Novastar Financial
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| Public | |
| Traded as | OTCQB: |
| Founded | 1996 |
| Headquarters | Kansas City, Missouri, United States |
| Website | www |
Novation Companies, Inc. (formerly Novastar Financial, Inc.) owns and operates early-stage businesses in the technology-enabled services industry. It trades under the symbol NOVC.
Novation Companies, Inc., (NOVC) was founded as NovaStar Financial, Inc., a Kansas City-based residential mortgage company, in 1996. Through its subsidiaries, NovaStar Mortgage, Inc., and NovaStar Home Mortgage, Inc., it originated, securitized and serviced residential loans.
During a 10-year period, NovaStar Mortgage originated more than $40 billion in mortgage loans and NovaStar Home had more than 400 branches located nationwide. The fast and significant success took the company to nearly 5,000 employees at one point. The company went public a mere 10 months after opening its doors.
From 2003 to 2006, the total number of subprime loans issued in the U.S. increased by 17 percent. However, NovaStar’s business model proved unsustainable for the long term as more and more people defaulted on loans. NovaStar's business model is considered one of the primary factors that led to the credit crisis of 2008.
NovaStar rode the economic storm to its low, and exited the mortgage lending business completely by 2008. The company’s stock price dropped from nearly $70 a share to under $1 and was delisted from the New York Stock Exchange by 2008. The employee base shrank to approximately 20.
However, through perseverance, NovaStar survived one of the most significant economic downturns of our time as well as paid all of its secured bank lenders. It exited the crisis with a seasoned group of founders and leaders who had learned important lessons during the last decade: How to set up a better business model that will not collapse the market completely but still be profitable. In addition, the company has significant realized and unrealized federal tax losses, allowing it to mitigate income taxes on profits for many years to come.
Leaders were convinced that if they could navigate NovaStar through that storm, they could take their lessons learned and help other entrepreneurs grow and scale their businesses; defer taxes and do it all over again. With the self-induced collapse in 2008, they began reinventing NovaStar based on their core competencies: the ability to scale businesses and improve execution of an original concept. Since then they have acquired four companies – StreetLinks, Advent Financial Services, IVR Central (renamed CorvisaCloud) and Mango Moving.
This reinvention prompted the company to change its name to Novation Companies, Inc., in order to reflect the leadership team’s vision for the future and to get away from the bad taste that Novastar left its investors. [1] This name represents the ability to innovate in order to bring new technology-enabled services to market.
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