GUARANTY AGREEMENT

Exhibit 10.4

GUARANTY AGREEMENT

THIS GUARANTY AGREEMENT, dated as of December 29, 2004, (as amended, supplemented and otherwise modified from time to time, this “Guaranty”), is made by and between NEW CENTURY FINANCIAL CORPORATION (together with its successors and permitted assigns, the “Guarantor”) and CITIGROUP GLOBAL MARKETS REALTY CORP. (the “Lender”), party to the Master Loan and Security Agreement referred to below.

RECITALS

WHEREAS, pursuant to the Amended and Restated Master Loan and Security Agreement, dated as of December 29, 2004 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), among NC Capital Corporation, (the “Borrower”), New Century Mortgage Corporation (the “Servicer”), New Century Financial Corporation (the “Guarantor”) and Citigroup Global Markets Realty Corp. (the “Lender”), the Lender has agreed to provide financing to the Borrower to purchase Eligible Assets; and

WHEREAS, as of the date hereof, the Borrower is an indirect wholly-owned subsidiary of the Guarantor, and the Guarantor will therefore derive a substantial direct and indirect benefit from the Lender’s providing financing to the Borrower pursuant to the Loan Agreement. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor has agreed (subject to certain limitations) to guaranty the Borrower’s obligations with respect to the Loan Agreement and the documents referenced therein.

NOW, THEREFORE, for good and valuable consideration, receipt of which by the parties hereto is hereby acknowledged, the parties hereto hereby agree as follows:

1. Defined Terms.

(a) Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

(b) “Expiration Date” shall have the meaning set forth in Section 2(d) herein.

(c) “Obligations” shall mean the obligations and liabilities of the Borrower and the Guarantor to the Lender, including, without limitation, the obligations whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, or out of or in connection with the Loan Agreement, this Guaranty or any other document made, delivered or given in connection therewith or herewith, whether on account of covenants, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to the Lender that are required to be paid by the Borrower pursuant to the terms of the Loan Agreement) or otherwise.

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(d) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty, and section and paragraph references are to this Guaranty unless otherwise specified.

(e) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

2. Guaranty.

(a) The Guarantor hereby, unconditionally and irrevocably, guarantees to the Lender and its successors, indorsees, transferees and assigns the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

(b) The Guarantor further agrees to pay any and all expenses (including, without limitation, all reasonable fees and disbursements of counsel) which may be paid or incurred by the Lender in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, the Guarantor under this Guaranty. This Guaranty shall remain in full force and effect until the Obligations are paid in full, notwithstanding that from time to time prior thereto the Borrower may be free from any Obligations.

(c) The Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of the Guarantor hereunder without impairing this Guaranty or affecting the rights and remedies of the Lender hereunder.

(d) No payment or payments made by the Borrower, the Guarantor, any other Guarantor or any other Person or received or collected by the Lender from the Borrower, the Guarantor, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantor hereunder which shall, notwithstanding any such payment or payments other than payments made by the Guarantor in respect of the Obligations or payments received or collected from the Guarantor in respect of the Obligations remain liable for the Obligations up to the maximum liability of the Guarantor hereunder until the Obligations paid in full and the Loan Agreement is terminated (such date, the “Expiration Date”).

(e) The Guarantor agrees that whenever, at any time, or from time to time, it shall make any payment to the Lender on account of its liability hereunder, it will notify the Lender in writing that such payment is made under this Guaranty for such purpose.

3. [Reserved]

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4. Representations and Warranties of the Guarantor. The Guarantor hereby represents and warrants that:

(a) It is duly organized and validly existing in good standing under the laws of the jurisdiction under which it is organized and is duly qualified to do business and is in good standing in every other jurisdiction as to which the nature of the business conducted by it makes such qualification necessary.

(b) It has the full power, authority and legal right to execute, deliver and perform its obligations under this Guaranty. This Guaranty has been duly authorized, executed and delivered by it, has not been amended or otherwise modified, is in full force and effect and is the legal, valid and binding obligation of the Guarantor, enforceable against it in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally and to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law).

(c) Neither the execution and delivery of this Guaranty nor the consummation of the transactions contemplated herein will conflict with or result in a breach of, or require any consent under, any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any material agreement or instrument to which the Guarantor is a party or by which the Guarantor or its property is bound or to which the Guarantor is subject, or constitute a default under any such material agreement or instrument, or (except for the liens created pursuant hereto) result in the creation or imposition of any lien or encumbrance upon the Guarantor’s revenues or assets pursuant to the terms of any such material agreement or instrument.

(d) It has received and reviewed copies of the Loan Agreement.

(e) There is no action, suit or proceeding at law or in equity by or before any governmental authority, arbitral tribunal or other body now pending, or to the best of the Guarantor’s knowledge, threatened against or affecting the Guarantor or its property that has a reasonable likelihood of having a material adverse effect on the Guarantor’s condition, financial or otherwise.

(f) No authorizations, approvals or consents of, and no filings or registrations with, any governmental authority are necessary for the execution, delivery or performance by the Guarantors of this Guaranty.

(g) In exchange for the guaranty hereunder, it will derive a benefit from the Lender providing financing to the Borrower.

(h) It is solvent on the date hereof.

(i) It is a qualified real estate investment trust (“REIT”) under Section 856 of the Internal Revenue Code of 1986, as amended and it is in compliance with all provisions of the Code governing its REIT status.

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5. Covenants of the Guarantor.

5.01 The Guarantor covenants and agrees that:

(a) It shall pay and discharge all taxes now or hereafter imposed on it, on its income or profits, on any of its property or upon the liens provided herein prior to the date on which penalties attach thereto; it shall promptly pay any valid, final judgment enforcing any such tax and cause the same to be satisfied of record and shall also pay, or cause to be paid, when due all claims for labor, material, supplies or services that, if unpaid, could by law result in a mechanics’ lien.

(b) It shall notify the Lender promptly upon obtaining knowledge of any material action, suit or proceeding at law or in equity by or before any government authority, arbitral tribunal or other body pending or threatened against it or the Borrower.

(c) It will take all steps necessary to maintain its status as a REIT.

6. Right of Set-off. Upon the occurrence of any Event of Default, the Guarantor hereby irrevocably authorizes the Lender or any of its Affiliates at any time and from time to time without notice to the Guarantor, any such notice being expressly waived by the Guarantor, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Lender or any of its Affiliates to or for the credit or the account of the Guarantor, or any part thereof in such amounts as the Lender may elect, against and on account of the obligations and liabilities of the Guarantor to the Lender hereunder and claims of every nature and description of the Lender or any of its Affiliates against the Guarantor, in any currency, whether arising hereunder, under the Loan Agre