Exhibit
      10.8

    


    BACKUP
      SERVICING AGREEMENT

    


    This
      Backup Servicing Agreement
      (this
“Agreement”)
      is
      made and entered into as of February 28, 2007 (the “Effective
      Date”),
      by
      and between DEUTSCHE BANK NATIONAL
      TRUST
      COMPANY, a New York banking corporation, operating out of its offices in Santa
      Ana, California (the "Trustee"),
      solely in its capacity as trustee of the NovaStar Mortgage Funding Trust, Series
      2007-1 (the “Trust”)
      pursuant to the Pooling Agreement (as hereinafter defined) and Countrywide
      Home
      Loans Servicing LP, having a principal office at 4500 Park Granada CH-11,
      Calabasas, California 91302 (the "Backup
      Servicer"
      or
      "Countrywide").

    


    1. ACCEPTANCE
      AND TERMS AND CONDITIONS:
      By
      acceptance of this Agreement, Backup Servicer agrees to be bound by, and to
      comply with all the terms and conditions of this Agreement, and the Pooling
      Agreement.
      All
      capitalized terms used herein, and not otherwise defined herein, shall have
      their respective meanings as set forth in the Pooling Agreement.

    


    2. SCOPE
      OF WORK:
      The
      Pooling Agreement has specified the services to be provided by Backup Servicer
      to the Trust, (the “Services”)
      as
      more specifically set forth on Exhibit A hereto. No later than the time of
      execution of this Agreement, the Trustee shall provide Backup Servicer a copy
      of
      the executed Pooling and Servicing Agreement, dated as of February 1, 2007
      (the
“Pooling
      Agreement”)
      by and
      among NovaStar Mortgage Funding Corporation, as Depositor (the “Depositor”),
      NovaStar Mortgage, Inc., as Servicer and as Sponsor (the “Servicer”
and
      the
“Sponsor”),
      U.S.
      Bank National Association, as Custodian (the “Custodian”)
      and
      Deutsche Bank, as Trustee. Services shall be provided to the Trust in accordance
      with the procedures described in the Pooling Agreement and on Exhibit A hereto.
      

    


    3. FEES
      AND EXPENSES:
      For the
      Services performed and provided under this Agreement, Backup Servicer shall
      be
      paid pursuant to the Pooling Agreement in accordance with the terms
      thereof.

    


    4. TERM:
      Subject
      to the termination provisions of this Agreement, this Agreement shall be in
      effect for so long as the Pooling Agreement has not terminated pursuant to
      Section 11.01 thereof (the “Term”
of
      this
      Agreement).

    


    5. PAYMENT:
      Prior
      to becoming the successor Servicer, and except as otherwise provided on Exhibit
      A hereto, any fee payable to Backup Servicer shall be paid on each Distribution
      Date, as set forth in Section 4.01 of the Pooling Agreement and if Backup
      Servicer becomes the successor Servicer under the Pooling Agreement, then Backup
      Servicer as successor Servicer shall be entitled to retain Servicing Fees and
      other reimbursable amounts as provided in the Pooling Agreement. 

    


    6. APPOINTMENT
      AS AGENT:
      The
      Backup Servicer is hereby appointed as provided in the Pooling Agreement to
      act
      as successor to the Servicer during the Term solely to the extent necessary
      for
      Backup Servicer to render Services in accordance with the terms and conditions
      of this Agreement and the Pooling Agreement, and Backup Servicer hereby accepts
      such appointment. In all other respects, the status of Backup Servicer to the
      Trust shall be that of an independent contractor and not any other relationship
      including agent, partner, joint venturer or employee, and Backup Servicer shall
      act consistently with its independent contractor status in connection with
      such
      other matters. Backup Servicer shall not make any representation to any person
      inconsistent with this paragraph. None of Backup Servicer’s employees or agents
      shall be deemed employees of the Trustee or of the Trust.

