NovaStar is suspending funding of some mortgage loans, according to a bulletin the lender sent mortgage brokers Friday.
A copy of the email message posted on several housing-related Web sites cites a "severe dislocation in the secondary market" for the decision. The move applies to "all loan transactions that have not been locked via a NovaStar Lock In Confirmation" through Tuesday.
The note says new loan applications will be accepted but will be put on hold till the suspension is lifted. NovaStar, which has been a leader in the business of lending to homebuyers in the hard-hit subprime market, said it will re-examine the decision on a day-to-day basis.