By purchasing a majority stake in a residential appraisal management company, NovaStar Financial Inc. has taken its first step back into the primary mortgage market — though as a vendor, rather than a lender.

The appraisal firm, PipeFire LLC of Indianapolis, gave NovaStar its first operating business since the Kansas City, Mo., company sold its servicing assets in the fourth quarter to Morgan Stanley's Saxon Mortgage Services Inc. for roughly $147 million.

Since then NovaStar has "been living off" its portfolio of asset-backed securities, said Matt Kaltenrieder, a company spokesman.

NovaStar said it paid $750,000 for the stake, with an additional earnout of up to $3.25 million.

PipeFire will be renamed StreetLinks National Appraisal Services. Steve Haslam, a NovaStar Mortgage senior vice president and its former head of retail lending, has become PipeFire's chief executive officer.

The acquisition closed Aug. 8 and was announced last week.

Lance Anderson, NovaStar Financial's CEO, said in a press release that the purchase was "a positive step toward reestablishing niche operations in the residential housing market." He cautioned that buying the stake would not "resolve the significant challenges NovaStar still faces."

Last week NovaStar notified the Securities and Exchange Commission that it could not file its second-quarter results on time, because of the "impact of market factors and the mortgage securities markets" on the company's financial statements.

It posted a first-quarter loss of $289 million, or $30.63 a share, compared with net income of $44.4 million, or $4.74 a share, a year earlier. NovaStar blamed the loss on adjustments to the estimated fair value of its loans held for sale. In its first-quarter SEC filing, the company said it faced "substantial liquidity risk" that threatened its ability to "continue as a going concern and avoid bankruptcy."

The former subprime lender shut its wholesale operations and closed 16 retail offices in the fourth quarter.

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