Appraisals proved profitable for NovaStar Financial Inc. in the third quarter, as income rose to $4.4 million, according to a filing with the Securities and Exchange Commission. The former subprime mortgage lender earnings for the three months Sept. 30 rose from $457,000 in the second quarter and $3.4 million in the same period last year. Earnings per share, however, dropped significantly from the second quarter, dipping to 5 cents from $5.55 a share, due to the dilutive effect of the sale of about 37.2 million shares and 43.8 million shares in late June. The number of basic shares outstanding rose to 90.3 million at the end of the third quarter, up from 16.5 million at June 30. Third-quarter revenue increased to $40.7 million from $25.6 million a year earlier. The vast majority of third-quarter revenue came from NovaStar's appraisal management subsidiary, StreetLinks, which generated $37.6 million in revenue up from $22.8 million a year earlier. StreetLinks, which NovaStar acquired in 2008, charges a fee to lenders for its appraisal management services. In 2010 StreetLinks acquired a majority interest in Corvisa, a software and appraisal management provider. In a separate deal in the third quarter, NovaStar bought a majority stake in Make My Move, a moving services start-up, for $1.7 million and future obligations of $700,000. Interest income on NovaStar's mortgage-backed securities climbed slightly to $3.1 million from $2.8 million a year ago. The company holds about $5.3 million in mortgage-backed securities, down from $5.8 million at the end of 2010. The Kansas City company did not include any loss contingency for ongoing legal battles, and said "an adverse ruling is not probable" for a few claims. There are at least four cases in which NovaStar is a defendant, according to its quarterly statement. AppraiserLoft, a former competitor of StreetLinks, went out of business in October after struggling to pay appraisers on time. Write to Andrew Scoggin. Follow him on Twitter @ascoggin.