RESIDENTIAL ASSET FUNDING CORP
8-K, 1999-06-08
ASSET-BACKED SECURITIES
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<PAGE>   1




                       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 (Date of earliest event reported) MAY 25, 1999.
                                                          ------------

                 NovaStar Mortgage Funding Trust, Series 1999-1
           (Issuer in respect of the NovaStar Home Equity Loan Asset-
                           Backed Bonds Series 1999-1)
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                Delaware           333-64775               51-6512366
- --------------------------------------------------------------------------------
    (State or other jurisdiction  (Commission             (IRS Employer
     of incorporation)            File Number)          Identification No.)

<TABLE>
<S>                            <C>                  <C>                      <C>   <C>
c/o First Union National Bank, 230 S. Tryon Street, 9th Floor, Charlotte, NC 28288-1179
- ---------------------------------------------------------------------------------------
               (Address of principal executive offices)                     (Zip Code)
</TABLE>

        Registrant's telephone number, including area code (704) 383-9568
                                                           ---------------



 -------------------------------------------------------------------------------
         (Former name or former address, if changed since last report.)


<PAGE>   2




Item 5. See the monthly statement to Bondholders attached as Exhibit 20.1 hereto
reflecting the required information for the MAY 1999 payment to the NovaStar
Home Equity Loan Asset-Backed Bonds Series 1999-1

Item 7.     Financial Statements and Exhibits.

(c) Exhibits.

<TABLE>
<CAPTION>
Item 601 (a) of Regulation.
S-K Exhibit Number.
- -------------------
<S>      <C>
20.1     Monthly statement to holders of NovaStar Home Equity Loan Asset-Backed
         Bonds Series 1999-1 relating to the MAY 25, 1999 Payment Date.
</TABLE>




















                                      -2-
<PAGE>   3




                                   Signatures

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf of NovaStar
Mortgage Funding Trust Series 1999-1 by the undersigned thereunto duly
authorized.



Dated:  JUNE 8, 1999         By:    First Union National Bank, as Indenture
                                    Trustee and on behalf of NovaStar Home
                                    Mortgage Funding Trust Series 1999-1

                                    BY:    Robert Ashbaugh
                                           ---------------
                                           Vice President



















                                      -3-
<PAGE>   4



                                  EXHIBIT INDEX




20.1 Monthly statement to holders of NovaStar Home Equity Loan Asset-Backed
Bonds Series 1999-1 relating to the JUNE 25, 1999 Payment Date.





























                                      -4-


<PAGE>   1
                         NovaStar Mortgage Funding Trust
                  NovaStar Home Equity Loan Asset-Backed Bonds
                                  Series 1999-1

                             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
- ------------------------------------------------------------------------------------------------------------------------------------
<S>       <C>             <C>               <C>          <C>               <C>          <C>       <C>          <C>    <C>
  A-1     75,000,000.00   73,858,114.00     328,822.49     188,822.53      517,645.02      0.00      0.00      0.00   73,669,291.47
  A-2     20,000,000.00   19,658,766.47      88,996.89     505,074.27      594,071.16      0.00      0.00      0.00   19,153,692.20
  A-3     45,000,000.00   44,228,435.56     231,646.43     327,845.59      559,492.02      0.00      0.00      0.00   43,900,589.97
  A-4     20,000,000.00   19,574,777.38     104,170.44     293,596.26      397,766.70      0.00      0.00      0.00   19,281,181.12
  B-1      2,197,208.51    2,197,208.51       9,782.16           0.00        9,782.16      0.00      0.00      0.00    2,197,208.51
  B-2        585,922.27      585,922.27       2,652.53           0.00        2,652.53      0.00      0.00      0.00      585,922.27
  B-3      1,318,325.11    1,318,325.11       6,904.73           0.00        6,904.73      0.00      0.00      0.00    1,318,325.11
  B-4        585,922.27      585,922.27       3,118.08      60,957.14       64,075.22      0.00      0.00      0.00      524,965.13
  IO-1    77,519,379.85   76,350,963.32     238,676.04           0.00      238,676.04      0.00      0.00      0.00   76,350,963.32
  IO-2    20,671,834.62   20,296,117.79      49,057.60           0.00       49,057.60      0.00      0.00      0.00   20,296,117.79
  IO-3    46,035,805.62   45,257,109.28     120,907.40           0.00      120,907.40      0.00      0.00      0.00   45,257,109.28
  IO-4    20,460,358.06   20,096,092.52      50,777.17           0.00       50,777.17      0.00      0.00      0.00   20,096,092.52

- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS   162,197,208.51  159,517,301.92   1,235,511.97   1,376,295.79    2,611,807.76      0.00      0.00      0.00  158,201,963.27
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>







<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
                                  FACTOR INFORMATION PER $1000 OF ORIGINAL FACE                                 PASS-THROUGH
                             PRIOR                                                       CURRENT                    RATES
                           PRINCIPAL                                                    PRINCIPAL
 CLASS       CUSIP          BALANCE        INTEREST      PRINCIPAL         TOTAL         BALANCE           CURRENT       NEXT
- ------------------------------------------------------------------------------------------------------------------------------------
<S>        <C>             <C>             <C>           <C>              <C>           <C>               <C>            <C>

  A-1      66987WAC1         984.774853       4.384300       2.517634        6.901934     982.257220      5.342500%       5.352500%
  A-2      66987WAD9         982.938324       4.449845      25.253714       29.703558     957.684610      5.432500%       5.442500%
  A-3      66987WAE7         982.854124       5.147698       7.285458       12.433156     975.568666      6.285000%       6.285000%
  A-4      66987WAF4         978.738869       5.208522      14.679813       19.888335     964.059056      6.386000%       6.386000%
  B-1                      1,000.000000       4.452083       0.000000        4.452083   1,000.000000      5.342500%       5.352500%
  B-2                      1,000.000000       4.527100       0.000000        4.527100   1,000.000000      5.432500%       5.442500%
  B-3                      1,000.000000       5.237500       0.000000        5.237500   1,000.000000      6.285000%       6.285000%
  B-4                      1,000.000000       5.321667     104.036223      109.357890     895.963777      6.386000%       6.386000%
  IO-1                       984.927427       3.078921       0.000000        3.078921     984.927427      5.342500%       5.352500%
  IO-2                       981.824698       2.373162       0.000000        2.373162     981.824698      5.432500%       5.442500%
  IO-3                       983.084985       2.626377       0.000000        2.626377     983.084985      6.285000%       6.285000%
  IO-4                       982.196522       2.481734       0.000000        2.481734     982.196522      6.386000%       6.386000%
- ------------------------------------------------------------------------------------------------------------------------------------
Seller:                         NovaStar Financial, Inc.
Servicer:                    NovaStar Mortgage Corporation
Record Date:                        May 31, 1999
Distribution Date:                  May 25, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   2
                         NovaStar Home Equity Loan Trust
                  NovaStar Home Equity Loan Asset-Backed Bonds
                                  Series 1999-1

                        Statement To Bondholder - Pool I


<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------

Distribution Date:       May 25, 1999
- -----------------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------
Aggregate Collections From the Mortgage Loans in Pool I
- --------------------------------------------------------------------------------------
<S>                                                                        <C>                               <C>
Total Collection on Pool                                                   867,498.72
Total Servicer Advances                                                          0.00
Total Compensating Interest                                                      0.00
- --------------------------------------------------------------------------------------

Available Carry-Forward Amount                                                                                          0.00
Aggregate Unpaid 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                                                        76,350,963.32
Aggregate Ending Principal Balance of Mortgage Loans                                                           76,188,671.47

Required Subordination Amount                                                                                   2,519,380.00
Current Subordination Amount                                                                                    2,492,849.32
Subordination Increase Amount                                                                                      26,530.68
Subordination Reduction Amount                                                                                          0.00
Net Monthly Excess Cashflow                                                                                        38,379.04
Unpaid Accrued Interest                                                                                                 0.00
Current Realized Loss on Mortgage Loans                                                                                 0.00
Aggregate Realized Loss on Mortgage Loans                                                                               0.00
Prepayment Penalties                                                                                                3,189.15
Weighted Average Mortgage Rate                                                                                   10.10533642%


- -----------------------------------------------------------------------------------------------------
DELINQUENCY               DELINQUENT      DELINQUENT     DELINQUENT      LOANS IN          REO
INFORMATION               30-59 DAYS      60-89 DAYS     90 + DAYS      FORECLOSURE      PROPERTY
- -----------------------------------------------------------------------------------------------------

PRINCIPAL BALANCE          1,748,317.42     529,093.97           0.00    2,186,706.76     211,834.52
NUMBER OF LOANS                      21              7              0              21              2
- -----------------------------------------------------------------------------------------------------


- -------------------------------------------------------
REPURCHASE                  Current       Cumulative
INFORMATION                 Period         History
- -------------------------------------------------------

