NEW CENTURY FINANCIAL CORP
AMENDED AND RESTATED GUARANTY
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>19
<FILENAME>dex1016.txt
<DESCRIPTION>AMENDED AND RESTATED GUARANTY
<TEXT>
<PAGE>

                                                                  EXECUTION COPY

                                                                   EXHIBIT 10.16

                          AMENDED AND RESTATED GUARANTY

                  This AMENDED AND RESTATED GUARANTY (this "Guaranty"), dated as
of June 20, 2003, is made and entered upon the terms hereinafter set forth by
New Century Financial Corporation, a corporation duly incorporated and in good
standing in the State of Delaware (the "Guarantor"), for the benefit of Morgan
Stanley Mortgage Capital Inc., as lender (the "Lender") under an Amended and
Restated Master Loan and Security Agreement, dated as of June 20, 2003 ( as the
same shall be amended, supplemented or otherwise modified from time to time, the
"Loan Agreement"), by and among NC Capital Corporation ("NC Capital"), New
Century Mortgage Corporation ("New Century" and together with NC Capital, each a
"Borrower" and collectively the "Borrowers") and the Lender.

                                    RECITALS

                  WHEREAS, NC Capital and the Lender are parties to that certain
Master Loan and Security Agreement, dated as of December 1, 2002 (the "Existing
Loan Agreement").

                  WHEREAS, the Borrowers and the Lender have agreed, subject to
the terms and conditions of the Loan Agreement that the Existing Loan Agreement
be amended and restated to, among other things, add New Century as a
co-borrower, increase the Maximum Credit and include Wet-Ink Mortgage Loans as a
type of Eligible Mortgage Loans.

                  WHEREAS, pursuant to the Loan Agreement, the Borrowers have
requested that the Lender from time to time continue and continue to make, as
the case may be, revolving credit loans (each, a "Loan") to finance certain
residential mortgage loans owned by the Borrowers, and the Lender has agreed to
make such loans upon the terms and conditions set forth herein and therein;

                  WHEREAS, pursuant to the Loan Agreement, the Borrowers have
duly executed and delivered an amended and restated promissory note (the "Note")
to the Lender evidencing each of the Loans, and the Borrowers have promised to
pay to the Lender the interest on and the aggregate unpaid principal amount of
the Loans on the dates and in the principal amounts provided in the Loan
Agreement; and

                  WHEREAS, the Guarantor is a party to that certain Guaranty,
dated as of December 1, 2002 (as amended, supplemented or otherwise modified
prior to the date hereof, the "Existing New Century Guaranty").

                  NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged by the Guarantor, the Guarantor hereby agrees that the Existing New
Century Guaranty is hereby amended and restated in its entirety as set forth in
the heading and recitals hereto and as follows:

<PAGE>

                  Section 1.    Definitions. Capitalized terms used but not
defined herein shall have the meanings specified in the Loan Agreement.

                  Section 2.    Guarantee. The Guarantor hereby unconditionally
and absolutely guarantees to the Lender and its successors and assigns the full
and prompt payment of all amounts due and owing by the Borrowers under the Loan
Agreement, as and when they shall become due thereunder (the "Guaranteed
Obligations"). This is a guaranty of payment and not of collection. The
liability of the Guarantor hereunder shall be direct and immediate and not
conditional or contingent upon the occurrence of any event.

                  If at any time any amounts that shall have become due and
payable under the Loan Agreement (including but not limited to, (i) interest,
default interest and principal payments required under Section 2.5 thereof, (ii)
the amount required to cure a Borrowing Base Deficiency under Section 2.6
thereof, (iii) any Minimum Usage Fee due pursuant to Section 7.17 thereof, and
(iv) indemnification payments and out-of-pocket expenses incurred pursuant to
Section 11.3 and Section 11.15 thereof) and the Borrowers shall not have
delivered full and timely payment to the Lender as required by the Loan
Agreement, the Lender shall notify the Guarantor in writing (which may be by
telecopy confirmed by a telephone call as described below) of the amounts that
remain due and unpaid (the "Shortfall Amount"). The Guarantor shall deliver the
Shortfall Amount to the Lender, in immediately available funds no later than one
(1) Business Day after such notice is received.

