Magazine article American Banker

Dozens of Nova Star Branches Set to Join 1st Metropolitan

Magazine article American Banker

Dozens of Nova Star Branches Set to Join 1st Metropolitan

Article excerpt

Seventy-nine branches of the subprime lender NovaStar Financial Inc. have committed to join 1st Metropolitan Mortgage Co., a Charlotte brokerage.

The transfer is to begin next week and should be finished by Jan. 31. 1st Metropolitan will assume or renegotiate NovaStar's leases and in some cases will buy furniture and equipment.

The deal, announced Wednesday, results from an unusual alliance between the two companies under which NovaStar, of Kansas City, Mo., has been encouraging 100 of its branches to move to the brokerage.

These branches mostly originate conforming loans, which are unsuitable for NovaStar's portfolio. Last month NovaStar agreed to help such moves go smoothly by assisting 1st Metropolitan with license transfers and other logistical issues.

But the transfer really depended on the branch employees' willingness to join 1st Metropolitan. To woo them, 1st Metropolitan last week flew about 170 NovaStar employees from 85 branches to New York for two days and put them up at the Waldorf-Astoria.

The all-expenses-paid trip "wasn't a budget affair," said Daniel H. Jacobs, the brokerage's chief executive. But "we consider ourselves to be a first-class company" and wanted to hold "a first-class event" to prove it. The resulting commitments "exceeded our goals and expectations," he said.

In return for helping with branch transfers, 1st Metropolitan last month said it would put NovaStar on its preferred lender list. The lender would get the inside track to fund the brokerage's nonconforming production. …

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