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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _________________
Commission file number 333-24327
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NovaStar Home Equity Loan Trust Series 1997-2
(Issuer in respect of the NovaStar Home Equity Loan Asset-Backed Bonds,
Series 1997-2)
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(Exact name of registrant as specified in its charter)
Delaware Applied for
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
c/o First Union National Bank, 230 S. Tryon Street
9th Floor, Charlotte, North Carolina 28288-1179
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (704) 383-9568
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]
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INTRODUCTORY NOTE
The Registrant, NovaStar Home Equity Loan Trust Series 1997-2, was
formed pursuant to that certain Amended and Restated Trust Agreement dated as
of November 1, 1997, by and between Merrill Lynch Mortgage Investors, Inc. and
Wilmington Trust Company, as Owner Trustee. The Registrant is the issuer of
the NovaStar Home Equity Loan Asset-Backed Bonds Series 1997-2 (the "Bonds"),
issued under an Indenture dated as of November 1, 1997 by and between the
Registrant and First Union National Bank, as Indenture Trustee.
This Form 10-K has been prepared with modified disclosure in
accordance with past exemptions from the reporting requirements granted by the
Securities and Exchange Commission under the Securities Exchange Act of 1934
for issuers substantially similar to the Registrant. Items designated herein
as "Not Applicable" have been specifically omitted in reliance on such prior
exemptions.
B-2
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PART I
Item 1. Business
Not Applicable.
Item 2. Properties.
Not Applicable.
Item 3. Legal Proceedings.
The Indenture Trustee is not aware of any material pending legal
proceedings involving either the Registrant, the Indenture Trustee, the
Owner Trustee or the Servicer with respect to the Bonds or the
Registrant's property.
Item 4. Submission of Matters to a Vote of Security Holders.
No vote or consent of the holders of the Bonds was solicited for any
purpose during the year ended December 31, 1997.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
To the best knowledge of the Indenture Trustee, there is no established
public trading market for the Bonds. As of the date hereof, Cede &
Co., the nominee of the Depository Trust Company ("DTC"), was the only
holder of record of the Bonds. DTC holds the Bonds for the accounts of
others.
Item 6. Selected Financial Data.
Not Applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Not Applicable.
Item 7A. Quantitative and Qualitative Disclosures About Market Risks.
Not Applicable.
Item 8. Financial Statements and Supplementary Data.
Not Applicable.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
B-3
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PART III
Item 10. Directors and Executive Officers of the Registrant.
Not Applicable.
Item 11. Executive Compensation.
Not Applicable.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The Indenture Trustee is not aware of any Schedule 13D or 13G filings
with the Securities and Exchange Commission in respect of the Bonds.
Item 13. Certain Relationships and Related Transactions.
None or Not Applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following documents are filed as part of the report
(1) Financial Statements
Not Applicable.
(2) Financial Statement Schedules
Not Applicable.
(b) The Registrant filed the following current reports on Form 8-K for
the fourth quarter of 1997:
Date of Reports Items Covered
None
(c) Exhibits*.
99.1 Annual Statement to Bondholders for the period ended
December 31, 1997
99.2 Officer's Certificate of Servicer
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* A copy of the annual report of independent public accountants with
respect to the servicing of the Mortgage Loans by the Servicer
shall be filed by Form 8-K at a later date.
B-4
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(d) Additional financial statements
(1) Separate Financial Statements of subsidiaries not
consolidated and fifty-percent-or-less persons.
None.
(2) Affiliates whose securities are pledged as collateral.
None.
(3) Schedules.
None.
B-5
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Indenture Trustee has duly caused this report to be
signed on behalf of the Registrant by the undersigned, thereunto duly
authorized.
