NovaStar to Buy $940M Bulk Mortgage Pool

NovaStar Financial Inc., Kansas City, Mo., has announced an agreement to buy approximately $940 million of nonconforming mortgage loans that it plans to include in an asset-backed securitization structured as a financing.The seller of the loans was not disclosed. NovaStar, a real estate investment trust, said it intends to "maintain flexibility" in structuring securitizations as either sales or financings. "This flexibility allows us to continue providing shareholders with the tax benefits associated with NovaStar's REIT status, while complying with certain income and asset tests to maintain our tax-advantaged structure," said Greg Metz, NovaStar's chief financial officer. "In order to satisfy these tests in a variety of interest rate environments, it may be necessary to periodically add additional real estate assets to our GAAP and tax balance sheets through securitizations treated as financings." The residential mortgage lender and portfolio investor can be found online at http://www.novastarmortgage.com.