                  Section 3.    Obligations Unconditional. The obligations of
the Guarantor under Section 2 hereof are absolute and unconditional irrespective
of the value, genuineness, validity, regularity or enforceability of the Loan
Agreement or any other agreement or instrument referred to herein or therein, or
any substitution, release or exchange of any other guarantee of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor
(other than any payments made by the Borrowers, but subject to the provisions of
Section 4). Without limiting the generality of the foregoing, it is agreed that
the occurrence of any one or more of the following shall not alter or impair the
liability of the Guarantor hereunder which shall remain absolute and
unconditional as described above:

                  (i)      at any time or from time to time, without notice to
         the Guarantor, the time for any performance of or the compliance with
         any of the Guaranteed Obligations shall be extended, or such
         performance or compliance shall be waived;

                  (ii)     any of the acts mentioned in any of the provisions of
         the Loan Agreement or any other agreement or instrument referred to
         herein or therein shall be done or omitted (other than any payments
         made by the Borrowers, but subject to the provisions of Section 4);

                  (iii)    the maturity of any of the Guaranteed Obligations
         shall be accelerated, or any Guaranteed Obligations due and unpaid
         shall be modified, supplemented or amended in any respect, or any right
         under the Loan Agreement or any other agreement or instrument referred
         to herein or therein shall be waived or any other guarantee of any of

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<PAGE>

         the obligations hereunder or any security therefor shall be released or
         exchanged in whole or in part or otherwise dealt with; or

                  (iv)     any lien or security interest granted to, or in favor
         of the Lender or the Custodian, as the case may be, as security for any
         of the Guaranteed Obligations shall fail to be perfected.

                  The Guarantor hereby expressly waives diligence, presentment,
demand of payment and protest whatsoever, and any requirement that the Lender
exhaust any right, power or remedy or proceed against any Borrower under the
Loan Agreement or any other agreement or instrument referred to herein or
therein, or against any other Person under any other guarantee of any of the
obligations guaranteed hereunder.

                  Section 4.    Reinstatement. The obligations of the Guarantor
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Borrower in respect of the Guaranteed Obligations
is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceeding under the
Bankruptcy Code or similar law ("Debtor Relief Law") and the Guarantor agrees
that it will indemnify the Lender on demand for all reasonable costs and
expenses (including, without limitation, fees of counsel) incurred by the Lender
in connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under a Debtor
Relief Law.

                  Section 5.    Subrogation. Until such time as the Note is paid
in full, the Guarantor hereby waives all rights of subrogation or contribution,
whether arising by contract or operation of law (including, without limitation,
any such right arising under a Debtor Relief Law) by reason of any payment by it
pursuant to the provisions of this Guaranty.

                  Section 6.    Remedies. The Guarantor agrees that, as between
the Guarantor and the Lender, the obligations of the Borrowers under the Loan
Agreement may be declared to be forthwith due and payable as provided therein
(and shall be deemed to have become automatically due and payable pursuant
thereto) for purposes of Section 2 hereof, notwithstanding any stay, injunction
or other prohibition preventing such declaration (or such obligations from
becoming automatically due and payable) as against the Borrowers and that, in
the event of such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due and payable
by the Borrowers) shall forthwith become due and payable by the Guarantor.

                  Section 7.    Instrument for the Payment of Money. To the
extent permitted by applicable law, the Guarantor hereby acknowledges that the
guaranty provided herein constitutes an instrument for the payment of money, and
consents and agrees that the Lender, at its sole option, in the event of a
dispute by the Guarantor in the payment of any moneys due hereunder, shall have
the right to bring motion-action under New York CPLR Section 3213.

                                       -3-

<PAGE>

                  Section 8.    Continuing Guarantee. The guarantee provided
herein is a continuing guarantee, and shall apply to all Guaranteed Obligations
whenever or however arising and shall survive the termination of the Loan
Agreement.

                  Section 9.    General Limitation on Guaranteed Obligations. In
any action or proceeding involving any state, corporate law, or any state or
Federal bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors generally, if the Guaranteed Obligations would otherwise be held or
determined to be void, invalid or unenforceable, or subordinated to the claims
of any other creditors, on account of the amount of its liability hereunder,
then, notwithstanding any other provision hereof to the contrary, the amount of
such liability shall, without any further action by the Guarantor or any other
Person, be automatically limited and reduced to the highest amount that is valid
and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.

                  Section 10.   Representations and Warranties.

                  (i)      Existence. The Guarantor (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
Material Adverse Effect, and (c) is qualified to do business and is in good
standing in all other jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where failure so to
qualify would not be reasonably likely (either individually or in the aggregate)
to have a Material Adverse Effect.

