PR - NovaStar to Sell Mortgage Servicing Rights to Saxon Mortgage

Lance Anderson, President and Chief Operating Officer, commented: "This action is expected to reduce debt and risks related to operating capital needs for servicing loans. As we continue to endure a difficult period for the mortgage industry and the secondary market for mortgage loans, our focus is on managing our portfolio of mortgage securities, along with brokering loans with a retail team that continues to serve homeowners."

The sale of mortgage servicing rights to Saxon means that collection, customer service and loss mitigation activities on the related loans that NovaStar services will transition to the Saxon organization upon closing of the sale or soon after closing. NovaStar is currently evaluating the impact of this transaction on its servicing organization, including its servicing workforce of approximately 300 persons, but expects that substantial reductions in both its organization and workforce will result.

NovaStar and Saxon place a high priority on customer service and providing a seamless transition for homeowners with NovaStar loans. Each homeowner will receive direct communication from the companies explaining the changes in procedures and contact information.

Mortgage servicing rights are an asset representing the present value of expected fees that are paid out of securitized loan pools for activities such as loan collection, customer service and loss mitigation. Deutsche Bank Securities Inc. advised NovaStar in this transaction.