When Novastar Financial of Kansas City went broke nobody really cried about it. This is a press release from October 16, 2007:
Troubled subprime lender NovaStar Financial, Inc. said late today that it will sell its entire servicing rights to Saxon Mortgage Services, Inc. in a bulk deal that pulls the rug out of NovaStar’s sizeable servicing operation.
The deal will see NovaStar’s servicing rights sold for roughly $175 million in cash, and will lead to “substantial reductions in both its organization and workforce,” the Kansas City-based mortgage company said. Novastar employs 300 in its servicing operations.
It is the summer of 2009, and Saxon Mortgage Services is trying to blame NovaStar accounts for many of Saxon’s problems. Failure to modify loans, the need for more employees, and call volume cannot be attributed to former Novastar customers.
Whatever the cause, Morgan Stanley and Saxon wanted the Novastar accounts. Now they have them, and must address certain issues, like telling homeowners who their investor is.
We’ve asked homeowners to call Saxon and report their results. We will publish more on this subject as details become clear.