                  (ii)     Financial Condition. The Guarantor has heretofore
furnished to the Lender a copy of (a) its consolidated balance sheet and the
consolidated balance sheets of its consolidated Subsidiaries for the fiscal year
of the Guarantor ended December 31, 2002 and the related consolidated statements
of income and retained earnings and of cash flows for the Guarantor and its
consolidated Subsidiaries for such fiscal year, setting forth in each case in
comparative form the figures for the previous year, with the opinion thereon of
KPMG, LLC and (b) its consolidated balance sheet and the consolidated balance
sheets of its consolidated Subsidiaries for the quarterly fiscal period of the
Guarantor ended March 31, 2003 and the related consolidated statements of income
and retained earnings and of cash flows for the Guarantor and its consolidated
Subsidiaries for such quarterly fiscal period, setting forth in each case in
comparative form the figures for the previous year. All such financial
statements fairly present, in all material respects, the consolidated financial
condition of the Guarantor and its Subsidiaries and the consolidated results of
their operations as at such dates and for such fiscal periods, all in accordance
with GAAP applied on a consistent basis. Since March 31, 2003, there has been no
material adverse change in the consolidated business, operations or financial
condition of the Guarantor and its consolidated Subsidiaries taken as a whole
from that set forth in said financial statements.

                                       -4-

<PAGE>

                  (iii)    Litigation. There are no actions, suits,
arbitrations, investigations (including, without limitation, any of the
foregoing which are pending or, to the Guarantor's knowledge, threatened) or
other legal or arbitrable proceedings affecting the Guarantor or any of its
Affiliates or affecting any of the Property of any of them before any
Governmental Authority (a) that questions or challenges the validity or
enforceability of this Guaranty or any action to be taken in connection with the
transactions contemplated hereby, (b) that makes a claim or claims in an
aggregate amount greater than $1,000,000, (c) which, individually or in the
aggregate, if adversely determined, could reasonably be likely to have a
Material Adverse Effect or (d) that requires filing with the Securities and
Exchange Commission in accordance with the 1934 Act or any rules thereunder.

                  (iv)     No Breach. Neither (a) the execution and delivery of
this Guaranty nor (b) the consummation of the transactions herein contemplated
in compliance with the terms and provisions hereof will conflict with or result
in a breach of the charter or by-laws of the Guarantor, or any applicable law,
rule or regulation, or any order, writ, injunction or decree of any Governmental
Authority, or other material agreement or instrument to which the Guarantor or
any of its Affiliates is a party or by which any of them or any of their
Property is bound or to which any of them is subject, or constitute a default
under any such material agreement or instrument or result in the creation or
imposition of any Lien upon any Property of the Guarantor or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.

                  (v)      Action. The Guarantor has all necessary corporate or
other power, authority and legal right to execute, deliver and perform its
obligations hereunder; the execution, delivery and performance by the Guarantor
of this Guaranty has been duly authorized by all necessary corporate or other
action on its part and this Guaranty has been duly and validly executed and
delivered by the Guarantor and constitutes a legal, valid and binding obligation
of the Guarantor, enforceable against the Guarantor in accordance with its
terms.

                  (vi)     Approvals. No authorizations, approvals or consents
of, and no filings or registrations with, any Governmental Authority or any
securities exchange are necessary for the execution, delivery or performance by
the Guarantor hereunder or for the legality, validity or enforceability hereof.

                  (vii)    Taxes. The Guarantor and its Subsidiaries have filed
all Federal income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by any of them, except for any
such taxes as are being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been provided. The charges, accruals and reserves on the books of the
Guarantor and its Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of the Guarantor, adequate.

                                       -5-

<PAGE>

                  (viii)   Investment Company Act. Neither the Guarantor nor any
of its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

                  (ix)     True and Complete Disclosure. The information,
reports, financial statements, exhibits and schedules furnished in writing by or
on behalf of the Guarantor to the Lender in connection with the negotiation,
preparation or delivery of this Guaranty and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, when taken
as a whole, do not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. All
written information furnished after the date hereof by or on behalf of the
Guarantor to the Lender in connection with this Guaranty and the other Loan
Documents and the transactions contemplated hereby and thereby will be true,
complete and accurate in every material respect, or (in the case of projections)
based on reasonable estimates, on the date as of which such information is
stated or certified. There is no fact known to a Responsible Officer of the
Guarantor, after due inquiry, that could reasonably be expected to have a
Material Adverse Effect that has not been disclosed herein, in the other Loan
Documents or in a report, financial statement, exhibit, schedule, disclosure
letter or other writing furnished to the Lender for use in connection with the
transactions contemplated hereby or thereby.

