Common use of Qualified REIT Subsidiaries Clause in Contracts

Qualified REIT Subsidiaries. Each subsidiary of the Company listed in Exhibit 21.1 to the Company’s 2004 Form 10-K (other than NFI Holding Corporation and its subsidiaries) is a wholly owned subsidiary of the Company and is a “qualified REIT subsidiary” within the meaning of Section 856(i) of the Code. Any securitization trusts formed by the Company are either (i) treated as real estate mortgage investment conduits, or (ii) disregarded for tax purposes, with such trust’s assets treated as assets of NovaStar Mortgage, Inc. The Company has no other “qualified REIT subsidiaries.”

Qualified REIT Subsidiaries. Each subsidiary of the Company listed in Exhibit 21.1 to the Company’s 2004 2003 Form 10-K (other than NFI Holding Corporation and its subsidiaries) is a wholly owned subsidiary of the Company and is a “qualified REIT subsidiary” within the meaning of Section 856(i) of the Code. Any securitization trusts formed by the Company are either (i) treated as real estate mortgage investment conduits, or (ii) disregarded for tax purposes, with such trust’s assets treated as assets of NovaStar Mortgage, Inc. . The Company has no other “qualified REIT subsidiaries.”

Qualified REIT Subsidiaries. Each subsidiary Subsidiary of the Company listed in Exhibit 21.1 to the Company’s 2004 Form 10-K Q for the quarter ending June 30, 2006 (other than NFI Holding Corporation and its subsidiaries) is a wholly wholly-owned subsidiary Subsidiary of the Company and is a “qualified REIT subsidiary” within the meaning of Section 856(i) of the Code. Any securitization trusts formed by the Company are either (i) treated as real estate mortgage investment conduits, or (ii) disregarded for tax purposes, with such trust’s assets treated as assets of NovaStar Mortgage, Inc. The Company has no other “qualified REIT subsidiaries.”