8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

February 10, 2006

Date of Report (Date of earliest event reported)

NOVASTAR FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Maryland	001-13533	74-2830661
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

8140 Ward Parkway, Suite 300, Kansas City, MO 64114

(Address of principal executive offices)

(Zip Code)

(816) 237-7000

(Registrant’s telephone number, including area code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Item 7.01 – Regulation FD Disclosure

On February 10, 2006, NovaStar Financial, Inc. (“the Company”) reported its Monthly Loan Origination Data and Selected Non-Conforming Loan Origination Data for the month of January on its website (www.novastarmortgage.com). The presentation of this data is included as Exhibit 99.1 and is incorporated herein by reference.

On February 10, 2006, the Company also reported its quarterly portfolio data on its website (www.novastarmortgage.com).The quarterly portfolio data is presented as of December 31, 2005. The presentation of the quarterly portfolio data is included as Exhibit 99.2 and is incorporated herein by reference.

References to the registrant’s website do not incorporate by reference the information on the registrant’s website into this Current Report and the registrant disclaims any such incorporation by reference.

Item 9.01 – Financial Statements and Exhibits

(c) Exhibits

99.1 Monthly Loan Origination Data and Selected Non-Conforming Loan Origination Data.

99.2 Quarterly Portfolio Data

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NOVASTAR FINANCIAL, INC.

DATE: February 10, 2006	/s/ Gregory S. Metz
	Gregory S. Metz
	Chief Financial Officer

Exhibit Index

Exhibit

Number

99.1 Monthly Loan Origination Data and Selected Non-Conforming Loan Origination Data.

99.2 Quarterly Portfolio Data

EX-99

Exhibit 99.1

NOVASTAR FINANCIAL, INC.

MONTHLY LOAN ORIGINATION DATA

(dollars in thousands)

(unaudited)

	For the Month Ended January 31,
		As a %		As a %
	2006	of Total	2005	of Total
Non-conforming production volume
Non-conforming
Wholesale	$ 430,254	75%	$ 446,372	76%
Correspondent/Bulk	62,745	11%	49,193	8%
Retail *	78,707	14%	94,093	16%
Total non-conforming production volume	$ 571,706	100%	$ 589,658	100%
# of funding days in the month	20		20
Average originations per funding day	$ 28,585		$ 29,483
Retail production volume *
Non-conforming
Sold to non-affiliates	$ 14,795	13%	$ 103,605	35%
Retained by NMI	78,707	69%	94,093	32%
Total non-conforming	93,502	82%	197,698	67%
Conforming/Government	20,279	18%	95,708	33%
Total retail production volume	$ 113,781	100%	$ 293,406	100%

*Branch production volumes are considered a part of our retail operations and are included within the retail production volumes shown above.

NOVASTAR FINANCIAL, INC.

SELECTED NON-CONFORMING LOAN ORIGINATION DATA

(dollars in thousands)

(unaudited)

