Fallout from the U.S. housing slump on mortgage and real estate companies deepened Tuesday, as title insurer First Americanand subprime lender NovaStar Financialannounced job cuts and NovaStar's auditor expressed doubt that the company will survive.
First American, the largest U.S. provider of insurance to protect homeowners against property claims, said it will cut 1,300 jobs, on top of 600 cuts announced in the second quarter, citing "rapidly 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 Inc, the third-largest title insurer, last Tuesday announced 1,100 job cuts.
NovaStar will cut 275 of 400 retail lending jobs, has canceled a rights offering intended to raise $101.2 million, and will explore "strategic alternatives" for its servicing business, including a partnership with another company. It stopped making home loans through brokers on Aug. 17. It expects to employ 600 people overall after the cuts.
The Kansas City, Missouri-based company also said auditor Deloitte & Touche 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." Subprime lenders make home loans to people with poor credit histories.
"We are pulling back to focus on NovaStar's core strengths and preserve liquidity," NovaStar Chief Executive Scott Hartman said in a statement. "The secondary market has deteriorated substantially, so we are modifying our business model and further reducing costs for this difficult environment."