    


    7. SUBCONTRACTOR
      APPROVAL:
      Backup
      Servicer shall not assign this Agreement or the Services hereunder or delegate
      its rights or duties hereunder or any portion thereof, without the prior written
      approval of the Trustee and the Sponsor; provided, however, that, without the
      Trustee’s or the Sponsor’s consent, Backup Servicer may (a) outsource certain
      specific functions to a third party, and (b) in order to fulfill its obligations
      as Backup Servicer hereunder, delegate certain specific functions to any entity
      that is directly or indirectly owned by Backup Servicer or any entity
      controlling, controlled by or under common control with, Backup Servicer. Backup
      Servicer shall remain liable for the conduct of any subcontractor, including
      any
      third party to which it outsources or otherwise delegates its specific
      functions, to the same extent as Backup Servicer’s liability under this
      Agreement. Backup Servicer shall be solely responsible for the compensation
      due
      to any such subcontractor for Services rendered in connection with this
      Agreement. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    8. REPRESENTATIONS
      AND WARRANTIES OF BACKUP SERVICER:
      Backup Servicer
      shall
      provide all Services with at least the same degree of care as that used by
      prudent mortgage servicing institutions which provide similar services. Backup
      Servicer warrants and represents that (a) it is duly organized and in good
      standing under applicable law; (b) it has the full power and authority to
      perform under this Agreement and under the Pooling Agreement, and (c) the
      execution and delivery of this Agreement will not conflict with or result in
      a
      breach of the terms and conditions of any other agreement to which Backup
      Servicer is a party. Backup Servicer further warrants and represents that any
      Services provided by Backup Servicer: (i) shall comply with all applicable
      laws,
      regulations, standards and codes, and (ii) shall otherwise fully conform in
      all
      respects to the Scope of Work document included as part of this Agreement.
      Backup Servicer shall promptly correct nonconforming Services at no additional
      charge.

    


    9. REPRESENTATIONS
      AND WARRANTIES OF THE TRUSTEE:
      The
      Trustee warrants and represents that (a) it is duly organized and in good
      standing under applicable law; and (b) it has the full power and authority
      to
      perform under this Agreement pursuant to the powers vested in it under the
      Pooling Agreement and as provided therein to execute and deliver this
      Agreement.

    


    10. INTELLECTUAL
      PROPERTY RIGHTS WARRANTY:
      In addition to its representations and warranties under Section 8 above,
Backup
      Servicer warrants and represents that it owns, or has the right to use or
      license (and sublicense where applicable) under valid and enforceable
      agreements, all intellectual property or proprietary rights, including
      copyrights, patents or pending applications for patent protection, derivative
      works, publicity rights, trade secrets, trademarks, trade names, service marks,
      logos, and all improvements or modifications of the foregoing (collectively,
      “Intellectual Property”), in any and all jurisdictions and in any and all media,
      reasonably necessary for or related to the performance of the Services. Backup
      Servicer further represents and warrants the performance of the Services and
      the
      Trustee’s use of any materials furnished by Backup Servicer shall not infringe
      or violate the Intellectual Property rights of any third party.

    


    11. INDEMNIFICATION
      BY THE BACKUP SERVICER:

    


    (a) Backup
      Servicer hereby agrees to indemnify, hold harmless and defend the Trustee and
      the Trust, their respective successors and assigns, and each of their officers,
      directors and employees (collectively, the “Indemnitees”), at Backup Servicer’s
      sole expense, from any judgment, loss, damage, penalty, cost, fine and/or
      expense (including reasonable attorneys' fees) that the Indemnitees may suffer
      or incur by reason of any claim or the defense of any claim, suit, or proceeding
      to the extent caused by: 

    


    (i) any
      acts
      or omissions, negligence or willful or wanton misconduct of Backup Servicer,
      its
      subcontractors, and or any of their officers, agents, servants, or employees,
      whether attributable wholly or in part, resulting in liability or injury to
      the
      Indemnitees; 

    


    (ii) the
      breach or alleged breach of any of the undertakings, representations or
      warranties made by Backup Servicer; 

    