                  (x)      Tangible Net Worth. On the date hereof, the Tangible
Net Worth of the Guarantor is not less than $315,000,000.

                  (xi)     ERISA. Each Plan to which the Guarantor or its
Subsidiaries make direct contributions, and, to the knowledge of the Guarantor,
each other Plan and each Multiemployer Plan is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, the applicable provisions of ERISA, the Code and any other Federal or
state law.

                  Section 11.   Covenants.

                  (i)      Financial Statements. The Guarantor shall deliver to
the Lender:

                  (a)      as soon as available and in any event within 90 days
after the end of each fiscal year of the Guarantor, the consolidated balance
sheets of the Guarantor and its consolidated Subsidiaries as at the end of such
fiscal year and the related consolidated statements of income and retained
earnings and of cash flows for the Guarantor and its consolidated Subsidiaries
for such year, setting forth in each case in comparative form the figures for
the previous year, accompanied by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall not be
qualified as to scope of audit or going concern and shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of the Guarantor and its consolidated
Subsidiaries as at the end of, and for, such fiscal year in accordance with
GAAP, and a certificate of such accountants stating that, in making the
examination necessary for their opinion, they obtained no

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<PAGE>

knowledge, except as specifically stated, of any Default or Event of Default
under the Loan Agreement;

                  (b)      as soon as available and in any event within 30 days
after the end of each month, the unaudited consolidated balance sheets of the
Guarantor and its consolidated Subsidiaries as at the end of such month and the
related unaudited consolidated statements of income and retained earnings and of
cash flows of the Guarantor and its consolidated Subsidiaries for such month and
the portion of the fiscal year through the end of such month, setting forth in
each case in comparative form the figures for the previous year, accompanied by
a certificate of a Responsible Officer of the Guarantor, which certificate shall
state that said consolidated financial statement fairly represents the
consolidated financial condition and results of operation of the Guarantor and
its consolidated Subsidiaries in accordance with GAAP, consistently applied, as
of the end of, and for, such month (subject to normal year-end audit
adjustments);

                  (c)      from time to time such other information regarding
the financial condition, operations, or business of the Guarantor as the Lender
may reasonably request; and

                  (d)      as soon as reasonably possible, and in any event
within thirty (30) days after a Responsible Officer of the Guarantor knows, or
with respect to any Plan or Multiemployer Plan to which the Guarantor or any of
its Subsidiaries makes direct contributions, has reason to believe, that any of
the events or conditions specified below with respect to any Plan or
Multiemployer Plan has occurred or exists, a statement signed by a senior
financial officer of the Guarantor setting forth details respecting such event
or condition and the action, if any, that the Guarantor or its ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC by the Guarantor or an ERISA
Affiliate with respect to such event or condition): (i) any reportable event, as
defined in Section 4043(c) of ERISA and the regulations issued thereunder, with
respect to a Plan, as to which PBGC has not by regulation waived the requirement
of Section 4043(a) of ERISA that it be notified within thirty (30) days of the
occurrence of such event (provided that a failure to meet the minimum funding
standard of Section 412 of the Code or Section 302 of ERISA, including, without
limitation, the failure to make on or before its due date a required installment
under Section 412(m) of the Code or Section 302(e) of ERISA, shall be a
reportable event regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code); and any request for a waiver under Section 412(d)
of the Code for any Plan; (ii) the distribution under Section 4041(c) of ERISA
of a notice of intent to terminate any Plan or any action taken by the Guarantor
or an ERISA Affiliate to terminate any Plan; (iii) the institution by PBGC of
proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the receipt by the
Guarantor or any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer Plan; (iv) the
complete or partial withdrawal from a Multiemployer Plan by the Guarantor or any
ERISA Affiliate that results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by the Guarantor or any ERISA Affiliate of
notice from a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA; (v) the institution of a proceeding by
a fiduciary of any Multiemployer Plan against the Guarantor or any ERISA
Affiliate to

                                       -7-

<PAGE>

enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days;
and (vi) the adoption of an amendment to any Plan that would result in the loss
of tax-exempt status of the Plan and trust of which such Plan is a part if the
Guarantor or an ERISA Affiliate fails to provide timely security to such Plan if
and as required by the provisions of Section 401(a)(29) of the Code or Section
307 of ERISA.

