Five certificates issued by NovaStar Mortgage Funding Trust have been placed on review for possible downgrade by Moody's Investors Service.The affected securities were as follows: series 2004-1, classes B-2 and B-3; series 2004-2, classes B-2 and B-3; and series 2004-4, class B-3. The negative rating actions were based on an analysis of credit enhancement provided by subordination, overcollateralization, excess spread, and mortgage insurance relative to expected losses, Moody's said. The transaction is backed by subprime fixed- and adjustable-rate mortgage loans. Moody's can be found on the Web at http://www.moodys.com.

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