	For the Month Ended 1/31/2006				For the Month Ended 12/31/2005				For the Month Ended 11/30/2005
	Weighted	Weighted	Weighted		Weighted	Weighted	Weighted		Weighted	Weighted	Weighted
	Average	Average	Average	Percent	Average	Average	Average	Percent	Average	Average	Average	Percent
	Coupon	LTV	FICO	of Total	Coupon	LTV	FICO	of Total	Coupon	LTV	FICO	of Total
Summary by Credit Grade
660 and above	7.54%	81.3%	702	32%	7.59%	82.4%	701	35%	7.27%	82.5%	705	35%
620 to 659	8.30%	81.4%	640	25%	8.07%	81.5%	640	23%	7.72%	81.2%	638	26%
580 to 619	8.89%	81.7%	600	21%	8.60%	80.9%	599	21%	8.23%	81.0%	600	19%
540 to 579	9.30%	79.3%	560	15%	9.09%	78.8%	560	14%	8.74%	80.4%	560	13%
539 and below	9.66%	76.1%	527	7%	9.42%	76.1%	527	7%	9.34%	75.4%	526	7%
	8.44%	80.7%	631	100%	8.24%	81.0%	634	100%	7.90%	81.1%	636	100%
Summary by Program Type
2-Year Fixed	8.84%	81.1%	609	58%	8.60%	80.9%	611	54%	8.25%	81.1%	613	53%
2-Year Fixed Interest-only	7.83%	80.5%	662	17%	7.63%	80.5%	666	21%	7.22%	81.4%	669	24%
3-Year Fixed	8.49%	78.0%	624	1%	7.69%	75.9%	636	1%	7.51%	75.3%	630	1%
3-Year Fixed Interest-only	7.43%	72.5%	671	1%	7.15%	78.2%	668	0%	6.97%	80.7%	675	1%
5-Year Fixed	6.63%	71.4%	685	0%	6.43%	58.8%	664	0%	7.34%	77.7%	646	0%
5-Year Fixed Interest-only	7.04%	79.4%	661	0%	7.75%	72.5%	683	0%	7.22%	79.0%	653	0%
15-Year Fixed	9.24%	79.3%	666	1%	9.31%	83.8%	661	1%	8.81%	79.6%	643	1%
30-Year Fixed	8.02%	75.2%	646	11%	7.94%	76.0%	639	12%	7.73%	75.9%	641	10%
30-Year Fixed Interest-only	7.73%	80.3%	673	0%	7.69%	76.2%	647	0%	7.13%	71.6%	666	1%
Other Products	9.72%	89.7%	659	8%	9.62%	91.2%	666	9%	9.52%	91.3%	664	7%
MTA	1.83%	74.9%	714	3%	1.80%	74.0%	709	2%	1.88%	75.6%	724	2%
	8.44%	80.7%	631	100%	8.24%	81.0%	634	100%	7.90%	81.1%	636	100%
Weighted Average
Coupon Excluding MTA	8.62%				8.40%				8.01%

EX-99

Exhibit 99.2

MORTGAGE SECURITIES AND LOANS COLLATERALIZING MORTGAGE SECURITIES

As of December 31, 2005

Table 1 – Summary of Securitizations (dollars in thousands)

		Loan Collateral
						Remaining
						Prepayment
						Penalty	Asset-Backed Bonds
						Period		Weighted
				Weighted		(in years)		Average	Estimated
Securitization	Issue	Original	Current	Average	Prepayment	for Loans w/	Remaining	Interest	Months
Trust	Date	Principal	Principal	Coupon	Penalty	Penalty	Principal	Rate	to Call
NMFT 2000-1	3/31/2000	$ 230,138	$ 14,899	10.2%	-	-	$ 13,966	5.40%	-
NMFT 2000-2	9/28/2000	339,688	19,671	10.3%	-	-	18,828	6.22%	-
NMFT 2001-1	3/31/2001	415,067	36,504	10.2%	26%	0.05	35,736	5.13%	-
NMFT 2001-2	9/25/2001	800,033	80,033	9.7%	42%	0.25	76,483	4.83%	2
NMFT 2002-1	3/28/2002	499,998	63,126	9.1%	42%	0.43	59,970	4.80%	7
NMFT 2002-2	6/28/2002	310,000	43,692	9.6%	38%	0.48	41,288	4.79%	9
NMFT 2002-3	9/27/2002	750,003	116,150	8.6%	34%	0.55	112,085	4.78%	11
NMFT 2003-1	2/27/2003	1,300,141	275,785	8.1%	34%	0.61	234,639	5.63%	20
NMFT 2003-2	6/12/2003	1,499,998	346,390	7.9%	58%	0.83	327,640	5.40%	22
NMFT 2003-3	9/16/2003	1,499,374	451,033	7.7%	58%	0.99	428,533	5.25%	31
NMFT 2003-4	11/20/2003	1,499,732	476,251	8.0%	53%	0.90	458,251	5.25%	25
NMFT 2004-1	3/11/2004	1,750,000	750,080	7.6%	60%	0.67	727,330	4.94%	23
NMFT 2004-2	6/16/2004	1,399,999	681,199	7.4%	79%	0.83	655,999	4.96%	25
NMFT 2004-3	9/9/2004	2,199,995	1,206,415	7.7%	81%	0.96	1,162,415	5.01%	28
NMFT 2004-4	11/18/2004	2,500,000	1,498,414	7.6%	76%	0.84	1,467,164	4.96%	29
NMFT 2005-1	2/22/2005	2,100,000	1,543,209	7.6%	71%	0.95	1,516,959	4.78%	32
NMFT 2005-2	5/27/2005	1,799,992	1,527,351	7.7%	69%	1.14	1,518,351	4.74%	38
NMFT 2005-3	9/22/2005	2,499,983	2,378,349	7.5%	66%	1.27	2,310,849	4.69%	44
NMFT 2005-4	12/15/2005	1,221,055	1,213,728	8.0%	64%	1.35	1,528,673	4.60%	51
Total		$ 24,615,196	$ 12,722,279	7.7%	67%	1.01	$ 12,695,159	4.87%

