March 13 (Bloomberg) -- Accredited Home Lenders Holding Co., a mortgage company for people with bad credit, needs to raise cash after paying more than $190 million demanded by backers this year. The stock lost almost half its value.

Accredited is ``exploring various strategic options, including raising additional capital to enhance liquidity,'' according to a statement today. The San Diego, California-based company, the 15th-biggest U.S. subprime lender, also plans to eliminate an unspecified number of jobs.

Similar demands by lenders earlier this month prompted analysts to predict New Century Financial Corp. will go bankrupt. A housing slump in the U.S. has pushed subprime loan defaults to a seven-year high, forcing Accredited, New Century and other mortgage underwriters to buy back loans sold to investors. More than two dozen lenders have shut or sold operations since January 2006, according to data compiled by Bloomberg.

``It's clear now that liquidity is an issue'' for Accredited, said Bose George, an analyst at Keefe Bruyette & Woods in New York. The wave of margin calls from backers ``shows that lenders are starting to get very concerned.''

The company's shares fell $5.29, or 46 percent, to $6.11 at 9:45 a.m. New York time in Nasdaq Stock Market trading.

New Century, based in Irvine, California, said today it received default notices from UBS AG, Barclays Plc and three other banks, adding to five such notices disclosed yesterday. The New York Stock Exchange said in a statement before trading began it will suspend trading in New Century's shares, which have lost 95 percent of their value this year.

Demands From Lenders

Accredited said cash and other sources of liquidity, which stood at $354 million on Dec. 31, have fallen because lenders demanded $190 million of collateral to cover potential losses. The company didn't provide the current cash balance. Accredited also didn't say whether the strategic options included a sale of the company.

The company has violated terms of lending agreements that require specified ``levels of net income.'' Accredited, which earlier this year persuaded creditors to waive the requirement, is now seeking extensions.

Accredited, which previously announced plans to file an annual report with securities regulators by March 16, said it's unlikely to meet that target because of a review of accounting related to its acquisition last year of Aames Investment Corp. The company is evaluating ``goodwill'' associated with Aames, or any amount that must be written down because of a decline in the asset's worth.

Shares Plunge

Shares of Accredited have plunged almost 80 percent this year as the industry crisis deepened. Mortgage Lenders Network USA Inc. and Ownit Mortgage Solutions Inc. are among companies that failed in the past six months.

New Century said today the Securities and Exchange Commission opened a preliminary investigation involving the company, following a Feb. 7 announcement that it would restate earnings because of a failure to properly account for the costs of loan buybacks.

The company also received a grand-jury subpoena for documents in a previously disclosed criminal investigation by the U.S. Attorney's Office in Los Angeles. That probe focuses on trading in Irvine, California-based New Century's securities as well as accounting errors.

Teaser Rates

Subprime loans, a term applied to some of the riskiest home mortgages, are made to borrowers unable to qualify under traditional, more stringent criteria. The loans often carry interest rates 2 to 3 percentage points higher than regular mortgages and sometimes have low initial ``teaser'' rates that adjust higher in later years. Some lenders also lowered their standards last year to bolster revenue because slumping home sales had hurt demand.

Rick Howe, an Accredited spokesman, didn't return a call seeking comment.

The company in October said full-year earnings would fall below the low end of its already trimmed estimate.

Zoltan Pozsar, an economist at Moody's Economy.com, said yesterday that more mortgage lenders may go bust amid rising defaults on risky loans. Mortgage defaults may climb to $225 billion during the next two years compared with about $40 billion annually in 2005 and 2006, according to debt strategists at Lehman Brothers Holdings Inc.

Unstable Market

``New Century is not the first mortgage lender to go bankrupt and it won't be the last one,'' said Pozsar. ``The risk here is that when the tide will eventually hit, hedge funds and investors get hurt. That is the real risk for the financial system.''

Industry defaults have sparked concern the U.S. housing slowdown will worsen, as potential buyers are cut off from credit. A Standard & Poor's index of home construction companies yesterday fell 4.1 percent, the biggest decline since August.

The meltdown has stung HSBC Holdings Plc, Europe's biggest bank by market value, whose second-half profit dropped 5.7 percent because of an increase in U.S. loan defaults. The bank fired senior U.S. managers and stopped buying so-called second- charge mortgages at its broker unit, which drove the rise in provisions.

``This is not a stable market,'' HSBC Chief Executive Officer Michael Geoghegan said on a March 5 conference call. ``There are ups and downs, and we are in a downturn.''

Further increases in interest rates or declines in home prices would force HSBC to make additional provisions for bad loans, Geoghegan said.

To contact the reporters for this story: Philip Lagerkranser in Hong Kong at lagerkranser@bloomberg.net

Last Updated: March 13, 2007 09:56 EDT