    (b) Backup
      Servicer shall defend, at its sole expense, every such claim, suit, or
      proceeding, and shall be given authority, information, and assistance for,
      at
      Backup Servicer's sole expense, the defense of such claim, suit, or proceeding.
      Backup Servicer shall pay all judgments, losses, damages, penalties, costs,
      fines, and expenses awarded against the Indemnitees in every such claim, suit,
      or proceeding and indemnify, defend and hold harmless the Indemnitees at Backup
      Servicer’s sole expense, from any judgment, loss, damage, penalty, cost, fine
      and/or expense (including reasonable attorneys' fees) which any of them may
      incur by reason thereof. 

    


    (c) Backup
      Servicer shall indemnify, hold harmless, and defend the Indemnitees, at Backup
      Servicer's sole expense, against every claim, suit, proceeding, judgment, loss,
      damage, penalty, cost, fine and/or expense (including reasonable attorneys'
      fees) brought against or imposed upon the Indemnitees for any violation or
      alleged violation of any applicable law by Backup Servicer or by any officer,
      agent, employee, or subcontractor of Backup Servicer.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    


    (d) Backup
      Servicer hereby agrees to perform all required obligations with respect to
      compliance with the Exchange Act as set forth in the Pooling Agreement and
      to
      fully indemnify the parties thereto with respect to any noncompliance with
      such
      obligations.

    


    (e) With
      regard to each of (a), (b), (c) and (d) above, the Indemnitees shall have the
      right to participate in the defense and settlement of any claims.

    


    12. INDEMNIFICATION
      OF BACKUP SERVICER:

    


    The
      Trust
      hereby agrees to indemnify, hold harmless and defend Backup Servicer, its
      successors and assigns, and each of their officers, directors and employees
      (collectively, the “Backup Servicer Indemnitees”), at the Trust’s sole expense,
      from any judgment, loss, damage, penalty, cost, fine and/or expense (including
      reasonable attorneys' fees) that the Backup Servicer’s Indemnitees may suffer or
      incur by reason of any claim or the defense of any claim, suit, or proceeding,
      to the same extent and on the same terms as the Servicer is indemnified, as
      provided in Section 6.03 of the Pooling Agreement; provided that, in addition,
      the Backup Servicer's Indemnities shall also be indemnified by the Trust for
      any
      claims, etc. based upon the acts or omissions of the prior Servicer, any
      originator of any Mortgage Loan or of any other third party. 

    


    13. POOLING
      AGREEMENT INDEMNITEES.
      The
      Indemnification arrangements provided for in Sections 11 and 12 hereof are
      in
      addition to any indemnification arrangements which may be provided for in the
      Pooling Agreement.

    


    14. LIMITATION
      OF LIABILITY OF BACKUP SERVICER AND OTHERS:
      Neither
      Backup Servicer nor any of the officers, employees or agents of Backup Servicer
      shall be under any liability to the Trust or the Trustee for any action taken
      or
      for refraining from the taking of any action, to the same extent as the Servicer
      would not be so liable under such circumstances, as provided in Section 6.03
      of
      the Pooling Agreement. 

    


    15. LIMITATION
      ON LIABILITY:
      NONE OF THE TRUSTEE, THE TRUST OR THE BACKUP SERVICER SHALL, UNDER ANY
      CIRCUMSTANCES, BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL,
      PUNITIVE, OR CONSEQUENTIAL LOSSES, DAMAGES, COSTS, OR EXPENSES
      WHATSOEVER.

    


    16. TRUSTEE
      CAPACITY: 
      It is expressly understood and agreed by the parties hereto that,
      notwithstanding the execution of this Agreement by Trustee on behalf of the
      Trust, Trustee shall perform only as required pursuant to the Pooling Agreement
      and each of the representations, undertakings and agreements herein made by
      the
      Pooling Agreement is made and intended for the purpose of binding only the
      Trust, and that the Trustee in its individual capacity shall not be personally
      liable under any circumstance for the payment of any indebtedness, expense,
      or
      obligation or be personally liable for the breach or failure of any obligation,
      representation, warranty or covenant made or undertaken except as provided
      in
      the Pooling Agreement. The Trustee shall be afforded all of the rights,
      protections and immunities available to the Trustee under the Pooling Agreement
      in connection with its performance hereunder. 

