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.
