Note 6 - Marketable Securities

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note

6.

Marketable Securities

The Company's portfolio of available-for-sale securities includes (dollars in thousands):

			Gross Unrealized
	Amortized Cost		Gains		Losses			Estimated Fair Value
As of December 31, 2018
Marketable securities, current
Mortgage securities	$	-	$	-	$	-		$	-
Equity securities		2		-		(1	)		1
Total	$	2	$	-	$	(1	)	$	1
As of December 31, 2017
Marketable securities, current
Mortgage securities	$	400	$	11,394	$	-		$	11,794
Equity securities		1		-		-			1
Total	$	401	$	11,394	$	-		$	11,795

See Note

10

for a discussion of the Company's fair value methods and measurements.

During

2018,

the Company sold all but

33

non-performing mortgage securities. These sales generated proceeds of

$13.0

million and realized gains of

$12.9

million recognized, included in other income in the Company's consolidated statements of operations and comprehensive income (loss). Of the

33

retained, the Company determined that these securities have

no

fair value. There were other-than-temporary impairments relating to available-for-sale securities in

2018

of

$0.3

million.

Prior to

2017,

the Company originated, purchased, securitized, sold, invested in and serviced residential nonconforming mortgage loans and mortgage securities. As a result of those activities, the Company held mortgage securities that continued to be a source of earnings and cash flow through

December 2018.

As of

December 

31,

2017,

these mortgage securities consisted entirely of the Company's investment in the residual securities issued by securitization trusts sponsored by the Company. Residual securities consist of interest-only and overcollateralization bonds.

The following table relates to the securitizations where the Company retained an interest in the assets issued by the securitization trust (in thousands):

	Size/Principal Outstanding (A)		Assets on Balance Sheet (B)		Liabilities on Balance Sheet		Maximum Exposure to Loss		Year to Date Loss on Sale		Year to Date Cash Flows
December 31, 2018	$	-	$	-	$	-	$	-	$	-	$	1,057
December 31, 2017	$	2,714,823	$	11,794	$	-	$	11,794	$	-	$	3,193

(A)    Principal Outstanding is the aggregate principal of the underlying loans held by the securitization trusts.

(B)    Assets on Balance Sheet and Maximum Exposure to Loss is the estimated fair value of securities issued by the entity and recorded as marketable securities, current in the consolidated balance sheets.

As part of the mortgage securitization process, the Company owned the mortgage servicing rights on the mortgage loans in each securitization deal. These servicing rights were sold to a

third

party on

October 12, 2007

as documented in the Servicing Rights Transfer Agreement by and between Saxon Mortgage Services as purchaser and NovaStar Mortgage, Inc. as seller, which was discussed in the Company's

third

quarter

2007

report on Form

10

-Q. As part of this transaction, the Company retained the clean-up call rights for most of the securitization deals. The Company also attempted to sell the clean-up call rights along with the securities that were sold, as noted above.  However,

no

bids were received for the clean-up call rights and the Company does

not

believe they have any fair value.