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

 January 10, 2008
 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 (Commission File (I.R.S. Employer
 incorporation or organization) Number) 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:

[ ] 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))



Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing

On January 11, 2008, the NYSE Regulation, Inc. ("NYSE Regulation") announced
that the common stock of NovaStar Financial, Inc. (the "Company") (ticker
symbol: NFI) and the Company's 8.90% Series C Cumulative Redeemable Preferred
Stock (ticker symbol: NFI PR C) will be suspended prior to the opening of the
market on Thursday, January 17, 2008.

The NYSE Regulation had previously announced on October 17, 2007 that it had
determined that the Company's securities should be removed from the list. The
Company requested a review of this determination by a Committee of the Board of
Directors of the NYSE Regulation ("Committee"), which review was held on
Tuesday, December 5, 2007. The staff of the NYSE Regulation notified the Company
that the Committee had affirmed the NYSE Regulation Staff's determination that
the Company should be delisted by letter on January 10, 2008, citing the
termination of the Company's status as a Real Estate Investment Trust and the
Company's failure to qualify for original listing as a corporation, in support
of its determination that the Company's securities are no longer suitable for
continued listing on the NYSE. Following suspension, application will be made to
the Securities and Exchange Commission to delist the Company's common and
preferred shares.

The Company has been advised that its shares are eligible for quotation on the
Pink Sheets, an electronic quotation service for securities traded
over-the-counter, effective with the opening of trading on Thursday, January 17,
2008. The Company has been informed that shortly after the close of business on
Wednesday, January 16, 2008, the Company's Pink Sheets trading symbol can be
found on the Over The Counter Bulletin Board website www.otcbb.com.



 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 hereunto duly authorized.


 NOVASTAR FINANCIAL, INC.
DATE: January 14, 2008

 /s/ Rodney Schwatken
 -----------------------------------------
 Rodney Schwatken
 Chief Financial Officer
Novastar (NYSE:NFI)
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