Exhibit 10.56.2

AMENDMENT NUMBER TWO

to the

MASTER REPURCHASE AGREEMENT (SECURITIES)

dated as of April 14, 2006

among

WACHOVIA INVESTMENT HOLDINGS, LLC,

NOVASTAR MORTGAGE, INC.

NOVASTAR CERTIFICATES FINANCIING LLC

NOVASTAR CERTIFICATES FINANCING CORPORATION

and

NOVASTAR FINANCIAL, INC

AMENDMENT NUMBER TWO (“Amendment Number Two”), dated as of March 29, 2007, by
and among Wachovia Investment Holdings, LLC, as buyer (the “Buyer”), Novastar
Mortgage, Inc., Novastar Certificates Financing LLC and Novastar Certificates
Financing Corporation (each a “Seller”, and collectively, jointly and severally,
the “Sellers”) and Novastar Financial, Inc. (the “Guarantor”), to the Master
Repurchase Agreement (Securities), dated as of April 14, 2006, by and among the
Buyer, the Sellers and the Guarantor (the “Agreement”).

RECITALS

WHEREAS, the Buyer, the Sellers and the Guarantor have agreed to amend the
Agreement, pursuant to the term and conditions set forth herein.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and of the mutual covenants herein contained,
the parties hereto hereby agree as follows:

SECTION 1. Defined Terms. Any terms capitalized but not otherwise defined herein
shall have the respective meanings set forth in the Agreement.

SECTION 2. Amendments. Effective as of the date hereof, Section 2(a) of the
Master Repurchase Agreement is hereby amended as follows:

(a) The definition of “Adjusted Tangible Net Worth” is hereby deleted in its
entirety and replaced with the following:

“Adjusted Tangible Net Worth” means shall mean at any date:

(a) Book Net Worth plus the notional amount of any Trust Preferred Securities,
minus

(b)(1) all receivables from directors, officers and shareholders of NFI and its
consolidated Subsidiaries and (2) the sum of all assets which would be
classified as intangible assets of NFI and its consolidated Subsidiaries under
GAAP (except purchased and capitalized value of servicing rights), including,
without limitation, goodwill (whether representing the excess cost over book
value of assets acquired or otherwise), patents, trademarks, trade names,
copyrights, franchises and deferred charges (including, without limitation,
unamortized debt discount and expense, organization costs and research and
product development costs), minus

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(c) The amount of unrealized gains on debt securities (as defined in FASB 115)
of NFI and any Subsidiaries of NFI Holding, plus

(d) The amount of unrealized losses on debt securities (as defined in FASB 115)
of NFI and any Subsidiaries of NFI Holding.

Provided that in all cases such amounts shall be determined by combining the
relevant figures for NFI and for NFI Holding and its consolidated Subsidiaries
and its Affiliates, as accounted for under the equity method.

(b) The definition of “Required Equity” is hereby deleted in its entirety and
replaced with the following:

‘“‘Required Equity” shall mean, with respect to the Guarantor (and its
consolidated Subsidiaries) (together, the “Companies”), the sum of the dollar
amounts calculated after multiplying the amount determined by combining the
relevant figures for the Guarantor and its consolidated Subsidiaries for each
asset class set forth in the table below (or if such asset class is owned by NFI
or a consolidated Subsidiary but cannot be determined by combining the relevant
figures for the Guarantor and its consolidated Subsidiaries, the fair market
value thereof as calculated by the Companies subject, however, to the approval
of the Buyer which will not be unreasonably withheld) by the Percentage
Multipliers set forth opposite such asset class in the table below:

 

Asset Class

   Percentage
Multiplier  

Cash

   0 %

Mortgage Loans held-for-sale including accrued interest and WUSA loans

   5 %

Mortgage loans held in portfolio including accrued interest (securitized in an
owners trust)

   5 %

Mortgage loans held-in-portfolio including accrued interest (securitized in a
REMIC trust)

   1.75 %

AAA-Rated I/O and Prepay (P) Certificates booked on-B/S

   25 %

BBB NIM Certificates

   25 %

Residuals from whole loan securitizations (including 1999-1)

