Disruptions in the private, secondary mortgage market last week promptedNovaStar's wholesale unit, which deals with outside brokers, to stop issuingcommitments for new loans on Friday. That news pushed NovaStar shares down morethan 30% during Monday morning trading.
However, the company issued a statement later on Monday explaining that it'sadjusting pricing and guidance on loans and expects to start committing to andfunding new loans in its wholesale channel on Tuesday.
"NovaStar has continued to honor all existing commitments and fund all loansthat have already been approved and committed for closing," the company added. "Our retail channel, which deals directly with homeowners, has continued to makeloans, using guidelines that are evolving to meet changing needs of thesecondary market."
The statement sparked a strong recovery in NovaStar shares. The stock endedtrading on Monday up 5.9% at
"NovaStar's business model is to focus on what is best for our shareholdersover the long term," the company also said. "We believe we can best serve theinterests of our shareholders -- and the mortgage market -- by making prudenteconomic decisions on loans we originate in the current market environment."
NovaStar was the latest mortgage lender to pull back from the mortgage market.A unit of private-equity firm Cerberus Capital Management LP and another unit ofbank
(END) Dow Jones Newswires
