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

November 28, 2005

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):

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

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

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

¨ 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

NovaStar Financial, Inc. will be presenting at the Friedman, Billings, Ramsey 2005 Investor Conference in New York City on November 30, 2005 at 2:00 p.m. Eastern time. The presentation data is included as Exhibit 99 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 2005 FBR Investor Conference Presentation 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: November 28, 2005	/s/    GREGORY S. METZ
	Gregory S. Metz Chief Financial Officer

Exhibit Index

Exhibit  Number
99	2005 FBR Investor Conference Presentation Data.

EX-99

NovaStar Financial

(NYSE-NFI)

www.novastarmortgage.com

2005 FBR Investor Conference

November 30, 2005

Exhibit 99

2

Safe Harbor Statement

Certain

matters

discussed

in

this

presentation

may

constitute

forward-looking

statements

within

the

meaning of the federal securities laws.  Forward looking statements are those that predict or

describe future events and that do not relate solely to historical matters.  Forward looking statements

are subject to risks and uncertainties and certain factors can cause actual results to differ materially

from

those

anticipated.

Some

important

factors

that

could

cause

actual

results

to

differ

materially

from those anticipated include: our ability to generate sufficient liquidity on favorable terms; the size

and

frequency

of

our

securitizations;

interest

rate

fluctuations

on

our

assets

that

differ

from

our

liabilities; increases in prepayment or default rates on our mortgage assets; changes in assumptions

regarding estimated loan losses and fair value amounts, changes in origination and resale pricing of

mortgage loans; our compliance with applicable local, state and federal laws and regulations and

the impact of new local, state or federal legislation or regulations or court decisions on our

operations; 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 expand origination volume while maintaining an acceptable level of

overhead; our ability to adapt to and implement technological changes; the stability of residual

property

values;

the

outcome

of

litigation

or

regulatory

actions

pending

against

us;

the

impact

of

losses resulting from natural disasters; the impact of general economic conditions; and the risks that

are from time to time included in our filings with the SEC, including our 2004 Annual Report on

Form

10-K.

Other

factors

not

presently

identified

may

also

cause

actual

results

to

differ.

This

document speaks only as of its date and we expressly disclaim any duty to update the information

herein.

Mortgage Banking

4

Production

2,358

2,779

1,948

-

500

1,000

1,500

2,000

2,500

3,000

Q3 '03

Q4 '03

Q1 '04

Q2 '04

Q3 '04

Q4 '04

Q1 '05

Q2 '05

Q3 '05

Production up

14% Yr/Yr, up

18% Sequentially

5

Cost of Production

2,779

-

500

1,000

1,500

2,000

2,500

3,000

Q3 '03

Q4 '03

Q1 '04

Q2 '04

Q3 '04

Q4 '04

Q1 '05

Q2 '05

Q3 '05

2.00%

2.10%

2.20%

2.30%

2.40%

2.50%

2.60%

2.70%

2.80%

2.90%

Production

COP

6

Production

Credit Characteristics

Weighted Avg. FICO

648

626

622

621

621

625

629

632

632

605

610

615

620

625

630

635

640

645

650

655

Weighted Avg. LTV

77.4

79.6

82.4

82.7

82.4

82.4

82.1

81.6

82.3

75.0

76.0

77.0

78.0

79.0

80.0

81.0

82.0

83.0

84.0

85.0

7

Spreads

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Q3 '03

Q4 '03

Q1 '04

Q2 '04

Q3 '04

Q4 '04

Q1 '05

Q2 '05

Q3 '05

2-year Swap

WAC

7.8%

1.9%

7.6%*

4.3%

586 bps

326 bps

*Excluding MTA

8

Mortgage Banking

Environment

•

Origination activity has moderated since

August peak as coupons have risen

•

Profit margins on newly originated loans are

relatively thin

•

Increasing revenue and continued cost

reduction will continue to be a primary focus

in 2006

Portfolio Management

10

Portfolio ROA

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Sep-03

Dec-03

Mar-04

Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

Net Interest Income

ROA

11

Portfolio

Net Interest Income

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Sep-03

Dec-03

Mar-04

Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Avg. Assets Under Mgmt.

Net Interest Income

12

Effect of HPA

on Portfolio LTV*

Loans with MI and

Loans with Original

LTV<= 60%

Loans without

MI and Original

LTV >60%

Remaining Loan

Balance

7,922

6,143

Initial Average LTV

after MI

55%

85%

Average Age (years)

1.03

0.98

HPA Increase

10.8%

10.6%

Estimated Current

LTV after MI

44.2%

74.6%

*Estimates for illustrative purposes only

13

Portfolio trends

•

Better credit from strength of housing

market

•

Faster prepayments –

borrowers looking to

monetize increase in home value

•

Returns on investments in new loans remain

relatively low at market prices

14

Dividends

Dividend Carry-over Analysis

(In millions)

Estimated 2004 REIT taxable income through Sept. 30, 2005

229

$     

  Less: 2005 dividend declarations applied to 2005 taxable income

(32)

Estimated 2005 REIT taxable income remaining to be distributed

197

$     

Questions

Appendix

17

Cost of Wholesale

Production

Cost of Wholesale Production

(dollars in thousands)

2005

2004

2005

2004

General and administrative expenses

$       172,685

$       157,130

$         55,887

$         54,597

Mortgage portfolio management general and administrative expenses

(11,928)

(5,424)

(4,174)

(1,820)

Branch operations general and administrative expenses

(39,537)

(53,255)

(13,315)

(19,112)

Consolidation eliminations

-

10,013

-

5,093

Mortgage lending and loan servicing general and administrative

expenses

121,220

108,464

38,398

38,758

Direct

origination

costs

classified

as

a

reduction

in

gain-on-sale

33,214

33,674

11,787

12,930

Costs of servicing

(25,185)

(17,191)

(8,531)

(6,264)

Other lending expenses

(22,743)

(31,717)

(7,390)

(11,237)

Overhead costs

106,506

93,230

34,264

34,187

Premium paid to broker, net of fees collected

40,703

40,139

15,459

14,823

Total cost of wholesale production

$       147,209

$       133,369

$         49,723

$         49,010

Wholesale production, principal

A

6,032,713

5,366,646

2,301,254

2,035,128

Total cost of wholesale production, as a percentage

2.44%

2.49%

2.16%

2.41%

A)  Includes

loans

originated

through

NovaStar

Home

Mortgage,

Inc.

and

purchased

by

our

wholesale

division

in

NovaStar

Mortgage,

Inc.

Only

the

costs

borne

by

our

wholesale

division

are

included

in

the

total

cost

of

wholesale

production.

For the Nine Months

For the Three Months

Ended Sept. 30,

Ended Sept. 30,