PRINCIPAL BALANCE                  0.00           0.00
NUMBER OF LOANS                       0              0
- -------------------------------------------------------

- -------------------------------------------------------
CONVERTED MTGE              Current       Cumulative
LOANS INFO                  Period         History
- -------------------------------------------------------

PRINCIPAL BALANCE                  0.00           0.00
NUMBER OF LOANS                       0              0
- -------------------------------------------------------

Cumulative Loss Percentage                                                                                           0.00000%
Delinquency Percentage                                                                                               3.14816%
Rolling Delinquency Percentage                                                                                       2.22184%

Prepayment Interest Shortfalls                                                                                          0.00
Relief Act Shortfalls                                                                                                   0.00
MI Insurer Insolvency Event Occurred                                                                                      No

- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   3

                         NovaStar Home Equity Loan Trust
                  NovaStar Home Equity Loan Asset-Backed Bonds
                                  Series 1999-1

                        Statement To Bondholder - Pool II

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------

Distribution Date:       May 25, 1999
- ---------------------------------------------------------------------------------------------------------------------------

- ---------------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------
Aggregate Collections From the Mortgage Loans in Pool II
- --------------------------------------------------------------------------------------

<S>                                                                        <C>                             <C>
Total Collection on Pool                                                   662,857.08
Total Servicer Advances                                                          0.00
Total Compensating Interest                                                      0.00
- --------------------------------------------------------------------------------------


Available Carry-Forward Amount                                                                                         0.00
Aggregate Unpaid 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                                                       20,296,117.79
Aggregate Ending Principal Balance of Mortgage Loans                                                          19,825,527.20

Required Subordination Amount                                                                                    671,835.00
Current Subordination Amount                                                                                     637,351.32
Subordination Increase Amount                                                                                     34,483.68
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
Prepayment Penalties                                                                                               6,583.33
Weighted Average Mortgage Rate                                                                                  10.05077592%

- -----------------------------------------------------------------------------------------------------
DELINQUENCY               DELINQUENT      DELINQUENT     DELINQUENT      LOANS IN          REO
INFORMATION               30-59 DAYS      60-89 DAYS      90+ DAYS      FORECLOSURE      PROPERTY
- -----------------------------------------------------------------------------------------------------

PRINCIPAL BALANCE            447,221.16           0.00           0.00    1,733,690.93           0.00
NUMBER OF LOANS                       3              0              0               9              0
- -----------------------------------------------------------------------------------------------------

- -------------------------------------------------------
REPURCHASE                  Current       Cumulative
INFORMATION                 Period         History
- -------------------------------------------------------

PRINCIPAL BALANCE                  0.00           0.00
NUMBER OF LOANS                       0              0
- -------------------------------------------------------

- -------------------------------------------------------
CONVERTED MTGE              Current       Cumulative
LOANS INFO                  Period         History
- -------------------------------------------------------

PRINCIPAL BALANCE                  0.00           0.00
NUMBER OF LOANS                       0              0
- -------------------------------------------------------

Cumulative Loss Percentage                                                                                          0.00000%
Delinquency Percentage                                                                                              8.74474%
Rolling Delinquency Percentage                                                                                      6.35674%

Prepayment Interest Shortfalls                                                                                         0.00
Relief Act Shortfalls                                                                                                  0.00
MI Insurer Insolvency Event Occurred                                                                                     No

- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   4
                         NovaStar Home Equity Loan Trust
                  NovaStar Home Equity Loan Asset-Backed Bonds
                                  Series 1999-1

                       Statement To Bondholder - Pool III

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------

Distribution Date:       May 25, 1999
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------
Aggregate Collections From the Mortgage Loans in Pool III
- --------------------------------------------------------------------------------------

<S>                                                                        <C>                          <C>
Total Collection on Pool                                                   742,648.36
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

Available Carry-Forward Amount                                                                                          0.00
Aggregate Unpaid Carry-Forward Amount                                                                                   0.00

Aggregate Beginning Principal Balance of Mortgage Loans                                                        45,257,109.28
Aggregate Ending Principal Balance of Mortgage Loans                                                           44,936,395.97

Required Subordination Amount                                                                                   1,035,806.00
Current Subordination Amount                                                                                    1,028,673.72
Subordination Increase Amount                                                                                       7,132.28
Subordination Reduction Amount                                                                                          0.00
Net Monthly Excess Cashflow                                                                                        18,073.88
Unpaid Accrued Interest                                                                                                 0.00
Current Realized Loss on Mortgage Loans                                                                                 0.00
Aggregate Realized Loss on Mortgage Loans                                                                               0.00
Prepayment Penalties                                                                                                6,191.01
Weighted Average Mortgage Rate                                                                                   10.08365707%


