Industry News

NovaStar to resume wholesale loans

Secondary market disruptions forced temporary hiatus

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NovaStar Financial Inc. said it will resume funding loans through its wholesale channel today after disruptions in the secondary loan market forced it to suspend commitments for new loans last week. The Kansas City, Mo.-based lender said it is adjusting its pricing and underwriting guidelines for the wholesale channel, but continues to honor all existing commitments and fund all loans that had already been approved. NovaStar's retail channel, which loans directly to homeowners, has continued to fund loans using "guidelines that are evolving to meet changing needs of the secondary market," the company said in a statement Monday. Wholesale loan production represented 73 percent of NovaStar's loan originations in the first quarter, compared with 24 percent in retail and 3 percent through correspondent lending. NovaStar reported May 10 that it would have posted a $39.8 million loss for the quarter if not for a one-time tax-related gain of $84.2 million related to the termination of the l...