<PAGE> 1
EXHIBIT 20.1
NovaStar Home Equity Loan Trust
NovaStar Home Equity Loan Asset-Backed Notes
Series 1998-1
Statement To Bondholder
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS IN DOLLARS
PRIOR CUMULATIVE CURRENT
ORIGINAL PRINCIPAL REALIZED REALIZED DEFERRED PRINCIPAL
CLASS FACE VALUE BALANCE INTEREST PRINCIPAL TOTAL LOSSES LOSSES INTEREST BALANCE
------------------------------------------------------------------------------------------------------------------------------------
BONDS 300,000,000.00 283,017,598.79 1,335,784.10 4,546,755.87 5,882,539.97 0.00 0.00 0.00 278,470,842.92
------------------------------------------------------------------------------------------------------------------------------------
TOTALS 300,000,000.00 283,017,598.79 1,335,784.10 4,546,755.87 5,882,539.97 0.00 0.00 0.00 278,470,842.92
------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Maximum Bond Interest Rate 13.50000%
Available Funds Interest Rate 9.03953%
Bond Interest Rate 5.66375%
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
FACTOR INFORMATION PER $1000 OF ORIGINAL FACE PASS-THROUGH
RATES
PRIOR CURRENT
PRINCIPAL PRINCIPAL
CLASS CUSIP BALANCE INTEREST PRINCIPAL TOTAL BALANCE CURRENT NEXT
------------------------------------------------------------------------------------------------------------------------------------
BONDS 66987XAA3 943.39 4.452614 15.155853 19.608467 928.24 5.663750% 5.289380%
------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Seller: NovaStar Financial, Inc.
Servicer: NovaStar Mortgage Corporation
Record Date: October 31, 1998
Distribution Date: October 26, 1998
------------------------------------------------------------------------------------------------------------------------------------
Page 1 of 2
</TABLE>
<PAGE> 2
NovaStar Home Equity Loan Trust
NovaStar Home Equity Loan Asset-Backed Notes
Series 1998-1
Statement To Bondholder
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------------------------------------
Distribution Date: October 26, 1998
-----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Aggregate Collections From the Mortgage Loans
----------------------------------------------------------------------------------------
Total Collection on Pool 6,038,035.87
Total Servicer Advances 0.00
Total Compensating Interest 0.00
----------------------------------------------------------------------------------------
Available Funds Cap Carry-Forward Amount 0.00
Aggregate Unpaid Available Funds Cap Carry-Forward Amount 0.00
Current Period Insured Payments Paid by Insurer 0.00
Aggregate Unreimbursed Insured Amounts Payable to Insurer 0.00
Aggregate Beginning Principal Balance of Mortgage Loans 290,411,192.71
Aggregate Ending Principal Balance of Mortgage Loans 286,829,114.74
Required Subordination Amount 15,454,546.00
Current Subordination Amount 8,358,271.82
Subordination Increase Amount 964,677.90
Subordination Reduction Amount 0.00
Net Monthly Excess Cashflow 0.00
Unpaid Accrued Interest 0.00
Current Realized Loss on Mortgage Loans 0.00
Aggregate Realized Loss on Mortgage Loans 0.00
Weighted Average Net Mortgage Rate 9.47993367%
------------------------------------------------------------------------------------------------------------
DELINQUENCY DELINQUENT DELINQUENT DELINQUENT LOANS IN REO
INFORMATION 30-59 DAYS 60-89 DAYS 90 + DAYS FORECLOSURE PROPERTY
------------------------------------------------------------------------------------------------------------
PRINCIPAL BALANCE 5,427,494.49 2,967,481.48 5,915,562.99 5,562,094.01 437,499.56
NUMBER OF LOANS 51 30 55 46 6
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------
REPURCHASE Current Cumulative
INFORMATION Period History
--------------------------------------------------------------------
PRINCIPAL BALANCE 0.00 0.00
NUMBER OF LOANS 0 0
--------------------------------------------------------------------
Cumulative Loss Percentage 0.00000%
Delinquency Percentage 2.06240%
Rolling Delinquency Percentage 1.98363%
Prepayment Interest Shortfalls 0.00
Relief Act Shortfalls 0.00
-----------------------------------------------------------------------------------------------------------------------------------
Page 2 of 2
</TABLE>
