Fears Reignite for Subprime Lenders

The group tumbles after NovaStar warns it expects to recognize little, if any, taxable income for the next five years

When NovaStar Financial (NFI) announced a loss for the December quarter and warned that it might not keep its status as a real estate investment trust (REIT), worries about the subprime mortgage lending market reignited on Feb. 21. As borrowing costs rise and the housing market slows, selling loans to people with poor credit histories has become a shakier business.

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