MORTGAGE SECURITIES AND LOANS COLLATERALIZING MORTGAGE SECURITIES

As of December 31, 2005

Table 2 — Loans Collateralizing Mortgage Securities by FICO Score

(dollars in thousands)

FICO Score	Current Principal	Weighted Average Coupon	Original Weighted Average Loan-to-Value
FICO score not available	$ 10,004	9.5%	70.2%
540 and below	965,704	9.0%	78.0%
540 to 579	1,981,585	8.4%	79.5%
580 to 619	2,505,987	8.0%	82.1%
620 to 659	2,946,485	7.5%	82.3%
660 and above	4,312,514	7.2%	83.0%
	$ 12,722,279	7.7%	81.7%

Table 3 — Loans Collateralizing Mortgage Securities by Geographic Concentration

Percent of Current Principal

Collateral Location
California	18%
Florida	18%
Texas	5%
Virginia	4%
Ohio	4%
All other states	51%
Total	100%

Table 4 — Loans Collateralizing Mortgage Securities

Carrying Value of Loans by Product/Type (in thousands)

Product/Type
2-Year Fixed	$ 7,112,368
2-Year Fixed Interest-only	1,780,297
3-Year Fixed	426,512
3-Year Fixed Interest-only	99,932
5-Year Fixed	77,098
5-Year Fixed Interest-only	50,719
15-Year Fixed	836,827
30-Year Fixed	2,156,910
30-Year Fixed Interest-only	47,978
Other Products	133,638
Outstanding principal	$ 12,722,279
Fair value of retained mortgage securities	$ 549,383

MORTGAGE LOANS HELD-FOR-SALE AND HELD-IN-PORTFOLIO

As of December 31, 2005

Table 1 — Mortgage Loans by FICO Score

(dollars in thousands)

FICO Score	Current Principal	Weighted Average Coupon	Original Weighted Average Loan-to-Value
Held-for-sale:
FICO score not available	$ 898	10.5%	80.3%
540 and below	78,027	9.4%	76.4%
540 to 579	148,725	9.0%	79.5%
580 to 619	230,344	8.5%	81.6%
620 to 659	301,019	8.0%	82.1%
660 and above	476,146	7.5%	81.8%
	$ 1,235,159	8.1%	81.2%
Held-in-portfolio:
FICO score not available	$ 892	10.4%	76.8%
540 and below	4,283	10.2%	77.5%
540 to 579	5,581	10.0%	80.6%
580 to 619	8,718	9.9%	83.6%
620 to 659	5,781	9.6%	81.1%
660 and above	3,829	9.4%	80.2%
	$ 29,084	9.9%	81.0%

Table 2 — Mortgage Loans by Geographic Concentration

Percent of Current Principal

Collateral Location	Held-for-sale
California	22%
Florida	21%
Virginia	5%
Maryland	5%
Arizona	4%
All other states	43%
Total	100%
Collateral Location	Held-in-portfolio
Florida	12%
North Carolina	8%
Indiana	7%
Pennsylvania	7%
Ohio	6%
South Carolina	6%
Tennessee	6%
All other states	48%
Total	100%