|       | 1.     |       | I have reviewed this      quarterly report on Form 10-Q of Novastar Financial, Inc.;                                                                                                                                                                                                                                                                               |
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|                                | 2.     |                                | Based on my knowledge, this      report does not contain any untrue statement of a material fact or omit to      state a material fact necessary to make the statements made, in light of      the circumstances under which such statements were made, not misleading      with respect to the period covered by this report;                                     |
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|                                | 3.     |                                | Based on my knowledge, the      financial statements, and other financial information included in this      report, fairly present in all material respects the financial condition,      results of operations and cash flows of the registrant as of, and for, the      periods presented in this report;                                                        |
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|                                | 4.     |                                | The registrant’s other      certifying officer and I are responsible for establishing and maintaining      disclosure controls and procedures (as defined in Exchange Act Rules      13a-15(e) and 15d-15(e) and internal control over financial reporting (as      defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant      and have: |
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|                                |   |                                | a)                                                                                                                                                                                                                                                                                                                                                                 |       | Designed such disclosure controls and procedures, or caused such      disclosure controls and procedures to be designed under our supervision,      to ensure that material information relating to the registrant, including      its consolidated subsidiaries, is made known to us by others within those      entities, particularly during the period in which this report is being      prepared; |
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|                                |   |                                | b)                                                                                                                                                                                                                                                                                                                                                                 |  | Designed such internal control over financial reporting, or caused      such internal control over financial reporting to be designed under our      supervision, to provide reasonable assurance regarding the reliability of      financial reporting and the preparation of financial statements for      external purposes in accordance with generally accepted accounting      principles; |
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|                                |   |                                | c)                                                                                                                                                                                                                                                                                                                                                                 |  | Evaluated the effectiveness of the registrant’s disclosure controls      and procedures and presented in this report our conclusions about the      effectiveness of the disclosure controls and procedures, as of the end of      the period covered by this report based on such evaluation;  and |
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|                                |   |                                | d)                                                                                                                                                                                                                                                                                                                                                                 |  | Disclosed in this report any change in the registrant’s internal      control over financial reporting that occurred during the registrant’s      most recent fiscal quarter (the registrant’s fourth fiscal quarter in the      case of an annual report) that has materially affected, or is reasonably      likely to materially affect, the registrant’s internal control over      financial reporting; and |
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|                                | 5.     |                                | The registrant’s other      certifying officer and I have disclosed, based on our most recent      evaluation of internal control over financial reporting, to the      registrant’s auditors and the audit committee of registrant’s board of      directors (or persons performing the equivalent function):                                   |
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|                                |   |                                | a)                                                                                                                                                                                                                                                                                                                                                                 |  | All significant deficiencies and material weaknesses in the design      or operation of internal control over financial reporting which are      reasonably likely to adversely affect the registrant’s ability to record,      process, summarize and report financial information; and |
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|                                |   |                                | b)                                                                                                                                                                                                                                                                                                                                                                 |  | Any fraud, whether or not material, that involves management or      other employees who have a significant role in the registrant’s internal      controls over financial reporting. |

| Date: August 11, 2010 |   /s/      W. Lance Anderson                  |  |
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|                  |   W. Lance      Anderson                      |  |
|                  |   Chairman of the Board      of Directors and |  |
|                  |   Chief Executive      Officer                |  |

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