February 21, 2007
FLASH: Novastar blows up - the latest subprime casualty. So when does Countrywide pre-announce it's disaster?
The race to jail between insider sellers Bob Toll and Angelo Mozilo seemed to be neck and neck, but I'd bet more on Mozilo today, as not a word yet from Countrywide about their impending disaster and write-down. I guess they're still adding up the carnage.
The loans ain't gettin' paid back folks. Massive mortgage fraud, flaky flippers and plummeting prices have destroyed anyone playing in the subprime pool.
Fannie and Freddie know it too. And we're talking TRILLIONS when it comes to those impending disasters.
Here's the latest dot-subprime to predictably blow up. Now there's blood in the streets, and we're just starting...
(disclosure - I'm gleefully short CFC and LEND at time of writing, and sure wish I was short 'em all)
NovaStar Flames Out
Shares of NovaStar Financial plummeted 26% after the real estate investment trust became the latest casualty of rising problems in the subprime mortgage market.
The Kansas City, Mo., mortgage lender reported a loss of $14.4 million, or 39 cents a share, compared with a profit of $26.4 million, or 84 cents a share, a year earlier.
"The credit performance of our portfolio, and specifically our 2006 originators, deteriorated during the fourth quarter, resulting in impairments on mortgage securities and additional loss provisions for loans held-in-portfolio in the REIT," says Scott Hartman, NovaStar's CEO. "Also, our gains upon securitization were reduced during the quarter because of lower whole loan prices. Furthermore, during the fourth quarter, we experienced a greater level of loan repurchase requests due to early payment defaults than we have historically."
The news comes just two weeks after shares in NovaStar rival New Century blew up after the company warned it was experiencing similar problems.