   35 %

Residuals from NIM/CAPS

   100 %

Non-rated subordinate bonds (i.e. class O from 2002-2)

   100 %

A-Rated Mortgage-Backed Securities not in CDO

   20 %

BBB-Rated Mortgage-Backed Securities not in CDO

   25 %

BB-Rated Mortgage-Backed Securities in CDO

   50 %

Mortgage-Backed Securities in CDO

   5 %

CDO Equity Sub Notes

   100 %

CDO BBB Bonds

   5 %

Agency Securities

   3 %

Servicing Agreements (Mortgage Servicing Rights)

   35 %

Servicing Advances

   15 %

REO + Non-performing (90+ & foreclosures from bond collateral calls)

   35 %

Other Assets

  

- Hedging Agreements (Value of reserves that are not reflected in Marks to
Market that impact equity)

   100 %

- All Other Assets (all else remaining- including Other Receivables & PP&E)

   35 %

Intangible Assets

   100 %

 

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(c) The following definition of “Trust Preferred Securities” is hereby added to
Section 2(a) of the Master Repurchase Agreement:

“Trust Preferred Securities” shall mean securities representing the preferred
beneficial interests in the assets of a trust, whose only assets are the junior
subordinated notes issued by the holder of the common securities of the trust.

SECTION 3. Conditions Precedent. This Amendment Number Two shall become
effective on the date on which the Buyer shall have received the following:

(a) this Amendment Number Two, executed and delivered by duly authorized
officers of each of the Sellers, the Guarantor and the Buyer; and

(b) such other documents as the Buyer or counsel to the Buyer may reasonably
request.

SECTION 4. Representations. In order to induce the Buyer to execute and deliver
this Amendment Number Two, the Sellers and the Guarantor hereby represent and
warrant to the Buyer that (i) no Default or Event of Default has occurred prior
to the date hereof and is continuing on the date hereof and (ii) as of the date
hereof, after giving effect to this Amendment Number Two, the Guarantor and each
Seller are in full compliance with all of the representations and warranties,
covenants and any other terms and conditions of the Program Documents.

SECTION 5. Governing Law. THIS AMENDMENT NUMBER TWO SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE
(OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH SHALL
GOVERN).

SECTION 6. Counterparts. This Amendment Number Two may be executed by each of
the parties hereto on any number of separate counterparts, each of which shall
be an original and all of which taken together shall constitute one and the same
instrument.

SECTION 7. Costs. Sellers and Guarantor shall promptly reimburse Buyer for all
out-of-pocket costs and expenses of Buyer in connection with the preparation,
execution and delivery of this Amendment (including, without limitation, the
fees and expenses of counsel for Buyer).

SECTION 8. Limited Effect. Except as amended hereby, the Agreement shall
continue in full force and effect in accordance with its respective terms.
Reference to this Amendment Number Two need not be made in the Agreement or any
other instrument or document executed in connection therewith, or in any
certificate, letter or communication issued or made pursuant to, or with respect
to, the Agreement, any reference therein to the Agreement, being sufficient to
refer to the Agreement, as amended hereby.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, each of Sellers, Guarantor and Buyer have caused this
Amendment Number Two to be executed and delivered by their duly authorized
officers as of the day and year first above written.

 

NOVASTAR MORTGAGE, INC., as Seller By:  

/s/ Todd Phillips

Name:   Todd Phillips Title:   Vice President

NOVASTAR CERTIFICATES FINANCING LLC,

as Seller

By:  

/s/ Todd Phillips

Name:   Todd Phillips Title:   Vice President

NOVASTAR CERTIFICATES FINANCING

CORPORATION, as Seller

By:  

/s/ Todd Phillips

Name:   Todd Phillips Title:   Vice President

WACHOVIA INVESTMENT HOLDINGS, LLC

as Buyer and Agent, as applicable

By:  

/s/ Andrew W. Riebe

Name:   Andrew W. Riebe Title:   Vice President

 

Acknowledged and Agreed: NOVASTAR FINANCIAL, INC., as Guarantor By:  

/s/ Todd Phillips

Name:   Todd Phillips Title:   Vice President

 

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