The Woodbury, New York, company also said it intends to stop taking mortgage applications, and it does not believe it can continue as a going concern.
NEW YORK (Reuters) - Delta Financial Corp <DFC.O>, a Long Island-based mortgage lender, said on Thursday it plans to file soon for bankruptcy protection, after losses mounted and an agreement to obtain new financing fell apart.
The Woodbury, New York, company also said it intends to stop taking mortgage applications, and it does not believe it can continue as a going concern.
Delta said its warehouse lenders have notified it of events of default under its financing agreements.
As a result, it expects to abandon plans to raise $100 million by selling senior notes and common stock to an affiliate of Angelo, Gordon & Co., one of its largest shareholders. That transaction would have given Angelo Gordon a majority stake.
!ADVERTISEMENT!Founded in 1982, Delta specialized in home loans that don't conform to standards set by mortgage financiers Fannie Mae <FNM.N> and Freddie Mac <FRE.N>.
Delta said it lost $39.6 million in the third quarter, as credit losses tripled and the company lost money on loans it sold.
The company has said it made loans through its own retail offices and a network of about 3,200 independent brokers. It has fired a majority of its 1,395 employees this year.
More than a dozen U.S. mortgage have gone bankrupt in the last year amid the U.S. housing downturn. Among these is American Home Mortgage Investment Corp <AHMIQ.PK>, a Melville, New York lender that also specialized in non-conforming loans.
Shares of Delta fell $1.35, or 79.4 percent, to 35 cents in morning trading on the Nasdaq.
(Reporting by Jonathan Stempel; Editing by Gerald E. McCormick and Dave Zimmerman)
