FORM 3

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 INITIAL STATEMENT OF 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 *   Phillips Todd M 2. Date of Event Requiring Statement (Month/Day/Year) 04/12/2006 3. Issuer Name and Ticker or Trading Symbol NOVASTAR FINANCIAL INC [NFI] (Last) (First) (Middle) 8140 WARD PARKWAY, SUITE 300 4. Relationship of Reporting Person(s) to Issuer (Check all applicable) _____ Director _____ 10% Owner __X__ Officer (give title below) _____ Other (specify below) Chief Accounting Officer 5. If Amendment, Date Original Filed(Month/Day/Year) (Street) KANSAS CITY, MO 64114 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 Beneficially Owned

1.Title of Security (Instr. 4) 2. Amount of Securities Beneficially Owned (Instr. 4) 3. Ownership Form: Direct (D) or Indirect (I) (Instr. 5) 4. Nature of Indirect Beneficial Ownership (Instr. 5) NovaStar Financial Inc. Common Stock 150 D   NovaStar Financial Inc. Common Stock (1) 150 D   NovaStar Financial Inc. Common Stock (2) 150 D   NovaStar Financial Inc. Common Stock (3) 408 D Â

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.			SEC 1473 (7-02)
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Table II - Derivative Securities Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 4)	2. Date Exercisable and Expiration Date (Month/Day/Year)		3. Title and Amount of Securities Underlying Derivative Security (Instr. 4)		4. Conversion or Exercise Price of Derivative Security	5. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 5)	6. Nature of Indirect Beneficial Ownership (Instr. 5)
	Date Exercisable	Expiration Date	Title	Amount or Number of Shares
Stock Option (4)	  (4)	02/07/2015	NovaStar Financial, Inc. Common Stock	500	$ 42.13	D	Â
Performance Based Restricted Stock (5)	  (5)	  (5)	NovaStar Financial, Inc. Common Stock	150	$ 0	D	Â
Stock Option (6)	  (6)	02/08/2016	NovaStar Financial, Inc. Common Stock	1,930	$ 31.21	D	Â

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
Phillips Todd M 8140 WARD PARKWAY, SUITE 300 KANSAS CITY, MO 64114	Â	Â	  Chief Accounting Officer	Â

Signatures

Todd M. Phillips		04/18/2006
**Signature of Reporting Person		Date

Explanation of Responses:

*	If the form is filed by more than one reporting person, see Instruction 5(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)	Time-vesting restricted stock which vests in two equal annual installments of 75 shares beginning on 1/28/2007 and ending on 1/28/2008. These shares have voting rights and rights to receive dividends, but are subject to forfeiture.
(2)	Time-vesting restricted stock which vests on 2/7/2015. These shares have voting rights and rights to receive dividends, but are subject to forfeiture.
(3)	Time-vesting restricted stock which vests on 2/8/2011. These shares have voting rights and rights to receive dividends, but are subject to forfeiture.
(4)	Consists of 500 derivatives which vest in four equal annual installments of 125 shares beginning on 2/7/2006 and ending on 2/7/2009.
(5)	These shares represent a performance contingent deferred stock award. No shares of stock will be issued unless the performance target is achieved within three years of the date of award.
(6)	Consists of 1,930 derivatives which vest in four annual installments consisting of 482 shares on 2/8/2007, 483 shares on 2/8/2008, 482 shares on 2/8/2009 and 483 shares on 2/8/2010.

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