Novastar Cutting 500 Jobs, Closing Wholesale Unit

August 17, 2007 No Comments »

Kansas City based Novastar Financial Inc. announced Friday that it would be cutting 500 jobs, or roughly 37% of its workforce as it shuts down wholesale operations in California and Ohio.

The news comes a week after a previous incident with the company, when it temporarily halted wholesale loan origination to re-evaluate pricing and guideline for brokered loans.

The company said pre-tax charges for the mortgage layoffs will range between $17 million and $21 million, with the bulk of layoffs coming at its Kansas City headquarters.

The head of wholesale operations for Novastar, David Pazgan, also stepped down.

The mortgage lender said it is still originating and funding loans through its retail arm, and said it will honor all commitments to fund loans that were already approved.

Shares of Novastar Financial Inc. ended up 64 cents, or 8.73% to $7.97 a share Friday, well below their 52-week high of $131.52.

Novastar specialized in subprime mortgages, and had been hurt recently by the lack of buyers on the secondary market.

See the full list of closed mortgage companies.

Leave A Response