Stay Clear of Subprime Lenders
Don't be fooled by the high dividend yields of two subprime lenders Novastar Financial (NFI) and New Century Financial (NEW). New Century is going to restate results for 2006 and report a loss in Q4. Both companies are being forced to buyback subprime loans but don't have the cash to buy back the loans. Don't expect either company to continue to pay dividends. I would avoid both NFI and NEW.