NovaStar to Cease Ops Temporarily in NJ

NovaStar Mortgage Inc., Kansas City, Mo., has announced that it will cease doing business in New Jersey on Nov. 27 until a new state law imposing unlimited assignee liability is amended.NMI said rating agencies have indicated that, as of Nov. 27 (when the New Jersey Home Ownership Security Act of 2002 takes effect), they will not rate structured finance deals that include all forms of cash-out refinancing. The agencies have cited a lack of clarity about potential damages under the new law, NMI said, and the company wants the law's uncapped assignee liability to be limited. NMI noted that its parent company, NovaStar Financial Inc., is a real estate investment trust that invests in mortgage securities backed by mortgage loans originated by NMI. "A large percentage of mortgage securities with collateral in New Jersey will be unrated and, therefore, will not be marketable, resulting in NovaStar's decision to cease doing business in the state," NMI said.