                  The Guarantor will furnish to the Lender, at the time it
furnishes each set of financial statements pursuant to paragraphs (a) and (b)
above, a certificate of a Responsible Officer of the Guarantor (x) setting forth
in reasonable detail, all calculations necessary to show compliance with the
requirements set forth in paragraphs (ix) through (xiii) of Section 11 as of the
end of such period (or, if the Guarantor is not in compliance with such
paragraphs, (A) showing the extent of non-compliance, (B) specifying the period
of non-compliance and (C) setting forth what actions, if any, the Guarantor has
taken, is taking or proposes to take with respect thereto), and (y) to the
effect that, to the best of such Responsible Officer's knowledge, the Guarantor
during such fiscal period or year has observed or performed all of its covenants
and other agreements, and satisfied every condition, contained in this Guaranty
and the other Loan Documents to be observed, performed or satisfied by it, and
that such Responsible Officer has obtained no knowledge of any Default or Event
of Default except as specified in such certificate (and, if any Default or Event
of Default has occurred and is continuing, describing the same in reasonable
detail and describing the action the Borrowers have taken or proposes to take
with respect thereto).

                  (ii)     Litigation. The Guarantor will promptly, and in any
         event within 10 days after service of process on any of the following,
         give to the Lender notice of all litigation, actions, suits,
         arbitrations, investigations (including, without limitation, any of the
         foregoing which are pending or threatened) or other legal or arbitrable
         proceedings affecting the Guarantor or any of its Subsidiaries or
         affecting any of the Property of any of them before any Governmental
         Authority that (a) questions or challenges the validity or
         enforceability of any of this Guaranty or any action to be taken in
         connection with the transactions contemplated hereby, (b) makes a claim
         or claims in an aggregate amount greater than $1,000,000, (c) which,
         individually or in the aggregate, if adversely determined, could be
         reasonably likely to have a Material Adverse Effect or (d) requires
         filing with the Securities and Exchange Commission in accordance with
         the 1934 Act and any rules thereunder.

                  (iii)    Existence, etc. The Guarantor will:

                  (a)      preserve and maintain its legal existence and all of
its material rights, privileges, licenses and franchises;

                  (b)      comply with the requirements of all applicable laws,
rules, regulations and orders of Governmental Authorities (including, without
limitation, all environmental laws) if failure to comply with such requirements
would be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect;

                  (c)      keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied;

                                       -8-

<PAGE>

                  (d)      pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or profits or on
any of its Property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which adequate
reserves are being maintained; and

                  (e)      permit representatives of the Lender, during normal
business hours, to examine, copy and make extracts from its books and records,
to inspect any of its Properties, and to discuss its business and affairs with
its officers, all to the extent reasonably requested by the Lender.

                  (iv)     Prohibition of Fundamental Changes. The Guarantor
         shall not enter into any transaction of merger or consolidation or
         amalgamation, or liquidate, wind up or dissolve itself (or suffer any
         liquidation, winding up or dissolution) or sell all or substantially
         all of its assets; provided, that the Guarantor may merge or
         consolidate with (a) any wholly owned subsidiary of the Guarantor or
         (b) any other Person if the Guarantor is the surviving corporation and
         the Guarantor's Tangible Net Worth would not be adversely affected by
         such merger or consolidation; and provided further, that if after
         giving effect thereto, no Default would exist under the Loan Agreement.

                  (v)      Payment of Shortfall Amounts. The Guarantor shall pay
         all Shortfall Amounts to or at the direction of the Lender in
         immediately available funds no later than one Business Day of notice
         from the Lender.

                  (vi)     Notices. The Guarantor shall give notice to the
         Lender (unless the Borrowers have already given such notice under the
         Loan Agreement):

                  (a)      promptly upon receipt of notice or knowledge other
than from the Lender of the occurrence of any Default or Event of Default under
the Loan Agreement;

                  (b)      promptly upon receipt of notice other than from the
Lender or knowledge of the occurrence of any breach of a representation or
warranty or the failure to observe or perform any covenant or agreement
contained herein;

                  (c)      promptly upon receipt of notice other than from the
Lender or knowledge of (A) any default related to any Collateral, (B) any Lien
or security interest (other than security interests created by the Loan
Agreement or other Loan Documents) on, or claim assert against, any of the
Collateral or (C) any event or change in circumstances which could reasonably be
expected to have a Material Adverse Effect; and

                  (d)      promptly upon any material change in the market value
of any or all of the Guarantor's assets.

