NovaStar to Slash 17 Percent of Workforce
NovaStar Financial, Inc. (NYSE:NFI) said Friday that it will lay off roughly 350 employees -- 17 percent of its workforce -- in a move it characterized as necessary to "align its organization with changing conditions in the mortgage market." In a press statement, the company said the layoff will largely focus on the company's wholesale loan origination group and related functions, including employees at the company's headquarters in Kansas City and at operation centers in California and Ohio. Subject to completion of the necessary legal notices and requirements, implementation of the reductions will begin immediately and conclude during the second quarter of 2007, NovaStar said. NovaStar's loan servicing organization is not affected by the reduction. As the economic landscape changes for the mortgage industry, NovaStar said it will continue to focus on three disciplines: solid lending guidelines appropriate for current conditions; coupon rates on loans that provide acceptable risk-adjusted returns; and lower overhead and support costs for loan origination. The company previously disclosed steps to tighten its underwriting guidelines and exception policies, as well as raising coupon rates to improve margins. The company estimates that the total pre-tax charge to earnings associated with this plan of termination will range between $2.7 million and $3.1 million and is expected to be incurred in the first quarter of 2007. For more information, visit http://www.novastarmortgage.com.