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Orange County loses more jobs in sub-prime industry

August 18, 2007|From Times Wire Services

Fallout from the mortgage market crisis continued Friday as two sub-prime lenders with operations in Orange County announced job cuts.

NovaStar Financial Inc., the third-biggest independent sub-prime mortgage lender, said it would fire more than a third of its workforce, or about 500 employees nationwide, including 170 in Lake Forest, as it closes its wholesale operations centers.

Wholesale loans are mortgages issued through a broker, as opposed to directly to a home buyer. NovaStar said it was still lending directly and had honored all commitments to fund previously approved loans.

The decision to trim its staff came a week after Kansas City, Mo.-based NovaStar temporarily suspended the sale of wholesale loans in a move the company said was needed to reevaluate prices and guidelines for brokered loans amid "disruptions" in the market for mortgage debt.

Separately, New York-based Bear Stearns, the giant money manager and underwriter of mortgage bonds, said it had cut 240 jobs at two sub-prime lending units because of a drop in demand. The firm's Irvine-based Encore Credit unit cut 100 jobs and its Bear Stearns Residential division laid off 140 in Glen Allen, Va., and King of Prussia, Pa.

Late Friday, First Mangus Financial Corp., a national mortgage lender based in Tucson, said it had halted operations, laid off 99% of its nearly 6,000 employees and closed all of its more than 300 offices. It had 13 branches in California.

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