GUARANTY

Exhibit 10.55

GUARANTY

THIS GUARANTY, dated as of April 15, 2005, (this “Guaranty”), is made by NovaStar Financial, Inc. (“NovaStar Financial”), NFI Holding Corp. (“NFI Holding”, and together with NovaStar Financial, the “Guarantors”) in favor of Wachovia Investment Holdings, LLC, (the “Buyer”, which term shall include any buyer for whom Buyer acts as Agent as defined and provided for in the Master Repurchase Agreement referred to below).

RECITALS

A. Pursuant to that certain Amended and Restated Master Repurchase Agreement (Securities), dated as of April 15, 2005, among NovaStar Mortgage, Inc. (“NMI”), NovaStar Assets Corp. (“NAC” and together with NMI, jointly and severally the “Sellers”) and the Buyer(the “Master Repurchase Agreement”), the Buyer has agreed to purchase certain securities (the “Purchased Assets”) from the Sellers and the Sellers have agreed to repurchase such Purchased Assets upon the terms and subject to the conditions set forth therein.

B. It is a condition precedent to the obligation of the Buyer to purchase the Purchased Assets from the Sellers under the Master Repurchase Agreement that the Guarantor shall have executed and delivered this Guaranty to the Buyer.

NOW, THEREFORE, for good and valuable consideration, receipt of which by the parties hereto is hereby acknowledged, the parties hereto hereby agree as follows:

1. Defined Terms . (a) Unless otherwise defined herein, terms defined in the Master Repurchase Agreement and used herein shall have the meanings given to them in the Master Repurchase Agreement.

(b) “ Obligations ” shall mean the obligations and liabilities of the Sellers and the Guarantor to the Buyer, including, without limitation, the obligations whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, or out of or in connection with the Master Repurchase Agreement, this Guaranty, any other Program Documents and any other document made, delivered or given in connection therewith or herewith, whether on account of covenants, Repurchase Prices, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to the Buyer that are required to be paid by the Sellers pursuant to the terms of the Master Repurchase Agreement) or otherwise.

(d) The words “hereof, “herein” and “hereunder” and words of similar import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty, and section and paragraph references are to this Guaranty unless otherwise specified.

(e) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

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2. Guaranty . (a) The Guarantors hereby, unconditionally and irrevocably, guarantee to the Buyer and its successors, endorsees, transferees and assigns the prompt and complete payment and performance by the Sellers when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

(b) The Guarantors further agree to pay any and all expenses (including, without limitation, all reasonable fees and disbursements of counsel) which may be paid or incurred by the Buyer in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, the Guarantors under this Guaranty. This Guaranty shall remain in full force and effect until the Obligations are paid in full, notwithstanding that from time to time prior thereto either or both Sellers may be free from any Obligations.

(c) Each Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing this Guaranty or affecting the rights and remedies of the Buyer hereunder.

(d) No payment or payments made by the Sellers, the Guarantors, any other guarantor or any other Person or received or collected by the Buyer from the Sellers, the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantors hereunder which shall, notwithstanding any such payment or payments other than payments made by the Guarantors in respect of the Obligations or payments received or collected from the Guarantors in respect of the Obligations, remain liable for the Obligations until the Obligations are paid in full and the Master Repurchase Agreement is terminated.

(e) Each Guarantor agrees that whenever, at any time, or from time to time, it shall make any payment to the Buyer on account of its liability hereunder, it will notify the Buyer in writing that such payment is made under this Guaranty for such purpose.

(f) Each Guarantor shall be jointly and severally liable to the Buyer for all obligations of the guarantors hereunder.

3. Representations and Warranties of the Guarantor . Each Guarantor hereby represents and warrants that:

(a) It is duly organized and validly existing in good standing under the laws of the jurisdiction under which it is organized and is duly qualified to do business and is in good standing in every other jurisdiction as to which the nature of the business conducted by it makes such qualification necessary.

(b) It has the full power, authority and legal right to execute, deliver and perform its obligations under this Guaranty. This Guaranty has been duly executed and delivered by it, has not been amended or otherwise modified, is in full force and effect and is the legal, valid and binding obligation of each Guarantor, enforceable against it in accordance with its terms, except as may be

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limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally and to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law).

(c) Neither the execution and delivery of this Guaranty nor the consummation of the transactions contemplated herein will conflict with or result in a breach of, or require any consent under, any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which the Guarantors are a party or by which the Guarantors or their property is bound or to which the Guarantors are subject, or constitute a default under any such agreement or instrument, or (except for the liens created pursuant hereto) result in the creation or imposition of any lien or encumbrance upon the Guarantors’ revenues or assets pursuant to the terms of any such agreement or instrument.

(d) The Guarantors have received and reviewed copies of the Master Repurchase Agreement.

(e) This Guaranty is the legal, valid and binding obligation of the Guarantors, enforceable against each Guarantor, in accordance with its terms, subject to bankruptcy, insolvency and similar laws and to the availability of equitable remedies.

(f) There is no action, suit or proceeding at law or in equity by or before any governmental authority, arbitral tribunal or other body now pending, or to the best of the Guarantors’ knowledge, threatened against or affecting the Guarantors or any of their property that could have a material adverse effect on the Guarantors’ condition, financial or otherwise.

(g) No authorizations, approvals or consents of, and no filings or registrations with, any governmental authority are necessary for the execution, delivery or performance by the Guarantors of this Guaranty.

4. Reserved .

5. Right of Set-off . Upon the occurrence of any Event of Default, the Guarantors hereby irrevocably authorize the Buyer or any of its Affiliates at any time and from time to time without notice to the Guarantors, any such notice being expressly waived by the Guarantors, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Buyer or any of its Affiliates to or for the credit or the account of the Guarantors, or any part thereof in such amounts as the Buyer may elect, against and on account of the obligations and liabilities of the Guarantors to the Buyer hereunder and claims of every nature and description of the Buyer or any of its Affiliates against the Guarantors, in any currency, whether arising hereunder, under the Master Repurchase Agreement as the Buyer may elect, whether or not the Buyer has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. The Buyer shall notify the Guarantors promptly of any such set-off and the application made by the Buyer, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Buyer and its Affiliates under this Section are in addition to other rights and remedies (including without limitation, other rights of set-off) which the Buyer and its Affiliates may have.

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