NovaStar Reports Big 3Q Loss

NovaStar Financial Inc., Kansas City, Mo., has reported a net loss of $598.0 million ($64.05 per share) for the third quarter, compared with net income of $25.3 million ($2.91 per share) one year prior.Among the noncash items that contributed to the loss are a tax charge of $245.8 million (pretax) related to the revocation of the company's real estate investment trust status during the quarter and a $99.2 million (pretax) provision for credit losses. Overall, NovaStar reported six separate noncash items totaling $544.7 million (pretax) that hurt its results. The company has a waiver for compliance with the net worth covenant in its financing facilities with Wachovia that expires on Nov. 30. NovaStar said it will still be out of compliance on that day and there are no assurances it will be able to obtain additional waivers or that it will be able to repay Wachovia. Scott Hartman, chairman and chief executive of NovaStar, said the company's strategy is "to manage the cash flows from our portfolio of mortgage-backed securities and operate our retail brokerage operations." NovaStar can be found online at http://www.novastarmortgage.com.