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NovaStar Financial, which temporarily halted funding nearly two weeks ago amid the major disruptions in the secondary market, announced that they will be laying off nearly 40% of their workforce as demand for their mortgage products has declined precipitously.
NovaStar is a primarily subprime mortgage lender. From Market Watch:
Friday said it plans to cut about 500 employees, or 37% of the workforce, “to align its organization and costs with an expected reduction in loan originations.” The Kansas City, Mo.-based company said it “continues to meet all loan commitments, and its servicing and portfolio management organizations are not affected by the reduction.” The company said David Pazgan, chief executive of subsidiary NovaStar Mortgage Inc., would leave the company as part of the reduction.
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