________________________________________________________________
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
Date of Report: August 13, 1998
(Date of earliest event reported)
NOVASTAR MORTGAGE FUNDING CORPORATION (as depositor under the
Trust Agreement, dated as of August 1, 1998, and pursuant to
which an Indenture was entered into, providing for, inter alia,
the issuance of NovaStar Mortgage Funding Trust, Series 1998-2
Home-Equity Loan Asset-Backed Bonds)
NovaStar Mortgage Funding Corporation
(Exact name of registrant as specified in its charter)
Delaware 333-44099 48-1195807
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1901 West 47th Street
Suite 105
Westwood, Kansas 66205
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (913) 514-3500
_________________________________________________________________
<PAGE>
Item 5. OTHER EVENTS.
On or about August 19, 1998, the Registrant will cause
the issuance and sale of approximately $315,000,000
aggregate principal amount of Home Equity Loan Asset-Backed
Bonds, Series 1998-2 (the "Bonds"), pursuant to an Indenture
to be dated as of August 1, 1998, between NovaStar Mortgage
Funding Trust, Series 1998-2, as issuer and First Union
National Bank, as indenture trustee.
In connection with the sale of the Bonds, the
Registrant has been advised by Merrill Lynch, Pierce, Fenner
& Smith Incorporated (the "Underwriter"), that the
Underwriter has furnished to prospective investors certain
yield tables and other computational materials (the
"Computational Materials") with respect to the Bonds
following the effective date of Registration Statement No.
333-44099, which Computational Materials are being filed as
exhibits to this report.
The Computational Materials have been provided by the
Underwriter. The information in the Computational Materials
is preliminary and may be superseded by the Prospectus
Supplement relating to the Bonds and by any other
information subsequently filed with the Securities and
Exchange Commission.
The Computational Materials were prepared by the
Underwriter at the request of certain prospective investors,
based on assumptions provided by, and satisfying the special
requirements of, such prospective investors. The
Computational Materials may be based on assumptions that
differ from the assumptions set forth in the Prospectus
Supplement. The Computational Materials may not include,
and do not purport to include, information based on
assumptions representing a complete set of possible
scenarios. Accordingly, the Computational Materials may not
be relevant to or appropriate for investors other than those
specifically requesting them.
In addition, the actual characteristics and performance
of the mortgage loans underlying the Bonds (the "Mortgage
Loans") may differ from the assumptions used in the
Computational Materials, which are hypothetical in nature
and which were provided to certain investors only to give a
general sense of how the yield, average life, duration,
expected maturity, interest rate sensitivity and cash flow
characteristics of the Bonds might vary under varying
prepayment and other scenarios. Any difference between such
assumptions and the actual characteristics and performance
of the Mortgage Loans will affect the actual yield, average
life, duration, expected maturity, interest rate sensitivity
and cash flow characteristics of the Bonds.
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(a) FINANCIAL STATEMENTS.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(c) Exhibits:
99 Computational Materials -- Computational
Materials (as defined in Item 5) that have been provided by
the Underwriters to certain prospective purchasers of the
NovaStar Home Equity Loan Asset Backed-Bonds, Series 1998-2
(filed in paper pursuant to the automatic SEC exemption
pursuant to Release 33-7427, August 7, 1997).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.
NOVASTAR MORTGAGE FUNDING
CORPORATION
By: /s/ David J. Lee
Name: David J. Lee
Title: Vice President
Dated: August 13, 1998
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
99 Computational Materials 6
<PAGE>
EXHIBIT 99
<PAGE>
FORM SE
FORM FOR SUBMISSION OF PAPER FORMAT EXHIBITS
BY ELECTRONIC FILERS
NOVASTAR MORTGAGE FUNDING CORPORATION 0001052549
Exact Name of Registrant as Registrant CIK Number
Specified in Charter
FORM 8-K, AUGUST 13, 1998,
SERIES 1998-2 333-44099
Electronic Report, Schedule SEC File Number, if available
or Registration Statement of
Which the Documents Are a Part
(give period of report)
__________________________________________________________________
Name of Person Filing the Document
(If Other than the Registrant)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto
duly authorized.
NOVASTAR MORTGAGE FUNDING
CORPORATION
By: /s/ David J. Lee
Name: David J. Lee
Title: Vice President
Dated: August 13, 1998
<PAGE>
IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT IS
BEING FILED IN PAPER PURSUANT TO A CONTINUING HARDSHIP EXEMPTION.
EXHIBIT INDEX
Exhibit No. Description Format
99 Computational Materials P*
_____________________
* The Computational Materials have been filed in paper pursuant
to a continuing hardship exemption from certain electronic
filing requirements.