                  Each notice pursuant to this provision shall be accompanied by
a statement of a Responsible Officer of the Guarantor setting forth details of
the occurrence referred to therein and stating what action the Guarantor has
taken or proposes to take with respect thereto.

                                       -9-

<PAGE>

                  (vii)    Transactions with Affiliates. The Guarantor will not
         enter into any transaction, including without limitation any purchase,
         sale, lease or exchange of property or the rendering of any service,
         with any Affiliate unless such transaction is (a) not a violation of
         any provision under this Guaranty or the Loan Agreement, as the case
         may be, (b) in the ordinary course of the Guarantor's business and (c)
         upon fair and reasonable terms no less favorable to the Guarantor than
         it would obtain in a comparable arm's length transaction with a Person
         which is not an Affiliate, or make a payment that is not otherwise
         permitted by this clause (vii) to any Affiliate.

                  (viii)   Limitation on Distributions. After the occurrence and
         during the continuation of any breach of a representation, warranty or
         covenant contained herein, the Guarantor shall not make any payment on
         the account of, or set apart the assets for, a sinking or other
         analogous fund for the purchase, redemption, defeasance retirement or
         other acquisition of any equity partnership interest of the Guarantor,
         whether now or hereafter outstanding, or make any other distribution in
         respect of any of the foregoing or to any shareholder or equity owner
         of the Guarantor, either directly or indirectly, whether in cash or
         property or in obligations of the Guarantor or any of the Guarantor's
         consolidated Subsidiaries, other than dividends paid by the Guarantor
         on its Series 1998A Convertible Preferred Stock and its Series 1999A
         Convertible Preferred Stock in an aggregate amount not to exceed
         $3,000,000 per annum.

                  (ix)     Maintenance of Tangible Net Worth. The Guarantor
         shall not permit its Tangible Net Worth at any time to be less than the
         sum of (i) $275,000,000 (ii) 75% of the aggregate consolidated positive
         Net Income, calculated from the period beginning December 31, 2002 to
         the most recently ended monthly period and (iii) an amount equal to 50%
         of any Equity Proceeds received by the Guarantor since December 31,
         2002.

                  (x)      Maintenance of Ratio of Total Indebtedness to
         Tangible Net Worth. The Guarantor shall not permit its ratio of Total
         Indebtedness to Tangible Net Worth at any time to be greater than 8:1.

                  (xi)     Minimum Liquidity. The Guarantor shall not permit its
         cash and pledgeable collateral, at any time, to be less than 1.5% of
         its loan receivables held for sale (net allowance for loan loss).

                  (xii)    Maximum Residual Interest in Securitizations. The
         Guarantor shall not permit its ratio of residual interests in
         securitizations to Tangible Net Worth at any time to be greater than
         1:1.

                  (xiii)   Maintenance of Profitability. The Guarantor shall not
         permit, for any period of two consecutive fiscal quarters (each such
         period, a "Test Period"), Net Income for such Test Period, before
         income taxes for such Test Period and distributions made during such
         Test Period, to be less than $1.00.

                  (xiv)    Required Filings. The Guarantor shall promptly
         provide the Lender with copies of all documents which the Guarantor or
         any Affiliate of the Guarantor is required

                                      -10-

<PAGE>

         to file with the Securities and Exchange Commission in accordance with
         the 1934 Act or any rules thereunder.

                  Section 12.   Limitation of Liability. The liability of the
Guarantor hereunder shall in no way be affected by (i) the release or discharge
of any Borrower in any creditors', receivership, bankruptcy or other
proceedings, (ii) the impairment, limitation or modification of the liability of
any Borrower in bankruptcy, or of any remedy for enforcement of any of the
Lender's obligations under the Loan Agreement resulting from the operation of
any present or future provision of the federal bankruptcy law or any other
statute or the decision of any court, (iii) the rejection or disaffirmance of
any instrument, document or agreement evidencing any of the Lender's rights or
obligations under the Loan Agreement in any such proceedings, (iv) the
assignment or transfer of any of the Lender's obligations under the Loan
Agreement by the Lender or (v) the cessation from any cause whatsoever of the
liability of the Lender with respect to the Lender's obligations under the Loan
Agreement.