    


    17. TERMINATION: 
      The
      Trustee may, at the direction of the Servicing Rights Pledgee (as defined in
      the
      Pooling Agreement) terminate all or any part of this Agreement upon thirty
      (30)
      days prior written notice to Backup Servicer, in which case Backup Servicer
      shall be entitled to retain the Servicing Fees accruing prior to the date of
      termination. In the event of such termination Backup Servicer shall immediately
      stop rendering Services hereunder and shall immediately cause any of its
      subcontractors to cease work and deliveries. To the extent the termination
      occurs pursuant to this Section, the Trust shall, at the expense of the
      Servicing Rights Pledgee, reimburse Backup Servicer for all costs and expenses
      incurred in connection with the transition of Services.

    


    18. AMENDMENT: 
      This
      Agreement may be amended from time to time by the parties hereto, provided
      that
      any amendment be accompanied by a letter from the Rating Agencies that the
      amendment will not result in the downgrading, qualification or withdrawal of
      the
      rating then assigned to any Class of Certificates.

    


    19. GOVERNING
      LAW:
      THIS
      AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
      YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
      RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
      WITH SUCH LAWS.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    


    20. NOTICES:
      All
      demands, notices and communications hereunder shall be in writing and shall
      be
      deemed to have been duly given if when delivered to:

    


    


    
      	 	
              a)

            	
              in
                the case of the Backup Servicer: 

            


    

    


    Countrywide
      Home Loans/Portfolio Services Group

    1800
      Tapo
      Canyon Rd, MS SV2-103A

    Simi
      Valley, CA 93063

    Attention:
      Tom Lin

    


    
      	 	
              b)

            	
              in
                the case of Rating Agencies:

            


    

    


    Standard
      & Poor’s, a division of The McGraw-Hill Companies, Inc.

    55
      Water
      Street - 41st Floor

    New
      York,
      New York 10041

    Attention:
      Daniel Larkin

    


    Moody’s
      Investors Service, Inc.

    99
      Church
      Street

    New
      York,
      New York 10007

    Attention:
      Rachel Peng

    


    
      	 	
              c)

            	
              in
                the case of the Trustee:

            


    

    


    Deutsche
      Bank National Trust Company

    1761
      East
      St. Andrew Place

    Santa
      Ana, CA 92705

    Attention:
      Trust Administration -- NS0701

    


    21. SEVERABILITY
      OF PROVISIONS:
      If any
      one or more of the covenants, agreements, provisions or terms of this Agreement
      shall be for any reason whatsoever held invalid, then such covenants,
      agreements, provisions or terms shall be deemed severable from the remaining
      covenants, agreements, provisions or terms of this Agreement and shall in no
      way
      affect the validity or enforceability of the other provisions of this
      Agreement.

    


    22. THIRD-PARTY
      BENEFICIARIES:
      This
      Agreement will inure to the benefit of and be binding upon the parties hereto,
      the parties to the Pooling Agreement and the Certificateholders and their
      respective successors and permitted assigns. Except as otherwise provided in
      this Agreement, no other Person will have any right or obligation hereunder.
      The
      Trustee shall have the right to exercise all rights of the Trust under this
      Agreement. The Sponsor and its officers and directors (in their corporate or
      individual capacity) shall have the right to bring an action against the Backup
      Servicer as it relates to a failure of the Backup Servicer to comply with its
      obligations under Section 11(d) of this Agreement.

    


    23. COUNTERPARTS:
      This
      instrument may be executed in any number of counterparts, each of which so
      executed shall be deemed to be an original, but all such counterparts shall
      together constitute but one and the same instrument.

