FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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(Print or Type Responses)

1. Name and Address of Reporting Person * BAMBURG MICHAEL L   2. Issuer Name and Ticker or Trading Symbol NOVASTAR FINANCIAL INC [NFI] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) _____ Director _____ 10% Owner __X__ Officer (give title below) _____ Other (specify below) Senior Vice President (Last) (First) (Middle) 8140 WARD PARKWAY, SUITE 300 3. Date of Earliest Transaction (Month/Day/Year) 02/07/2005 (Street) KANSAS CITY, MO 64114 4. If Amendment, Date Original Filed(Month/Day/Year) 6. Individual or Joint/Group Filing(Check Applicable Line) _X_ Form filed by One Reporting Person ___ Form filed by More than One Reporting Person (City) (State) (Zip) Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned

1.Title of Security (Instr. 3) 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
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Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 3)

2. Conversion or Exercise Price of Derivative Security

3. Transaction Date (Month/Day/Year)

3A. Deemed Execution Date, if any (Month/Day/Year)

4. Transaction Code (Instr. 8)

5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5)

6. Date Exercisable and Expiration Date (Month/Day/Year)

7. Title and Amount of Underlying Securities (Instr. 3 and 4)

8. Price of Derivative Security (Instr. 5)

9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)

10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4)

11. Nature of Indirect Beneficial Ownership (Instr. 4)

Code

V

(A)

(D)

Date Exercisable

Expiration Date

Title

Amount or Number of Shares

Restricted stock (3)

$ 0

02/07/2005

A

1,925

02/07/2015

(1)

NovaStar Financial, Inc. Common Stock

1,925

$ 0

34,925

D

Stock Option

$ 42.13

02/07/2005

A

1,519

02/07/2006

02/07/2015

NovaStar Financial, Inc. Common Stock

1,519

$ 42.13

36,444

D

Stock Option

$ 42.13

02/07/2005

A

1,519

02/07/2007

02/07/2015

NovaStar Financial, Inc. Common Stock

1,519

$ 42.13

37,963

D

Stock Option

$ 42.13

02/07/2005

A

1,519

02/07/2008

02/07/2015

NovaStar Financial, Inc. Common Stock

1,519

$ 42.13

39,482

D

Stock Option

$ 42.13

02/07/2005

A

1,518

02/07/2009

02/07/2015

NovaStar Financial, Inc. Common Stock

1,518

$ 42.13

41,000

D

Performance based restricted stock (2)

$ 0

02/07/2005

A

1,925

(2)

(2)

NovaStar Financial, Inc. Common Stock

1,925

$ 0

42,925

D

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
BAMBURG MICHAEL L 8140 WARD PARKWAY SUITE 300 KANSAS CITY, MO 64114			Senior Vice President

Signatures

Michael L. Bamburg		02/09/2005
**Signature of Reporting Person		Date

Explanation of Responses:

*	If the form is filed by more than one reporting person, see Instruction 4(b)(v).
**	Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1)	Restricted stock is converted to common stock on the exercisable date. Thus, expiration date is not applicable.
(2)	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.
(3)	Restricted stock has voting rights and right to recieve dividends at transaction date, but is subject to forfeiture.

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