Housing Wire has learned that subprime mortage banker NovaStar is winding down its warehouse lending operation, WarehouseUSA Capital Corp., in an effort to adjust to difficulties in the subprime lending market. In a notice posted on the company's web site, WarehouseUSA said it was no longer accepting applications for warehouse lines of credit and that it would close all of its existing lines of credit on or before April 27. "The closure of the warehouse lending business will not impact direct mortgage loan funding by, or any other business of, any NovaStar entity," the company said. NovaStar has had its fair share of trouble in the recent subprime market downturn, most recently as the target of a potential servicer ratings downgrade by Fitch Ratings, who expressed concerns regarding "NovaStar's ability to fund its ongoing servicing operation and maintain servicing quality."
The company had disclosed it may fail to satisfy profitability covenants associated with its own warehouse repurchase facilities during the first quarter of 2007, and also announced on March 16 that it would lay off 17 percent of its workforce. It was not clear how many employees would be affected by the closure, or if the previously-mentioned layoffs included employees at Warehouse USA. Company officials were not available to comment on the WarehouseUSA closing at the time HW published this story. For more information, visit http://www.novastarmortgage.com.
Don't subscribe? Be sure to sign up today to get our free email updates delivered direct to your inbox!