    


    24. EFFECT
      OF HEADINGS AND TABLE OF CONTENTS:
      The
      Article and Section headings herein and the Table of Contents are for
      convenience only and shall not affect the construction hereof.

    


    25. NO
      PETITION:
      The
      Backup Servicer, by entering into this Agreement, hereby covenants and agrees
      that it will not at any time institute against the Trust, or join in any
      institution against the Trust, any bankruptcy proceedings under any United
      States federal or state bankruptcy or similar law in connection with any
      obligations of the Trust. This section shall survive the satisfaction and
      discharge of the Pooling Agreement by one year.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    


    26. NO
      RECOURSE:
      The
      Backup Servicer acknowledges that no recourse may be had against the Trust,
      except as may be expressly set forth in this Agreement.

    


    27. CONSENT
      TO JURISDICTION:
      The
      parties to this Agreement each hereby irrevocably submits to the non exclusive
      jurisdiction of any New York State or federal court sitting in the Borough
      of
      Manhattan in The City of New York in any action or proceeding arising out of
      or
      relating to this Agreement or the transactions contemplated hereby, and all
      such
      parties hereby irrevocably agree that all claims in respect of such action
      or
      proceeding may be hard and determined in such New York State or federal court
      and hereby irrevocably waive, to the fullest extent that they may legally do
      so,
      the defense of an inconvenient forum to the maintenance of such action or
      proceeding. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
      EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
      ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
      TRANSACTIONS CONTEMPLATED HEREBY.

    


    28. RELATIONSHIP
      TO POOLING AGREEMENT.
      In the
      event of any inconsistency between this Agreement and the Pooling Agreement,
      the
      Pooling Agreement shall control.

    


    


     

    


     


    
      
         

      

      
        5

        
          

        

      

      
         

      

    



     

    IN
      WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
      have
      caused this Agreement to be executed by their duly authorized representatives
      as
      of the day and year first above written.

     

     

    
      	
              DEUTSCHE
                BANK NATIONAL
                TRUST

              COMPANY,
                not in its individual 

              capacity
                but solely as Trustee 

            	
              COUNTRYWIDE
                HOME LOANS SERVICING LP,

              as
                Backup Servicer

              By:
                Countrywide GP, INC.

            
	 	 
	 	 
	
              By:/s/
                Ronaldo Reyes            

            	
              By:/s/
                Thomas P. Lin            

            
	
              Name:Ronaldo
                Reyes            

            	
              Name:Thomas
                P. Lin            

            
	
              Title:Vice
                President              

            	
              Title:Senior
                Vice President         

            


    

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    EXHIBIT
      A

    


    SCOPE
      OF WORK

    


    Dated
      as of February 28, 2007

    


    (a)
      Compensation:

    


    The
      Servicer shall pay a nonrefundable initial fee of $15,000 to Countrywide to
      act
      as cold Backup Servicer. Such fee shall be payable within thirty days of the
      execution of this Agreement. Thereafter, until such time as the Backup Servicer
      is terminated, or becomes the Successor Servicer, the Backup Servicer shall
      receive a monthly fee payable as provided in Section 4.01(a)(i) of the Pooling
      Agreement, equal to the greater of (1) 1/12 of 0.01% per annum times the Pool
      Balance as of the first day of the related Due Period (as defined in the Pooling
      Agreement) and (2) $2,250.

    


    If
      appointed as Successor Servicer under the Pooling Agreement, Countrywide shall
      be entitled to compensation based on the greater of (a) the Servicing Fee
      provided for in the Pooling Agreement or (b) the aggregate servicing fee per
      mortgage loan as set forth on Exhibit B attached hereto plus reimbursement
      of
      any compensating interest and prepayment interest shortfall obligations. In
      addition Countrywide shall be entitled to receive all other compensation
      otherwise payable to the Servicer under the related Pooling Agreement, including
      but not limited to the late fees, interest on deposits into the collection
      and
      escrow accounts as well as any other ancillary income payable to the Servicer.
      Such servicing compensation shall begin to accrue on the effective date of
      any
      servicing transfer. 

