"NovaStar Financial Inc.'s stock plummeted Thursday after the beleaguered home lender posted a nearly $600 million loss, said its shares are likely to be booted off the New York Stock Exchange and warned of heightened risk of bankruptcy.
"Many of NovaStar Financial's competitors -- including American Home Mortgage Investment Corp. and New Century Financial Corp. -- have gone out of business this year. NovaStar Financial has laid off much of its staff and stopped issuing mortgage loans this year as the mortgage industry plunged into distress.
"For the third quarter, NovaStar lost $598 million. This stemmed from various charges reflecting how much value its portfolio has lost."
For some perspective on the size of NovaStar, the firm originated $11.2 billion in nonconforming loans in 2006. That compares with almost $60 billion at New Century Financial, which flamed out spectacularly earlier this year.