NEW YORK - Fallout from the US housing slump on mortgage and real estate companies deepened yesterday, as title insurer First American and subprime lender NovaStar Financial announced job cuts and NovaStar's auditor expressed doubt that the company will survive.
First American, the largest US provider of insurance
to protect homeowners against property claims, said it would cut 1300 jobs, on top of 600 cuts announced in the second quarter, citing "changing economic conditions".
The Santa Ana, California-based company said it may move some jobs to other countries. It ended 2006 with 39,670 employees.
LandAmerica Financial Group, the third-largest title insurer, a week ago announced 1100 job cuts. NovaStar will cut 275 of 400 retail lending jobs, has cancelled a rights offering intended to raise US$101.2 million ($146.17 million), and will explore "strategic alternatives" for its servicing business, including a partnership with another company. It stopped making home loans through brokers on August 17. It expects to employ 600 people after the cuts.
The Kansas City, Missouri-based company also said auditor Deloitte & Touche LLP wouldn't be associated with the rights offering unless NovaStar amended its 2006 financial statements, and included a statement "about the uncertainty of NovaStar's ability to continue as a going concern".
- Reuters