    


    (b)
      Responsibilities of Backup Servicer:

    


    For
      so
      long as Countrywide acts as Backup Servicer, the Servicer shall provide to
      Countrywide a monthly pool activity tape no later than the 18th day of each
      month (in a format acceptable to Countrywide). Countrywide shall retain such
      reports as Backup Servicer for the Trust and shall have no further obligations
      to render Services as Backup Servicer. Upon request, in anticipation of
      transferring the servicing to Countrywide, and no earlier than sixty (60) days
      prior notice of the anticipated transfer, the Servicer shall provide Countrywide
      with a preliminary electronic data file as of the last cut off date from the
      Servicer.

    


    The
      Backup Servicer has no reporting, monitoring or reconciliation obligations
      during the back-up servicing period (i.e., prior to becoming the successor
      Servicer).

    


    If
      the
      Backup Servicer becomes the successor Servicer under the Pooling Agreement,
      the
      Backup Servicer shall thereafter perform all of the duties of the Servicer
      under
      the Pooling Agreement.

    


    (c)
      Costs and Expenses:

    


    Countrywide
      and the Trust shall each be responsible for its own expenses in connection
      with
      the performance of its obligations under this Agreement, which include, but
      are
      not limited to, its legal and accounting fees and data conversion costs. Without
      limiting the generality of the foregoing, in connection with the transfer of
      servicing from the terminated Servicer to Countrywide, Countrywide shall be
      reimbursed from the terminated Servicer (or, if not from the terminated
      Servicer, then as provided in Section 3.07 of the Pooling Agreement) for (i)
      all
      servicing transfer costs and expenses incurred by Countrywide not to exceed
      $10
      per loan, (ii) its out-of-pocket costs incurred to transfer any third party
      contracts including but not limited to the transfer of flood insurance
      monitoring and real estate tax service contracts with respect to the Mortgage
      Loans, (iii) any other documented third party costs or expenses in connection
      with the physical transfer of servicing to Countrywide, and (iv) any costs
      to
      correct any material errors or insufficiencies in the servicing data.
      Countrywide shall not be responsible for any fees or expenses related to the
      preparation and recording of assignments, transfer of servicing in MERS and
      any
      other third party costs. If Countrywide is terminated as successor Servicer
      without cause by the Trustee at the direction of the Servicing Rights Pledgee
      (as defined in the Pooling Agreement), Countrywide shall be entitled to a
      service release fee to be paid by the Servicing Rights Pledgee equal to $10.00
      per loan (subject to a minimum of $10,000 per transfer) and shall be entitled
      to
      100% reimbursement of any advances made pursuant to the Pooling Agreement
      including but not limited to unpaid delinquency advances, servicing advances,
      and prepayment interest shortfall advances.

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      



    


    EXHIBIT
      B

    


    MINIMUM
      SERVICING FEES

    


    


    
      	
              Minimum
                Servicing Fee

            	
              1st
                lien

            	
              2nd
                lien

            	 
	
              Current

            	
              $  
                10.00

            	
              $ 
                 10.00

            	
              per
                loan/mo

            
	
              30
                days delinquent

            	
              $  
                35.00

            	
              $  
                35.00

            	
              per
                loan/mo

            
	
              60
                days delinquent

            	
              $  
                75.00

            	
              $  
                75.00

            	
              per
                loan/mo

            
	
              90
                days delinquent

            	
              $  
                90.00

            	
              $  
                65.00

            	
              per
                loan/mo

            
	
              120+
                days delinquent

            	
              $  
                90.00

            	
              $  
                35.00

            	
              per
                loan/mo

            
	
              Foreclosure

            	
              $
                150.00

            	
              $
                225.00

            	
              per
                loan/mo

            
	
              Bankruptcy

            	
              $  
                35.00

            	
              $  
                35.00

            	
              per
                loan/mo

            
	
              REO

            	
              $
                300.00

            	
              $
                300.00

            	
              per
                loan/month

            


    

    


    
      
         

      

      
        i