Update - 2008-01-10: A short statement on the front page of their web site ends Retail Loan Production at NovaStar:

"At present, we are no longer originating new loans..."

Saxon Mortgage Services of Fort Worth, Texas has taken over the Servicing, the top Executives left on January 3rd, and Wachovia gave them until January 4th to come up with a plan or be forced into Bankruptcy.

It's over.

Original Post - 2007-08-17: NovaStar has announced that they are closing their wholesale operations and laying off 37% of its workforce (roughly 500 employees). Per an article on the Houston Chronicle:

Mortgage lender NovaStar Financial Inc. said Friday it is cutting 500 jobs, or 37 percent of its work force, as it stops selling home loans through brokers.

The company said it will begin the cutbacks immediately and complete them in the fourth quarter, with the bulk of the cuts coming at its Kansas City headquarters.

It also said it will close wholesale operation centers in California and Ohio and the head of its wholesale NovaStar Mortgage Inc. subsidiary, David Pazgan, is stepping down.

Pre-tax charges for the layoffs will range between $17 million and $21 million, the company said.

Per an email that was forwarded on to us sent by an ex-NovaStar employee:

Unfortunately, NovaStar decided to close down their Wholesale Operations today and we will no longer be originating loans via the wholesale market. It has been a pleasure working with all of you over the past 5 plus years and I hope you make it through this dip in the industry to come out on the other side for the next wave.

Update, August 19th:

We've added Homeview Lending to the effected companies of this implosion, as it was apparently just backed by NovaStar, according to our sources. The web site simply directs one to call Marc Hanson, suggesting that an "implosion" has certainly occurred.

Interestingly, we received some information on Homeview from a (clearly angry) ex-employee back in March:

I worked for their bastard-child "Homeviewlending", we were slightly in existance over one year, never profitable. In February we closed less than 20million with apx. 50 a.e.'s and a full ops staff, all new managers, none of them ever having been managers before, the ceo and vp were previously mid level operations managers at a small companiy that shut down, not involved in marketing or production.

I know of one large national netbranch who ordered all their loan officers to not do business with Novastar or Homeview as they closed loans but could not fund some , that netbranch had in excess of 1000 loan officers nationwide and Novastar got a lot of their business from them.

Oh, my!

Original posting on Ailing from 2007-08-07

Update 2007-08-07

NovaStar has resumed wholesale.

Previously (2007-08-06):

NovaStar Mortgage Wholesale ceased funding on Friday per the following announcement:

ANNOUNCEMENT

Due to severe dislocation in the secondary market, NovaStar Mortgage Wholesale is temporarily suspending approval and funding activity on all loan transactions that have not been locked via a NovaStar Lock In Confirmation until Tuesday, August 7th, at which time the policy will be reevaluated. Locked loans and loans with docs out will continue to fund as scheduled. This is effective immediately.

New loan applications will continue to be accepted however will be held until the temporary suspension on loan approvals and fundings has been lifted.

We apologize for short notice and will be reviewing market conditions and updating our policy on a daily basis.

If you have any questions, please contact NovaStar Solutions at 877-480-3939 or Novastar Solutions at (877) 480-3939.

This message is an advertisement

NovaStar Mortgage, Inc. 8140 Ward Parkway, Kansas City, MO 64114

Should any news develop regarding NovaStar, please let us know.