- -----------------------------------------------------------------------------------------------------
DELINQUENCY               DELINQUENT      DELINQUENT     DELINQUENT      LOANS IN          REO
INFORMATION               30-59 DAYS      60-89 DAYS      90+ DAYS      FORECLOSURE      PROPERTY
- -----------------------------------------------------------------------------------------------------

PRINCIPAL BALANCE            520,305.48     249,050.15           0.00      518,645.31           0.00
NUMBER OF LOANS                       8              4              0               6              0
- -----------------------------------------------------------------------------------------------------

- -------------------------------------------------------
REPURCHASE                  Current       Cumulative
INFORMATION                 Period         History
- -------------------------------------------------------

PRINCIPAL BALANCE                  0.00           0.00
NUMBER OF LOANS                       0              0
- -------------------------------------------------------

- -------------------------------------------------------
CONVERTED MTGE              Current       Cumulative
LOANS INFO                  Period         History
- -------------------------------------------------------

PRINCIPAL BALANCE                  0.00           0.00
NUMBER OF LOANS                       0              0
- -------------------------------------------------------

Cumulative Loss Percentage                                                                                           0.00000%
Delinquency Percentage                                                                                               1.15418%
Rolling Delinquency Percentage                                                                                       0.75516%

Prepayment Interest Shortfalls                                                                                          0.00
Relief Act Shortfalls                                                                                                   0.00
MI Insurer Insolvency Event Occurred                                                                                      No

- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   5
                         NovaStar Home Equity Loan Trust
                  NovaStar Home Equity Loan Asset-Backed Bonds
                                  Series 1999-1

                        Statement To Bondholder - Pool IV

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------

Distribution Date:       May 25, 1999
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------
Aggregate Collections From the Mortgage Loans in Pool IV
- --------------------------------------------------------------------------------------

<S>                                                                        <C>                                <C>
Total Collection on Pool                                                   539,121.36
Total Servicer Advances                                                          0.00
Total Compensating Interest                                                      0.00
- --------------------------------------------------------------------------------------


Available Carry-Forward Amount                                                                                            0.00
Aggregate Unpaid 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                                                          20,096,092.52
Aggregate Ending Principal Balance of Mortgage Loans                                                             19,741,539.12

Required Subordination Amount                                                                                       460,358.00
Current Subordination Amount                                                                                        521,315.14
Subordination Increase Amount                                                                                             0.00
Subordination Reduction Amount                                                                                       60,957.14
Net Monthly Excess Cashflow                                                                                           9,631.12
Unpaid Accrued Interest                                                                                                   0.00
Current Realized Loss on Mortgage Loans                                                                                   0.00
Aggregate Realized Loss on Mortgage Loans                                                                                 0.00
Prepayment Penalties                                                                                                  1,714.25
Weighted Average Mortgage Rate                                                                                      9.98224748%


- -----------------------------------------------------------------------------------------------------
DELINQUENCY               DELINQUENT      DELINQUENT     DELINQUENT      LOANS IN          REO
INFORMATION               30-59 DAYS      60-89 DAYS      90+ DAYS      FORECLOSURE      PROPERTY
- -----------------------------------------------------------------------------------------------------

PRINCIPAL BALANCE            164,762.35      36,082.78     114,788.41      448,860.49           0.00
NUMBER OF LOANS                       3              1              1               4              0
- -----------------------------------------------------------------------------------------------------

- -------------------------------------------------------
REPURCHASE                  Current       Cumulative
INFORMATION                 Period         History
- -------------------------------------------------------

PRINCIPAL BALANCE                  0.00           0.00
NUMBER OF LOANS                       0              0
- -------------------------------------------------------

- -------------------------------------------------------
CONVERTED MTGE              Current       Cumulative
LOANS INFO                  Period         History
- -------------------------------------------------------

PRINCIPAL BALANCE                  0.00           0.00
NUMBER OF LOANS                       0              0
- -------------------------------------------------------

Cumulative Loss Percentage                                                                                             0.00000%
Delinquency Percentage                                                                                                 2.85514%
Rolling Delinquency Percentage                                                                                         1.99976%

Prepayment Interest Shortfalls                                                                                            0.00
Relief Act Shortfalls                                                                                                     0.00
MI Insurer Insolvency Event Occurred                                                                                        No
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>



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