NovaStar closes $1.25 Billion asset backed securitization
NovaStar Financial, Inc., a residential mortgage lender and portfolio investor, announced today that its subsidiary, NovaStar Mortgage, Inc., securitized $1.25 billion of non-conforming mortgage assets. The transaction will be treated as a sale for both financial reporting purposes (GAAP) and tax purposes.
Lead managers RBS Greenwich Capital, Deutsche Bank Securities and Wachovia Securities underwrote NovaStar Mortgage Funding Trust, Series 2006-6, which closed November 30, 2006. The transaction was structured into 18 rated classes of certificates with a face value of $1,243,750,000.
NovaStar retained the Mortgage loans -10, Mortgage loans -11, Mortgage loans -12 and Mortgage loans -13 certificates. Collectively, these certificates represent $26.9 million in principal. The Mortgage loans -12 and Mortgage loans -13 certificates were not covered by the prospectus. Ratings for the Mortgage loans -10, Mortgage loans -11, Mortgage loans -12 and Mortgage loans -13 certificates follow:
Class S&P / Moody’s / Fitch
M-10 BBB / NR / NR
M-11 BBB- / NR / NR
M-12 BB+/ NR / NR
M-13 BB / NR / NR
NovaStar also retained the class C certificates. Class C has a notional amount of $1,250,000,000, entitles NovaStar to excess and prepayment penalty fee cash flow from the underlying loan collateral and serves as overcollate ralization. Other than prepayment penalty fee cash flow, Class C is subordinated to the other classes.