NovaStar Financial Inc., Kansas City, Mo., has reported net income of $29.7 million for the first quarter, up from $23 million in the same period of 2003.Approximately 23% of the company's subprime business comes from its net branches, which fell from 432 as of Dec. 31 to 383 in the first quarter, the company said. While selectively eliminating branches, NovaStar increased nonconforming loan production and securitized $1.7 billion in nonconforming mortgage loans. The company also reported that its lending arm, NovaStar Mortgage, received an SQ2 rating from Moody's Investors Service, the second-highest mark in the industry, for above-average loss mitigation on loans and average foreclosure timeline management results. NovaStar Mortgage can be found online at http://www.novastarmortgage.com.

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