NovaStar Announces Commitment for an Additional $100 Million
    in Liquidity; Initiates Formal Process to Explore Strategic Alternatives


KANSAS CITY, MO., April 11, 2007- NovaStar Financial, Inc. (NYSE: NFI), a
residential mortgage lender and portfolio investor, announced today that it has
received a commitment for an additional financing facility in an amount up to
$100 million arranged by Wachovia Capital Markets, LLC. The commitment also
provides for the parties to commence negotiation on a comprehensive financing
facility which would replace and expand the existing facilities in place between
the Company and Wachovia. The proposed additional financing facility is subject
to completion of definitive documentation and certain other conditions. The
Company anticipates closing and funding under the facility to occur within ten
days. There can be no assurances that the proposed additional financing facility
or the successful negotiation of a comprehensive facility will occur.

Loan proceeds from the additional financing facility will be used for general
corporate purposes. The financing will have a term of 364 days. It will consist
of a facility collateralized by existing mortgage servicing rights carrying an
interest rate of one-month LIBOR plus 375 basis points and a facility
collateralized by existing residual securities carrying an interest rate of
one-month LIBOR plus 350 basis points. The facility is part of the Company's
efforts to enhance liquidity and flexibility in light of the current credit
environment.

NovaStar also announced today that it has initiated a formal process to explore
a range of strategic alternatives, including without limitation a potential sale
or other change of control transactions. The Company has retained Deutsche Bank
Securities Inc. to act as its financial advisor in this process.

There can be no assurance that this process will result in the Company
completing any transaction. The Company does not intend to disclose developments
with respect to any outcome of the process unless and until the Company's Board
of Directors has approved a specific transaction or otherwise has reached a
definitive conclusion.

About NovaStar

NovaStar Financial, Inc. (NYSE:NFI) is a specialty finance company that
originates, purchases, securitizes, sells and invests in nonconforming loans and
mortgage-backed securities. The Company also services a large portfolio of
residential nonconforming loans. NovaStar specializes in single-family
mortgages, involving borrowers whose loan size, credit details or other
circumstances fall outside conventional mortgage agency guidelines. Founded in
1996, NovaStar efficiently brings together the capital markets, a nationwide
network of independent mortgage brokers and American families financing their
homes. NovaStar is headquartered in Kansas City, Missouri, and has lending
operations nationwide.

For more information, please reference our website at www.novastarmortgage.com.

This Press Release contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, regarding
management's beliefs, estimates, projections, and assumptions with respect to,
among other things, our future operations, business plans and strategies, as
well as industry and market conditions, all of which are subject to change at
any time without notice. Actual results and operations for any future period may
vary materially from those discussed herein. Some important factors that could
cause actual results to differ materially from those anticipated include: our
ability to generate and maintain sufficient liquidity on favorable terms; the
size, frequency and structure of our securitizations; our ability to sell loans
we originate in the marketplace; impairments on our mortgage assets; increases
in prepayment or default rates on our mortgage assets; increases in loan
repurchase requests; inability of potential borrowers to meet our underwriting
guidelines; changes in assumptions regarding estimated loan losses and fair
value amounts; finalization of the amount and terms of any severance provided to
terminated employees; finalization of the accounting impact of our
previously-announced reduction in workforce; events impacting the subprime
mortgage industry in general, including events impacting our competitors and
liquidity available to the industry; the initiation of margin calls under our
credit facilities; the ability of our servicing operations to maintain high
performance standards and maintain appropriate ratings from rating agencies; our
ability to generate acceptable origination volume while maintaining an
acceptable level of overhead; residential property values; our continued status
as a REIT; interest rate fluctuations on our assets that differ from our
liabilities; the outcome of litigation or regulatory actions pending against us
or other legal contingencies; our compliance with applicable local, state and
federal laws and regulations or opinions of counsel relating thereto and the
impact of new local, state or federal legislation or regulations or opinions of
counsel relating thereto or court decisions on our operations; our ability to
adapt to and implement technological changes; compliance with new accounting
pronouncements; our ability to successfully integrate acquired businesses or
assets with our existing business; the impact of general economic conditions;
and the risks that are from time to time included in our filings with the SEC,
including our Annual Report on Form 10-K for the year ended December 31, 2006.
Other factors not presently identified may also cause actual results to differ.
Words such as "believe," "expect," "anticipate," "promise," "plan," and other
expressions or words of similar meanings, as well as future or conditional verbs
such as "will," "would," "should," "could," or "may" are generally intended to
identify forward-looking statements. This document speaks only as of its date
and we expressly disclaim any duty to update the information herein.

Media Relations Contact
Richard M. Johnson
913.649.8885

Investor Relations Contact
Jeffrey A. Gentle
816.237.7424