a Class II member of the Company’s Board of Directors: Brad A. Morrice, Michael M. Sachs and Terrence P. Sandvik.

2.

Ratification of KPMG LLP’s appointment as independent auditors of the Company for the fiscal year ending December 31, 2002.

3.

Approval of an amendment to the Company’s 1995 Stock Option Plan that would increase the number of shares issuable under the plan by 2,000,000 shares.

4.

In their discretion, upon any other matters as may properly come before the meeting or at any adjournment thereof.

Dated:                                 ,2002

Dated:                                , 2002

(Signature of Stockholder)

(Signature of Stockholder)

This proxy must be signed exactly as your name appears hereon. Executors, administrators, trustees, etc., should give full title, as such. If the stockholder is a corporation, a duly authorized officer should sign on behalf of the corporation and should indicate his or her title.