-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 SOFPGnf3JNvyKXvn8KmkDxQSMXbpLAe4faM68508sXK1cyaF6E0JiMdH/jbB6mQ7
 dCvKwX5y9em3K6ISoLUdgw==

<SEC-DOCUMENT>0001181431-05-008936.txt : 20050211
<SEC-HEADER>0001181431-05-008936.hdr.sgml : 20050211
<ACCEPTANCE-DATETIME>20050211133446
ACCESSION NUMBER:		0001181431-05-008936
CONFORMED SUBMISSION TYPE:	3
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20050211
FILED AS OF DATE:		20050211
DATE AS OF CHANGE:		20050211

ISSUER:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NOVASTAR FINANCIAL INC
		CENTRAL INDEX KEY:			0001025953
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				742830661
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	BUSINESS ADDRESS:	
		STREET 1:		8140 WARD PARKWAY
		STREET 2:		STE 300
		CITY:			KANSAS CITY
		STATE:			MO
		ZIP:			64114
		BUSINESS PHONE:		8162377000

	MAIL ADDRESS:	
		STREET 1:		8140 WARD PARKWAY
		STREET 2:		STE 300
		CITY:			KANSAS CITY
		STATE:			MO
		ZIP:			64114

REPORTING-OWNER:	

	OWNER DATA:	
		COMPANY CONFORMED NAME:			Pazgan David A
		CENTRAL INDEX KEY:			0001317213

	FILING VALUES:
		FORM TYPE:		3
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13533
		FILM NUMBER:		05596885

	BUSINESS ADDRESS:	
		BUSINESS PHONE:		816-237-7000

	MAIL ADDRESS:	
		STREET 1:		8140 WARD PARKWAY
		CITY:			KANSAS CITY
		STATE:			MO
		ZIP:			64114
</SEC-HEADER>
<DOCUMENT>
<TYPE>3
<SEQUENCE>1
<FILENAME>rrd68061.xml
<DESCRIPTION>REPORTING ID
<TEXT>
<XML>
<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0202</schemaVersion>

    <documentType>3</documentType>

    <periodOfReport>2005-02-11</periodOfReport>

    <noSecuritiesOwned>0</noSecuritiesOwned>

    <issuer>
        <issuerCik>0001025953</issuerCik>
        <issuerName>NOVASTAR FINANCIAL INC</issuerName>
        <issuerTradingSymbol>NFI</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001317213</rptOwnerCik>
            <rptOwnerName>Pazgan David A</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>8140 WARD PARKWAY</rptOwnerStreet1>
            <rptOwnerStreet2></rptOwnerStreet2>
            <rptOwnerCity>KANSAS CITY</rptOwnerCity>
            <rptOwnerState>MO</rptOwnerState>
            <rptOwnerZipCode>64114</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>0</isDirector>
            <isOfficer>1</isOfficer>
            <isTenPercentOwner>0</isTenPercentOwner>
            <isOther>0</isOther>
            <officerTitle>Executive Vice President</officerTitle>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable>
        <nonDerivativeHolding>
            <securityTitle>
                <value>NovaStar Financial Inc. Common Stock</value>
            </securityTitle>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>138742</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </nonDerivativeHolding>
    </nonDerivativeTable>

    <derivativeTable>
        <derivativeHolding>
            <securityTitle>
                <value>Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>7.16</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <value>2005-12-19</value>
            </exerciseDate>
            <expirationDate>
                <value>2011-12-19</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>5000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>12.22</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <value>2005-12-18</value>
            </exerciseDate>
            <expirationDate>
                <value>2012-12-18</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>3500</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>12.22</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <value>2006-12-18</value>
            </exerciseDate>
            <expirationDate>
                <value>2012-12-18</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>3500</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>42.13</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <value>2006-02-07</value>
            </exerciseDate>
            <expirationDate>
                <value>2015-02-07</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>1425</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>42.13</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <value>2007-02-07</value>
            </exerciseDate>
            <expirationDate>
                <value>2015-02-07</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>1425</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>42.13</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <value>2008-02-07</value>
            </exerciseDate>
            <expirationDate>
                <value>2015-02-07</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>1425</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>42.13</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <value>2009-02-07</value>
            </exerciseDate>
            <expirationDate>
                <value>2015-02-07</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>1425</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Time-vesting Restricted Stock</value>
                <footnoteId id="F3"/>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>0</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <value>2015-02-07</value>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F1"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>1825</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Performance based restricted stock</value>
                <footnoteId id="F4"/>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>0</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <footnoteId id="F4"/>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F1"/>
                <footnoteId id="F4"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>100000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Performance based restricted stock</value>
                <footnoteId id="F2"/>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>0</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <footnoteId id="F2"/>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F1"/>
                <footnoteId id="F2"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>1825</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Time-vesting Restricted Stock</value>
                <footnoteId id="F3"/>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>0</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <value>2006-01-28</value>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F1"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>1000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Time-vesting Restricted Stock</value>
                <footnoteId id="F3"/>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>0</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <value>2007-01-28</value>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F1"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>1000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Time-vesting Restricted Stock</value>
                <footnoteId id="F3"/>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>0</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <value>2008-01-28</value>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F1"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>NovaStar Financial, Inc. Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>1000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
    </derivativeTable>

    <footnotes>
        <footnote id="F1">Restricted stock is converted to common stock on the exercisable date.  Thus, expiration date is not applicable.</footnote>
        <footnote id="F2">These shares represent a performance contingent deferred stock award, no shares of the stock will be issued unless the performance objective is achieved within three years of the transaction date.</footnote>
        <footnote id="F3">Time-vesting restricted stock has voting rights and right to receive dividends at transaction date, but is subject to forfeiture.</footnote>
        <footnote id="F4">These shares represent a performance contingent deferred stock award, no shares of the stock will be issued unless at least the minimum performance objective is achieved within five years of the transaction date.  A range of 25,000 to 100,000 shares can be earned based on the range of minimum and maximum performance targets the Company must achieve.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>David A. Pazgan</signatureName>
        <signatureDate>2005-02-11</signatureDate>
    </ownerSignature>
</ownershipDocument>
</XML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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