NovaStar Financial Inc. said it is in the process of laying off 500 workers as it stops seeking new loans in the wholesale market and closes wholesale operations centers in California and Ohio.

The layoffs, which amount to about 37 percent of the troubled lender’s remaining workforce, will also result in staff reductions at the company’s headquarters in Kansas City, Mo., the company said in a press release.

NovaStar reported $54.6 million in losses in the second quarter as loan production fell 73 percent from the same quarter a year ago, to $774 million.

Wholesale loan production in the second quarter represented 61 percent of loan originations, the company said in a Securities and Exchange Commission filling, while retail lending grew to 39 percent of loan originations with the launch of new retail branches in December.

NovaStar said it was subjected to $197 million in cash margin calls between Jan. 1 and Aug. 8, including $76.5 million in August alone.

The company has discontinued originations of 2/28 hybrid adjustable-rate mortgages, which accounted for $1.5 billion of the company’s loan production in the first half of the year.

NovaStar originated and purchased $2.2 billion in nonconforming loans during the period, compared with $5.6 billion during the first half of 2006.

Loans under management totaled $15.5 billion at the end of June.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription