IndyMac Increases Credit Reserves 47 Percent to $1.39 Billion

This number from the top Alt-A originator ( 14 percent) gives a hint how ugly the situation has become beyond subprime.

That might give a hint how bad the situation for several other players is that have bought back shares hand over fist during the past years and are more involed in subprime, havn´t sold their originations etc......

bigger / größer via Calculated Risk

Forecasted Home price depreciation ranging between 6% and 10% is factored into our loss expectations that drive valuation and reserves – average HPI declines expected to be around 9%

Diese Zahlen von dem Top Alt-A Kreditgeber ( 14 %) geben ein paar klare Indizien das neben Subrpime auch andere Segmente massiv an Qualität verlieren.

Das läßt erahnen wie übel es für andere Institute aussehen muß die im Gegensatz zu IndyMac in den letzten Jahren haufenweise Aktien zurückgekauft havben und sinnlose wertvernichtende Übernahmen getätigt haben aussehen mag. Ganz zu schweigen von denen die Ihre Riskiken nicht weiterreichen konnten und noch stärker im Subprime Sektor engagiert waren.....

We Hold Direct Credit Risk On $19.02 Billion Of Total Single Family Loans Serviced In Our Whole Loans And In Non-Investment Grade And Residual Securities

> Watch the large percentage of homebuilder credit costs....

> Man beachte den gewaltigen Anteil der Rückstellungen für die Homebuilder.....

In the call they said that they had claer signs in 2005 that the market for builders has peaked, but they have ignored it. Now they are paying a high price. They have stopped making any loans to builders and have no intend to re-enter the market soon.

Im CC hat das Management zugegeben das bereits Ende 2005 ganz klare Anzeichen für Probpleme bei den Buildern zu erkennen waren. Dummerweise wurden diese ignoriert und es wirde munter weiter verliehen. Nun kommt die Rechnung. Immerhin haben Sie versprochen dieses Segment nicht weiter zu bedienen und bis auf weiteres keine neuen Kredite zu begeben.

IndyMac Bancorp Reports Third Quarter Loss of $202.7 Million, ($2.77) Per Share

• Total pre-tax credit costs were $407.7 million (versus $103.5 million in the second quarter of 2007), or a negative impact on earnings per share (“EPS”) of $3.40.
• Spread widening in the private-label (non-GSE) mortgage secondary market resulted in a loss of gain on sale and MBS securities revenue estimated at $167.2 million pre-tax for the third quarter, or a negative EPS impact of $1.39.
• After surviving the global liquidity crisis in 1998 as a REIT, we purchased a federally chartered thrift and put our entire business inside the thrift, with the result that we have no liquidity issues today, while many mortgage companies have gone bankrupt or recorded massive losses due to liquidity shortfalls.
• We protected and bolstered our capital by not repurchasing any shares since 2002 and, in fact, raised a substantial amount of capital in 2007.
• We held virtually no subprime, closed-end seconds or HELOCs for investment purposes ($112 million, or 0.3 percent of total assets at September 30, 2007).
• We were not a major subprime lender, ranking 32nd among subprime lenders (according to the National Mortgage News 2006 survey). Our subprime volume in 2006 was $2.7 billion, or 0.39 percent of the total subprime market.
• While we originated $43 billion of Option ARMs from 2005 through Q3-07, we sold all but $1.0 billion (held for investment) and $2.6 billion (held for sale), and we retained no non-investment grade or residual securities related to these loans.
• We laid off virtually all Alt-A 2005/2006 credit risk into the secondary market, retaining only $7.0 million in non-investment grade and residual securities from this production.
• We hold no investments in collateralized debt obligations (CDOs) or structured investment vehicles (SIVs) and only hold mortgage backed securities (93.5 percent of the investment grade MBS are rated AAA and AA, none of which have been downgraded).
• We made one of the only successful acquisitions this decade in the mortgage business – Financial Freedom, the largest reverse mortgage lender in the nation – while virtually all other significant acquisitions have produced very poor results.

> Almost all of the new liquidity is coming from the Federal Home Loan Banks ......

> Fast die ganze zusätzliche Liquidität kommt von Seiten der Federal Home Loan Banks ......

Our operating liquidity is at an all time high of $6.3 billion at 9/30/07, up 54% from $4.1 billion at 6/30/07, and we have no reverse repurchase borrowings or extendable assetbacked commercial paper…95% of our borrowings are deposits, FHLB advances and long-term debt

> the next slide shows a nice Level 3 aka "Mark-to-Make-Believe Gains" etc gain. Wonder why they havn´t used an assumption that would have cover the entire loss from the credit costs.......... Maybe they are conservatice.......

> Nebenbei bemerkt zeigt die nächste Grafik das auch hier mal wieder ein nicht ganz unerheblicher Level 3 aka Mark-to-Make-Believe Gains etc Gewinnbestandteil. Schon erfreulich das Sie nicht gleich eine Berechnungsgrundlage berechnet haben die gleich die gesamten Verluste im Zusammenhang mit den Kreditkosten abdeckt...... Evtl. ist IndyMac ja betont konservativ......

I want to highlight the IndyMac Presentation / pdf that is full of details about every aspect of the mortgage market

Ich möchste Euch in diesem Zusammenhang die IndyMac Präsentation / pdf ans Herz legen die vollgepackt mit Details zur aktuellen Verfassung der Hypothekenmärkte ist.

A Comparisson Of Bubbles

I remember the days at the peak listening to the conference calls and almost every analyst reiterated their buy rating based on the low pe, after the earnings were gone they pointed to the book value & the strong balance sheets, ...... Now we now why they call them "Wall Street Finest"....

Ich kann mich noch sehr gut an die Telefonkonferenzen zu Zeiten des Peak erinnern wo fast jeder Analyst sein "Kaufen" Urteil bestätigt hat. Begründung war seinerzeit die niedrigen KGV´s, nachdem die Gewinne sich in Luft aufgelöst haben wurde dann das Argument der niedrigen Buchbewertung und der starken Bilanzen herausgeholt..... Den Namen "Wall Street Finest" haben die sich wirklich redlich verdient

Number Of The Day ....Earnings Estimates for Homebuilders

Now the bust is taking a brutal toll. In January, industry analysts predicted that the 10 biggest builders would have average earnings per share of $3.69 for 2007; the latest forecast ( August 2007) is for a loss of $1.18.

But they were not alone. Even Bill Miller from the Legg Mason Value Trust and until last year one of the most successfull fund manager was way of the mark. He jumped on to buy the builder in mid 2006 and still has some of them in his portfolio. If you look at the Portfolio Holdings as of June 30, 2007 (unaudited) i think it is safe to say that he will underperform again. So far he is lagging over 6 percent. In 2006 he underperformed the broad market by a margin of 10 percent.......

Selbst der bis zum letzten Jahr erfolgreichte Fondsmanager Legg Mason Value Trust ist bereits Mitte 2006 massiv in die Builder eingestiegen. Dieser Wahnsinn hat ihn seine einmalige Rekordserie den S&P 500 über 15 Jahre zu schlagen gekostet. Wenn man sich die Portfolio Holdings as of June 30, 2007 (unaudited) ansieht dürfte er kaum in der Lage sein seine Underperformance von 10% in 2006 in diesem Jahr zum positiven zu wenden. Zur Zeit hinkt er dem Markt mit 6% hinterher.....

Bill Miller August 2006

"Here we clearly made a mistake by initiating positions too early," Miller said. "We were waiting for a significant sell-off to establish positions," he added. "When that sell-off occurred late last year, we jumped in,"

Revisiting the Homebuilders / Bespoke

Below we revisit our comparison between the Nasdaq bubble of the late 90s and the Homebuilder bubble of the 2000s. The chart below highlights the performance of the two from the start of their enormous gains to their eventual peaks, and back down to their lows again. As shown, the S&P 1500 Homebuilder index actually registered more gains than the Nasdaq at its peak, but the comparable time frame (both around 2,000 days) of the two rises is eerily similar.

The bursting of the Nasdaq bubble lasted 943 days with declines of 78.29%. The current bursting of the Homebuilder bubble has lasted 831 days with declines of 67%. While the declines have already been severe, for the Homebuilder index to decline to the low levels that the Nasdaq reached, it would have to go down another 34% from here.

> Keep the comments from analysts and experts in mind when they tell you that the worst is over for the banks, brokers etc.... I assume we will see the sequel of incompetence and dishonesty what we have witnessed from the homebuilding sector. Here is one funny example Citigroup Dividend, Share Drop Make Banks Unbeatable ......

> Die Lehre aus dieser Erfahrung kann nur sein dem gesunden Menschenverstand zu folgen und die Meinungen von sog. Experten mit größtmöglicher Skepsis zu begegnen...... Ich erwarte das wir eine Fortsetzung der Inkompetenz und Vernebelung die wir im Homebuildersegment zu sehen bekommen haben auch im Banken & Broker Segment bewundern dürfen. Die ersten Versuche sind in der Tat vielversprechend.... Citigroup Dividend, Share Drop Make Banks Unbeatable .......

Housing: That Sinking Feeling / Business Week Cover Story

After Bonfire Of The Builders Mara de Hovanesian from Business Week has put up another excellent cover story. And this comment from Mike Morgan is one more reason to read the entire story Housing: That Sinking Feeling . This from Bloomberg Homebuilders Liquidate Assets as Threat to Survival Spurs Sales is also wort a look.

Nach der Titelgeschichte Bonfire Of The Builders hat Mara de Hovanesian eine weitere extrem gute Titelgeschichte zum Thema Immobilien und Homebuilder herausgebracht. Ein Grund mehr die komplette Geschichte Housing: That Sinking Feeling zu lesen ist das der von mir sehr geschätzte Mike Morgan voll des Lobes für Mara ist. Dieser Link von Bloomberg Homebuilders Liquidate Assets as Threat to Survival Spurs Sales ist ebenfalls zumindest einen Blick wert

"If you want information that is relevant, insightful and accurate, follow Mara Der Hovanesian in Business Week." Mike Morgan

Housing: That Sinking Feeling

Homeowners are getting slammed as builders slash prices. The big question: Will this shock treatment help hasten the end of the painful downturn....

Builders' balance sheets needed a boost, too. Even though the five-largest publicly held residential builders have cut the value of their land and unsold homes from $49.7 billion in 2006 to $41.9 billion today, that inventory as a percentage of sales has soared 33% during the past year, according to Banc of America Securities (BAC ). Those idle assets have taken a toll on the industry's health. A year ago builders' debt payments were roughly the same as their cash flow. Now debt is 2.5 times cash flow. ....

Driving along interstate 215 west of McCarran International Airport, it's easy to forget that Vegas' lifeblood is gambling and not homebuilding.

An Impaired Industry

What happened to all the value players that screamed day in and day out that the builders are cheap when you value them vs their book value (they switched to this argument when there was no earnings left to calculate their former argument that the p/e ratios were cheap)......Marketwatch is doing a great job of running all results from the major builders. Click on the Headline to see all details (Highlight as always WCI!). What a horror show....when you are long the stocks. :-)

Frage mich wo die ganzen "Value Palyer" sind die noch bis vor kurzem jeden Tag die niedrigen Bewertungen im Vergleich zum Buchwert als Kaufargument heraufbeschworen haben. Das sind im übrigen die identischen Personen die davor die niedrigen KGV´s als Kaufgrund angeführt haben ( bis die Gewinne zum ermitteln eines KGV´s plötzlich fehlten...) Klickt bitte auf die Überschrift um alle Details aller wichtigen Builder zu lesen (Kommentar wie immer WCI). Eine Einzige Horrorshow.....wenn man die Aktien besitzt.


D.R. Horton
The home builder said its third-quarter results, for the period ended June 30, included pretax charges of $835.8 million for inventory impairments and $16.2 million related to write-offs on land options it's abandoning. The company also took a pretax goodwill-impairment charge of $425.6 million
Beazer Homes
The Atlanta-based builder booked pretax charges of $188.5 million related to inventory impairments, abandonment of land options and goodwill impairments. The company said total revenue dropped to $761 million from $1.2 billion a year earlier.


D.R. Horton has taken over the dubious distinction of absorbing the biggest quarterly land-related write-off so far in this housing downturn, topping Pulte Homes Inc.'s roughly $750 million pretax charge announced last week. Factoring in D.R. Horton's goodwill charge, the quarterly total was nearly $1.3 billion.

Disclosure: Short the homebeuilder index and WCI

Mortgage Rate Rise Pushes U.S. Housing, Economy to `Blood Bath'

nothing really new but a nice summray. from "home sweet home" to "blood bath" in 24 month....always good to remember that this cover is just 2 years old and marked the peak....

nichts richtig neues aber eine erstklassige Zusammenfassung der aktuell trüben Lage. Das inzwsischen brühmte Cover im Sommer 2005 hat ziemlich genau das Top im Markt getroffen...

The worst is yet to come for the U.S. housing market.

The jump in 30-year mortgage rates by more than a half a percentage point to 6.74 percent in the past five weeks is putting a crimp on borrowers with the best credit just as a crackdown in subprime lending standards limits the pool of qualified buyers. The national median home price is poised for its first annual decline since the Great Depression, and the supply of unsold homes is at a record 4.2 million, according to the National Association of Realtors. ...

Confidence among U.S. homebuilders fell in June to the lowest since February 1991, according to the National Association of Home Builders/Wells Fargo index released this week.

Housing starts declined in May for the first time in four months, the Commerce Department reported yesterday. New-home sales will decline 33 percent from 2005's peak to the end of this year, according to the Realtors' group, exceeding the 25 percent three-year drop in 1991 that helped spark a recession. `Economic Recession'
``It's not just a housing recession anymore, it looks more and more like an economic recession,'' said Nouriel Roubini, a Clinton administration Treasury Department director and economic adviser who now runs Roubini Global Economics in New York.

Goldman Sachs Group Inc., the world's biggest securities firm, and Bear Stearns Cos., the largest underwriter of mortgage-backed securities in 2006, said last week that rising foreclosures reduced their earnings. Bear Stearns said profit fell 10 percent, and Goldman reported a 1 percent gain, the smallest in three quarters. Both firms are based in New York.

The investment banks, insurance companies, pension funds and asset-management firms that hold some of the U.S.'s $6 trillion of mortgage-backed securities have yet to suffer the full effect of subprime loans gone bad, said David Viniar, Goldman's chief financial officer. Subprime mortgages, given to people with bad or limited credit histories, account for about $800 billion of the market.
Homebuilder Stocks
Homebuilding stocks are down 20 percent this year after falling 20 percent in 2006, according to the Standard & Poor's Supercomposite Homebuilding Index of 16 companies. Before last year, the index had gained sixfold in five years.

``There isn't a recovery about to happen,'' said Ara Hovnanian, chief executive officer of Hovnanian Enterprises Inc., the Red Bank, New Jersey-based homebuilder. The company's stock tumbled 42 percent this year through yesterday.

The share of people taking out all types of adjustable-rate home loans averaged 29 percent during the past three years, compared with the 17 percent average of the prior three years, according to data compiled by Mclean, Virginia-based Freddie Mac.

Higher fixed mortgage rates and stricter lending standards mean some of those borrowers won't be able to refinance into fixed-rate loans. Many of them have seen their home's value drop even as their interest rates adjust higher.

`Millions of People'
``When all these people see their mortgage payment and it's up 40 or 50 percent, they're going to say, `We can't stay in this house,''' Pimco's Kiesel said. ``And there are millions of people in this situation.''

The average U.S. rate for a 30-year fixed mortgage was 6.74 percent last week, up from 6.15 percent at the beginning of May, according to Freddie Mac, the second-largest source of money for home loans. That adds $116 a month to the payment for a $300,000 loan and about $42,000 over the life of the mortgage.

The recent increase in mortgage rates is the biggest spike since 2004. The change means buyers can afford 8 percent less house than they could five weeks ago, Kiesel said.

``Prices are going lower,'' he said.
The housing sector will push the U.S. economy into recession unless the Federal Reserve cuts its benchmark rate at the first surge in unemployment, said Kiesel, who expects the Fed to reduce rates.

Home Equity Loans
In addition to their primary mortgages, homeowners had $913.7 billion of debt in home equity loans in 2005, more than double the $445.1 billion in 2001, according to a paper by former Federal Reserve Chairman Alan Greenspan and James Kennedy on equity extraction issued by the Fed three months ago.

About a third of that money, extracted as home values surged 53 percent from 2000 to 2005, was used to buy cars and other consumer goods, according to the paper. The interest rate on those loans doubled to 8.25 percent in 2006 from 4 percent in 2003.
If the Federal Reserve lowers the rate it charges for overnight lending to banks, that would cut the prime rate that moves in tandem with it and reduce the interest on many types of adjustable home loans, including home equity mortgages.


Boom and Bust
Homebuyers who got an adjustable-rate mortgage, a so-called ARM, in 2004 have seen their rate climb by about 40 percent. That's enough to add $288 to the monthly payment for a $300,000 mortgage. The average adjustable rate last week was 5.75 percent, an 11-month high, according to Freddie Mac.

Roubini predicts the decline in U.S. home sales will last at least another 12 months, reducing the median house price by 5 percent this year and next. That would take home prices back to 2004, when the national median was $195,200.

The primary cause of the 1990 to 1991 recession was a real estate boom and bust similar to the past seven years, Roubini said. A real estate ``bubble'' in the mid-1980s led to speculative buying and lower credit standards that resulted in widespread foreclosures, he said. The defaults triggered a credit crunch that turned into an economic recession in the spring of 1990, said Roubini, who is an economics professor at New York University's Stern School of Business.

He put the chance of a recession this year at ``50-50,'' above former Fed chief Greenspan's 33 percent estimate. A recession is a decline in gross domestic product for two consecutive quarters.

A Fed survey of senior loan officers issued in April said that 45 percent of lenders had restricted ``nontraditional'' lending, such as interest-only mortgages, and 15 percent had tightened standards for the most creditworthy, or prime, borrowers. More than half had raised standards for subprime borrowers, according to the survey.


The median U.S. price for a previously owned home fell 1.4 percent in the first quarter from a year earlier, the third consecutive decline, according to the National Association of Realtors. Before the third quarter of 2006 prices hadn't dropped since 1993. The quarterly median may dip another 2.4 percent in the current period, the Chicago-based industry trade group said in its June forecast.

Increase in Foreclosures
The share of mortgages entering foreclosure rose to 0.58 percent in the first quarter, the highest on record, from 0.54 percent in the final three months of 2006, the Mortgage Bankers Association said in a report last week. Subprime loans going into default rose to a five-year high of 2.43 percent, up from 2 percent, and late payments from borrowers with poor credit histories rose to almost 13.8 percent, the highest since 2002.
thanks to http://www.recharts.com/rt/RT_1.html

Prime loans entering foreclosure increased to 0.25 percent, the highest in a survey that goes back to 1972. That's a sign that even the most creditworthy borrowers are being squeezed, Roubini said.

``We have a lot of people, even prime borrowers, who are at the edge because they either bought with no equity, they have an ARM that's seen a rate spike, or they used their house like an ATM and turned their equity into cash,'' Roubini said. ``Many of those people are under water today, and if they have to sell, it's going to drag down values in their neighborhood.''


Adjustable Rates
Some owners are selling their homes at ``fire sale'' prices to avoid foreclosure after seeing their adjustable mortgage rates spike, said Lawrence White, an economics professor at the Stern School of Business.

``Prices will continue to soften for as long as we have distressed sellers,'' White said. Some regions of the U.S. could see price declines of 10 percent in the next six to 12 months, he said. The slump probably won't cause a recession, he said.

``It's not going to be the 1929 stock-market disaster, with people jumping out of buildings, but there is going to be widely dispersed pain for the next few quarters,'' he said.

The biggest problem is volatile home prices, said Gary Shilling, head of A. Gary Shilling & Co., an economic forecasting company in Springfield, New Jersey. Shilling put the chance of a recession this year at 75 percent.

``A lot of people went out on a limb to pay the record high prices for homes, and they're in trouble now,'' he said.

`Exploding ARMs'
Borrowers who got loans with so-called teaser rates are in the biggest bind, according to Shilling. Prices surged a record 12 percent in 2005, spurring buyers to ``stretch'' to qualify for bigger loans by using interest-only ARMs or so-called option ARMs with low introductory payments.