FIRST UNION NATIONAL BANK, as Indenture
Trustee and on behalf of NovaStar Home
Equity Loan Trust Series 1997-2
Dated: March 31, 1998
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By: /s/ Robert Ashbaugh
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Name: Robert Ashbaugh
Title: Vice President
B-6
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INDEX OF EXHIBITS
99.1 Annual Statement to Bondholders for the period ended December 31, 1997
99.2 Officer's Certificate of Servicer
B-7
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NOVASTAR HOME EQUITY LOAN ASSET-BACKED NOTES
SERIES 1997-2
ANNUAL STATEMENT TO BONDHOLDER
AS OF DECEMBER 31, 1997
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From the Period December 1, 1997 (Date of Inception) to December 31, 1997
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AGGREGATE COLLECTIONS FROM THE MORTGAGE LOANS
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Total Collections on Pool 3,198,943.79
Total Servicer Advances 0.00
Total Compensating Interest 0.00
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AVAILABLE FUNDS CAP CARRY-FORWARD AMOUNT 0.00
AGGREGATE UNPAID AVAILABLE FUNDS CAP CARRY-FORWARD AMOUNT 0.00
AGGREGATE INSURED PAYMENTS PAID BY INSURER 0.00
AGGREGATE UNREIMBURSED INSURED AMOUNTS PAYABLE TO INSURER 0.00
AGGREGATE BEGINNING PRINCIPAL BALANCE OF MORTGAGE LOANS 222,574,961.00
AGGREGATE ENDING PRINCIPAL BALANCE OF MORTGAGE LOANS 220,837,645.52
REQUIRED SUBORDINATION AMOUNT 10,461,961.00
CURRENT SUBORDINATION AMOUNT 10,461,961.00
AGGREGATE SUBORDINATION INCREASE AMOUNT 0.00
AGGREGATE SUBORDINATION REDUCTION AMOUNT 0.00
AGGREGATE NET EXCESS CASHFLOW 959,563.84
AGGREGATE UNPAID ACCRUED INTEREST 0.00
AGGREGATE REALIZED LOSS ON MORTGAGE LOANS 0.00
<TABLE>
<CAPTION>
DELINQUENCY
INFORMATION DELINQUENT DELINQUENT DELINQUENT LOANS IN REO
AT 12/31/97 30-59 DAYS 60-89 DAYS 90 + DAYS FORECLOSURE PROPERTY
<S> <C> <C> <C> <C> <C>
PRINCIPAL BALANCE 2,011,579.54 389,633.38 66,774.16 0.00 0.00
NUMBER OF LOANS 9 3 0 0 0
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE
REPURCHASE CURRENT CUMULATIVE
INFORMATION PERIOD PERIOD
<S> <C> <C>
PRINCIPAL BALANCE 0.00 0.00
NUMBER OF LOANS 0 0
</TABLE>
AGGREGATE PREPAYMENT INTEREST SHORTFALLS 0.00
AGGREGATE RELIEF ACT SHORTFALLS 0.00
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<TABLE>
<CAPTION>
AGGREGATE DISTRIBUTIONS IN DOLLARS CURRENT
PRIOR CUMULATIVE PRINCIPAL
ORIGINAL PRINCIPAL REALIZED DEFERRED BALANCE
CLASS FACE VALUE BALANCE INTEREST PRINCIPAL TOTAL LOSSES INTEREST AT 12/31/1997
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
BONDS 212,113,000.0 212,113,000.00 515,552.43 1,737,315.48 2,252,867.91 0.00 0.00 210,375,684.52
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TOTALS 212,113,000.0 212,113,000.00 515,552.43 1,737,315.48 2,252,867.91 0.00 0.00 210,375,684.52
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AVERAGE BOND INTEREST RATE 6.25000%
MAXIMUM BOND INTEREST RATE 14.51%
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</TABLE>
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Annual Officer's Certificate
The undersigns certifies that he is a Senior Vice President of NovaStar
Mortgage, Inc. a corporation organized under the laws of the State of Virginia
("NMI"), and that as such he is duly authorized to execute and deliver this
certificate on behalf of NMI in connection with the Servicing Agreement dated as
of November 1, 1997 (the "Agreement"), among NMI, NovaStar Financial, Inc. and
First Union National Bank, as Indenture Trustee, and further certifies that a
review of the activities of NMI and of its performance of its obligations has
been made under his supervision and to the best of his knowledge, NMI has
fulfilled its obligations under the Agreement.
IN WITNESS WHEREOF, I have affixed hereto my signature this March 30,
1998.
/s/ Christopher S. Miller
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Name: Christopher S. Miller
Title: Senior Vice President
