Confirming numerous emails I'd received this week from various sources, NovaStar Financial Inc. today confirmed that it plans to cut approximately 500 jobs amid continuing woes in the mortgage market -- including the job of wholesale operations chief David Pazgan. From the press statement:
Lance Anderson, President of NovaStar, commented: "... Our decision to reduce employment is painful but is required by market conditions and financial discipline. As we disclosed previously, the tighter guidelines and adjusted pricing we have adopted will reduce loan originations until the secondary market shows signs of normalizing. This reduction in force includes stepping back temporarily from pursuing new loans in the wholesale market, a decision we are also seeing among some of our peer companies ... Our retail channel will be the dominant source of new loans in the coming months. We will follow through on the funding of loans already approved through the wholesale channel." The reduction in workforce will affect NovaStar's headquarters in Kansas City and will lead to closing wholesale operation centers in California and Ohio. David A. Pazgan, who has led the Company's wholesale lending organization since 2004, most recently as President and CEO of NovaStar Mortgage, Inc. (a subsidiary of NovaStar Financial), will leave the company as part of the workforce reduction .. His duties as CEO of NovaStar Mortgage will be assumed by Mr. Anderson.
In addition to the cuts, the above makes it sound as if the company has again halted wholesale production. (Update: National Mortgage News has confirmed that NovaStar has again suspended wholesale). The company said in the statement that it continues to meet all loan commitments, and that its servicing and portfolio management organizations would not be affected by the reduction. No mention of its retail operations were made explicitly in the release, although I've received unconfirmed reports that the layoffs also involved some of the company's retail operations.