Some have payments based on interest rates as low as 1 percent. At the end of an introductory period, the rate can more than quadruple, leading them to be called ``exploding ARMs,'' he said. Some loans allow borrowers to choose how much they want to pay, with the balance added to the loan's principle, making it possible to owe more than the home's purchase price.

``Homeowners with adjustable-rate mortgages are getting squeezed on all sides,'' said Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago. Real estate taxes have surged along with home prices, and many U.S. homeowners saw their property insurance double after Hurricane Katrina ravaged Louisiana and Mississippi, she said.

disclosure: short several hombuilder, lender

Builders Laugh at Paulson? / Greenberg

should be no surprise....i´m laughing almost on a a daily basis when i hear or read official comments/statements.....you can stand this stuff way to often only with humor.... by the way the last few years i laughed about every comment that came from the builders themselves.....compared to them is paulson harmless......even when he looks.....

sollten keine wirklich überraschen...teilweise sind die kommentare und veräffnetlichungen nbur noch mit ne guten prise h7umor zu ertragen. im übrigen habe ich bei 99% aller kommentare der "builder" ebenfalls laut gelacht. dagegen ist paulson harmlos.......

Recent comments by Treasury Secretary Hank Paulson that the housing slump is largely contained apparently didn't get lost on builders. As the story goes, CSFB analyst Ivy Zelman told her company's sales force today that builders attending the Builder 100 Conference in San Diego laughed when the comments were mentioned as if Paulson didn't know what he was talking about.


How did I hear? From a legitimate and well-regarded trader who heard it directly from his Credit Suisse broker after Zelman reportedly broadcast the story on the Credit Suisse Squawk Box. Zelman hasn't returned my call.

And this note: If you, too, were called by Credit Suisse -- or if the story wasn't quite the way I told it, please let me know!

hat tip to P'cola Popper!

here is an interview from Paulson via the exlennet BNN / Papermoney

http://tinyurl.com/3753b5

“That correction has now been significant, we think it is near the bottom, it will take a while to work its way through the system.” Unfortunately, Paulson only reiterates the same guidance he offered last year prior to the housing market taking another major leg down

D.R.Horton ...no spring bounce / orders down 37%

click on the headline to see the details/ auf die überschrift klicken um mehr details zu sehen

said second-quarter net sales orders fell 37% to 9,983 homes from 15,771 homes a year earlier. The value of net sales orders declined 41% to $2.6 billion from last year's $4.4 billion. The cancellation rate was "essentially unchanged" at 32%.


orders down 37%
order value down 41%
cancellation rate 32%

"....the spring selling season has not gotten off to its usual strong start."

what a surprise....... / welch überraschung.....

disclosure: short several homebuilder

where is your stabilisation mr. toll?

should be good enough to lift the stock at least 5%..../sarcasm off..... plus 5% sollten heute drinnen sein....

this is a quote from december robert toll / zitat robert toll

Right now is a great time to buy a new luxury home. Builders are motivated to sell their specs and the fundamentals that typically lead our industry out of a slowdown are already in place. Interest rates are near historic lows, unemployment is near an all-time low and the stock market is setting records."

looks like not everybody agrees with mr. toll.

FY 2007's first-quarter home building revenues were approximately $1.09 billion, a decline of 19% compared to the first-quarter record of $1.34 billion in FY 2006

FY 2007's first-quarter-end backlog was approximately $4.15 billion, a decline of 30% compared to the first-quarter record of $5.95 billion in FY 2006.

FY 2007's first-quarter net signed contracts were approximately $749 million, a decline of 34% compared to FY 2006's first-quarter total of $1.14 billion

Net of cancellations, first quarter contracts totaled 1,027 units, down 33% from 1,544 units in the first quarter of FY

with that kind of fundamentals/performance no wonder the builders are flying high again.......

bei diesen daten kein wunder das die builder wieder abheben........

and here the usual spin attempt

Robert I. Toll, chairman and chief executive officer, stated: ``It appears that the pace of cancellations is starting to abate. First quarter FY 2007 cancellations totaled 436 versus 585 in fourth quarter FY 2006 and this quarter's cancellation rate of 29.8% was lower than the 36.9% cancellation rate last quarter. However, we are still well above the Company's historical average of about 7%. (spin attempt failed....but maybe some wall street analysts will freak out and upgrade the stock on this news....evtl. fahren ja einige wall street analysten darauf ab......)

and when you divide sales to communities the salesrate almost got halved from 6 to just over 3!

wenn man das ganze ins verhältnis zu den erföffneten baugebieten setzte hat sich das tempo von 6 auf knapp über 3 fast halbiert!

