The mortgage market fire is growing bigger and bigger this month, and August has just begun. On the heels of severely disabling margin calls, C-BASS announced on Friday that it has retained The Blackstone Group as financial advisor to assist the company in finding additional ways to secure capital in order to keep the fasting sinking company afloat.

Then NovaStar Financial announced that it has suspended funding or approving loans in its wholesale-lending unit as a result of "severe dislocation in the secondary market." The firm recently received an investment of $48.8 million by MassMutual and Jefferies Capital Partners in the form of convertible preferred stock as well as a commitment to purchase up to $101.2 million of any unsubscribed shares of an upcoming shareholder rights offering for a similar series of convertible preferred stock in order to raise $150 million in equity for NovaStar.

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