                  Section 13.   No Waiver. No failure on the part of the Lender
to exercise and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by the Lender of any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein are cumulative
and not exclusive of any remedies provided by law.

                  Section 14.   Notices. Notices sent to the Guarantor
(including notices of Shortfall Amounts) via telecopy and telephone shall be
sent to the attention of Kevin Cloyd (or such other person as may hereafter be
prescribed by the Guarantor to the Lender in writing) to the telecopy number of
(949) 862-7749 (or such other telecopy number as may hereafter be prescribed by
the Guarantor to the Lender in writing).

                  Section 15.   Expenses. The Guarantor agrees to indemnify
the Lender for all reasonable costs and expenses of the Lender (including,
without limitation, the reasonable fees and expenses of legal counsel) in
connection with (i) any non-payment of Shortfall Amounts as they shall become
due and any enforcement or collection proceeding resulting therefrom, including,
without limitation, all manner of participation in or other involvement with (x)
bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation
proceeding, (y) judicial or regulatory proceedings and (z) workout,
restructuring or other negotiations or proceedings (whether or not the workout,
restructuring or transaction contemplated thereby is consummated) and (ii) the
enforcement of this Section 15.

                  Section 16.   Assignment. The Guarantor may not assign its
obligations hereunder without the prior written consent of the Lender. The
Lender may assign its rights under this Guaranty to any successor Lender under
the Loan Agreement, and any assignment of the Lender's obligations under the
Loan Agreement or any portion thereof by the Lender shall operate to vest in the
assignee, the rights and powers of the Lender hereunder to the extent of such
assignment. This Guaranty shall be binding upon the Guarantor and the
Guarantor's successors and assigns, and shall inure to the benefit of the
Lender, its representatives, successors, successors-in-title and assigns.

                                      -11-

<PAGE>

                  Section 17.   Governing Law. THIS GUARANTY SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK LAW WITHOUT REFERENCE TO CHOICE OF LAW
DOCTRINE.

                  Section 18.   Submission To Jurisdiction; Waivers. The
Guarantor hereby irrevocably and unconditionally:

                  (i)      SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
         ACTION OR PROCEEDING RELATING TO THIS GUARANTY, THE NOTE AND THE OTHER
         LOAN DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
         RESPECT THEREOF, TO THE NON EXCLUSIVE GENERAL JURISDICTION OF THE
         COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED
         STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
         COURTS FROM ANY THEREOF;

                  (ii)     CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
         BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY
         OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
         ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
         PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD
         OR CLAIM THE SAME;

                  (iii)    AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
         PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
         CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
         PREPAID, TO ITS ADDRESS SET FORTH IN THE LOAN AGREEMENT OR AT SUCH
         OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED; AND

                  (iv)     AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
         EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
         LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

                  Section 19.   Waiver of Jury Trial. EACH OF THE GUARANTOR AND
THE LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

                  Section 20.   Amendments. No amendment or modification hereof
shall be effective unless evidenced by a writing signed by the Guarantor and the
Lender.

                  Section 21.   Severability. If any provision hereof is invalid
and unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof

                                      -12-

<PAGE>

shall remain in full force and effect in such jurisdiction and (ii) the
invalidity or unenforceability of any provisions hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.

                  Section 22.   Counterparts. This Guaranty may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Guaranty by
signing any such counterpart.

                  Section 23.   Effect of Amendment and Restatement. This
Amended and Restated Guaranty amends and restates in its entirety the Guaranty,
dated as of December 1, 2002, made by the Guarantor in favor of the Lender.

                                      -13-

<PAGE>

                  IN WITNESS WHEREOF, the undersigned has executed this Amended
and Restated Guaranty, or has caused this Amended and Restated Guaranty to be
executed by its duly authorized representative, as of the date first above
written.

                                            NEW CENTURY FINANCIAL
                                            CORPORATION, as Guarantor


                                            By: /s/ Patrick Flanagan
                                                --------------------------------
                                                Name: Patrick Flangan
                                                Title: Executive Vice President

Accepted and Acknowledged:

MORGAN STANLEY
MORTGAGE CAPITAL, INC., as Lender


By:  /s/ Andrew B. Newberger
     ------------------------------
     Name: Andrew B. Newberger
     Title: Vice President

</TEXT>
</DOCUMENT>
