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Parent Company of AMC Faces Financial Challenges

By AppraiserLoft Team | June 10, 2009

While many AMCs today are enjoying the benefits of increased volume under the Home Valuation Code of Conduct (HVCC), one is yet to turn profitable for its parent company, who in turn is facing financial difficulties, according to company filings.

NovaStar Financial Inc., the Maryland-based subprime lender, continues to face financial challenges, according to its 10-K, filed with the Securities and Exchanges Commission (S.E.C.) on May 27, 2009. NovaStar acquired a majority interest in the appraisal management company PipeFire LLC in August 2008, renaming the company StreetLinks National Appraisal Services and installing former head of NovaStar’s retail lending division, Steve Haslam, as the CEO. StreetLinks is headquartered in Indianapolis. NovaStar is in Kansas City.

NovaStar ran into problems with the onset of the subprime mortgage lending crisis, despite taking early steps to protect its assets by shutting down its operating business, and halting all lending since late 2007. According to the 10-K filed with the S.E.C., questions remain about NovaStar’s future.

“We face substantial liquidity risk and uncertainty, near-term and otherwise, which threatens our ability to continue as a going concern and avoid bankruptcy,” it stated. If NovaStar did file for bankruptcy, StreetLinks would be forced to find another owner with enough capital to help sustain its rapid growth.

The emergence of StreetLinks was originally viewed with suspicion by some appraisers due to its association with NovaStar. According to an article in BusinessWeek, when NovaStar was operating as a subprime lender, it was disciplined by three states for infractions including employing unlicensed brokers and charging unlawful fees.

For the full story, click here.

 

 

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