Banking industry

NovaStar Financial Securitizes $1.25 Billion in Non-Conforming Mortgage Assets

Strategic Insights

Dec 5, 2006 — 1 min read

NovaStar Financial, Inc., a residential mortgage lender and portfolio investor, announced that its subsidiary, NovaStar Mortgage, Inc., has securitized $1.25 billion of non-conforming mortgage assets. The transaction, known as NovaStar Mortgage Funding Trust, Series 2006-6, was structured into 18 rated classes of certificates with a face value of $1,243,750,000. NovaStar retained the M-10, M-11, M-12, and M-13 certificates, representing $26.9 million in principal. The company also retained the class C certificates, which have a notional amount of $1,250,000,000 and serve as overcollateralization.

Key Takeaways:

NovaStar Financial securitized $1.25 billion of non-conforming mortgage assets through its subsidiary, NovaStar Mortgage, Inc.
The transaction, NovaStar Mortgage Funding Trust, Series 2006-6, was structured into 18 rated classes of certificates with a face value of $1,243,750,000.
NovaStar retained the M-10, M-11, M-12, and M-13 certificates, representing $26.9 million in principal.
The class C certificates have a notional amount of $1,250,000,000 and serve as overcollateralization.
The company specializes in single-family mortgages for borrowers who do not meet conventional mortgage agency guidelines.
NovaStar Financial is a Real Estate Investment Trust (REIT) founded in 1996 and is headquartered in Kansas City, Missouri.

Statistics:

$1.25 billion: the total amount of non-conforming mortgage assets securitized
$1,243,750,000: the face value of the 18 rated classes of certificates created
$26.9 million: the total principal represented by the M-10, M-11, M-12, and M-13 certificates retained by NovaStar
$1,250,000,000: the notional amount of the class C certificates retained by NovaStar
18: the number of rated classes of certificates created
2006: the year in which the transaction was closed (November 30)

Sources:

NovaStar Financial, Inc. news release, November 30, 2006
NovaStar Financial, Inc. annual report on Form 10-K, for the year ended December 31, 2005
NovaStar Financial, Inc. quarterly report on Form 10-Q, for the period ending September 30, 2006

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