August 04, 2007

Here's the 1-year chart for mortgage lender NovaStar, who stopped funding most loans Friday. Look a bit like pets.com to you? Maybe drkoop.com?


From a high of $143 to today's close of, uh, wow, $6.40. My math says that's a 96% haircut. They, and their thousands of employees, and their billions in crap loans, will be gone soon.

Real soon.

And the world will be a better place.

Working for a subprime lender is as shameful as working for a crack dealer. Life is short people. You don't have to spend it working for scum industries who prey on the ignorant and poor. Good luck NovaStar employees with the job search. Do something good with your life. It's not too late.

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.

7 comments:

Anonymous said...

DOOM DOOM DOOM


Why are people still buying Novastar.




Don't they know




Bad debts is begetting more bad debts, which beget even more bad debts.

blogger said...

http://blownmortgage.com/


Here's a great post over at blownmortgage:

A Quick Recap: The Day The Credit Died

Published at August 3, 2007 in Wall Street and Mortgage News/Insight. 0 Comments
Dear readers - what a day. I wish I could recap everything that happened, and I might get to it this weekend; if I try now I will have been working or on the phone or responding to email or writing for the last 13 hours straight and my wife will kill me - literally. So here is a quick recap:

A commenter correctly said that NovaStar was not the only one that ceased funding today; many other lenders did as well. Here is a quick summary of those that I know who temporarily (unless otherwise noted) pulled the lending plug today:

NovaStar temporarily suspends funding due to “severe secondary market disruptions”
1st National Lending Services suspends all of the following products: Jumbo, Alt A, Pay Option Arm’s, and Seconds indefinitely (email to brokers) and throws in a round of layoffs for good measure
First Magnus suspends all jumbo ARMs and expanded and niche products (email to brokers)
Credit Suisse Wholesale suspends Subprime, Second Lien, Choice Payment ARMs and all 2 and 3 year ARMs
Wachovia pulls out of Alt-A temporarily
Wells Fargo pulls out of Alt-A
Aegis Wholesale suspends option ARMs, expanded Alt-A and second lien products (email)
Homecomings eliminates rebate on all Option ARMs (email)
Countrywide increases pricing and fees on the LTV/FICO/ Documentation type grids for all documentation types, adjustments for Subordinate Financing, Cash out transactions and larger loan balances (email)
National City makes changes
IndyMac increases pricing and spreads on Alt-A products
American Home Mortgage workers pack it up
Fieldstone stops funding
Bear Stearns says its the worst they’ve seen it in 22 years
And to cap it all of Cramer melts down on air on CNBC; so much so that the network needs to throw up a disclaimer or as a new friend called it DisCramer. Get that guy a single malt scotch ASAP!

What a Friday. So now the question becomes - Will the Fed cut rates on Tuesday to calm the credit market? What are your thoughts? I have my own but I’ll save them for later.

Anonymous said...

"NEXT" says the Bankruptcy Nazis after AHM files their papers and Indymac, Novastar, LEND and CFC are sitting in the waiting room, all looking at each other to see who's going to stand up first!!

Anonymous said...

Right. This is so ridiculous. 3 years ago a High School grad idiot like me could see disaster on the horizon with these mortgages. Early this year subprime took a huge hit with New Century going tits up. These geniuses in New York couldn't see this coming?

Gee? What's the big surprise here? These companies just kept on with business as usual. We all talked about how "They still have ads on TV advertising no doc loans? What's going on". I'm still seeing the same obnoxious mortgage banner ads with dancing aliens and female bubble heads with surprised expressions. It's still business as usual. What's Cramer ranting about?

These companies are so heavily in debt that they need new credit constantly to keep going. It's like someone using a new credit card to pay the payment of many previous, maxed out credit cards. It's a complete ponzi borrowing scheme financed by the Fed with easy money.

None of the home building or mortgage CEOs I see on television impresses me with their intelligence. They all based their company future on this gravy train going on forever. Maybe, just to keep up with their competitors they had to let total losers get mortgages.

I guess in the long run, the optimists, the perma-bulls win. Blind to any downside they plod on and when disaster strikes, their optimistic attitude sucks even Uncle Sam in to rescue them, at the expense of the people who saw the truth, both the good and the bad, who maintained a frugality that once made America great.

Oh well. I guess we're freaking doomed.

Anonymous said...

"You don't have to spend it working for scum industries."

No matter the industry, everyone is selling and buying bullshit.

Anonymous said...

At least crack dealers are a bit more honest.

Anonymous said...

First of all, the subprime industry has been around, alot longer then the last 5 years. Secondly, all the foreclosures are not because of subprime Lenders, it's from the Bank of America's and the Wachovia's etc. that offered people 1.25% teasers mortgage loans when real-estate was off the charts. No one and I mean No one ever mentions these loans, that for the 1st five and a half years of those payments, you have negative amort. Meaning you end up owing more than you borrowed..