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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) April 30, 1998
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 333-24327 52-6882502
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
c/o First Union National Bank,
230 S. Tryon Street, 9th Floor, Charlotte, NC 28288-1179
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704) 383-9568
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(Former name or former address, if changed since last report.)
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Item 5. 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.
A copy of the Annual Accountant's Report with respect to the servicing
of the Mortgage Loans by the Servicer pursuant to the Servicing Agreement is
attached hereto as Exhibit 99.1
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Item 601 (a)
of Regulation S-K
Exhibit Number.
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99.1 Annual Accountant's Report with respect to the servicing of the
Mortgage Loans by the Servicer pursuant to the Servicing
Agreement.
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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 Home
Equity Loan Trust Series 1997-2 by the undersigned thereunto duly authorized.
Dated: May 6, 1998
First Union National Bank, as Indenture Trustee
and on behalf of NovaStar Home Equity Loan Trust
Series 1997-2
BY: /s/ Robert Ashbaugh
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Vice President
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EXHIBIT INDEX
99.1 Annual Accountant's Report with respect to the servicing of the
Mortgage Loans by the Servicer pursuant to the Servicing
Agreement.
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EXHIBIT 99.1
Independent Accountants' Report
The Board of Directors
NovaStar Mortgage, Inc.
We have examined management's assertion about NovaStar Mortgage, Inc.'s (the
Company) compliance with the minimum servicing standards set forth in the
Mortgage Bankers Association of America's Uniform Single Attestation Program for
Mortgage Bankers for the period from July 1, 1997 to December 31, 1997 included
in the accompanying management assertion. Management is responsible for the
Company's compliance with those minimum servicing standards. Our responsibility
is to express an opinion on management's assertion about the Company's
compliance based on our examination.
Our explanation was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Company's compliance with the
minimum servicing standards and performing such other procedures as we
considered necessary in the circumstances. We believe that our examination
provides a reasonable basis for our opinion. Our examination does not provide a
legal determination on the Company's compliance with the minimum servicing
standards.
In our opinion, management's assertion that NovaStar Mortgage, Inc. complied
with the aforementioned minimum servicing standards for the period from July 1,
1997 to December 31, 1997 is fairly stated, in all material respects.
/s/ KPMG Peat Marwick LLP
April 3, 1998
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Management Assertion
For the period from July 1, 1997 to December 31, 1997, NovaStar Mortgage, Inc.
has complied in all material respects with the minimum servicing standards set
forth in the Mortgage Bankers Association of America's Uniform Single
Attestation Program for Mortgage Bankers. As of and for this same period,
NovaStar Mortgage, Inc. had in effect a fidelity bond in the amount of
$2,000,000 and an errors and omissions policy in the amount of $1,000,000.
/s/ Chris S. Miller
Senior Vice-President/Servicing Manager
April 3, 1998