``We ended the quarter with 320 communities compared to 300 at FYE 2006 and 258 at first-quarter-end 2006

We ended the quarter with approximately 70,000 lots under control compared to our peak of 91,200 at 2006's second-quarter-end and 73,800 lots at FYE 2006

``We continue to believe that buyer confidence is the key to a turnaround in the new home market. It appears that the media's sentiment toward the housing market is becoming more balanced and their messages are making customers aware that, in the current climate of attractive interest rates, motivated sellers and a generally healthy economy, now is a good time to buy a home

disclosure: short diverse homebuilder

homebuilder down on bad new....you must be kidding

in the past quarter month every ugly news like this one from centex about 500 "adjustments" were viewed as great news to buy. the worse the news the more upbeat the gain.
http://immobilienblasen.blogspot.com/2007/01/centex-eps-minus-2-from-plus-252-in.html

looks like the music has stopped with the help from the weak bond auction. we will see if the momentum has changed. http://interestrateroundup.blogspot.com/2007/01/another-blah-treasury-auction.html

in den letzten quartalen war es so das je schlechter die new desto höher die kurse. selbst mrdschwere abschreibungen waren nur ein grund mehr zu kaufen. das könnte sich gestern mit hilfe der schwachen bondauktion geändert haben. mal sehen ob das von dauer ist.

thanks to bill cara. click on the headline for more details. http://www.billcara.com/

"hovnanian faces reality"

that the stock performance since they guided down in august to 5$ for the year....... now 2,14% and for 07 1,75$. looks like the stock trades at a 20 pe! maybe even wall street will sometime realize this......

das ist die performance seit hov im august die guidance auf 5$ reduziert hat. nun sind es ganze 2,14$ geworden und für 07 sogar nur 1,75. macht ein kgv von 20!. evtl. realisiert das sogar wall street........

The Company reported net income of $138.9 million for fiscal 2006, or $2.14 (-70%!!!) per fully diluted common share, compared with $469.1 million, or $7.16 per fully diluted common share, in fiscal 2005. Total revenues increased 15% over the prior year, to $6.1 billion. (guidance august hov above 5$!, analysts in august 8$!!)

the Company reported a loss to common stockholders for the fiscal 2006 fourth quarter of $117.9 million, or $1.88 per fully diluted common share, compared to net income available to common stockholders of $165.4 million, or $2.53 per fully diluted common share, for the same period a year ago.

- During fiscal 2006, the Company incurred $336 million of charges related to inventory impairments and land option write-offs, including $315 million in the fourth quarter. ( 94% in q4. now it seems that they face reality or maybe the auditors putting pressuers on them..../ 94% davon 10 q4. endlich sind sie in der realität angekommen bzw. die wirtschaftsprüfer machen gehörig druck.)

- The number of net contracts for fiscal 2006, excluding unconsolidated joint ventures, declined 18.2% to 13,761 contracts. The dollar value of net contracts for fiscal 2006, excluding unconsolidated joint ventures, decreased 17.3% to $4.6 billion, compared to $5.6 billion last year.

- Contract backlog as of October 31, 2006, excluding unconsolidated joint ventures, was 8,496 homes with a sales value of $2.9 billion (down 30%!), compared with a $4.1 billion sales value of contract backlog at the end of fiscal 2005.

- The Company ended the year with no balance outstanding on its $1.5 billion unsecured revolving credit facility and $43.6 million in cash on the balance sheet. The Company's average ratio of net recourse debt to capital for the year was 49.0%.

- Management is providing an initial projection for 2007 earnings of between $1.50 to $2.00 per fully diluted common share on 16,000 to 18,000 home deliveries, including 1,000 to 1,500 deliveries from unconsolidated joint ventures. (is naybody seeing a trend....nut the analysts have had it always wrong ...../ trend zu erkennen....die analysten waren auch nicht besser als das management.......)

EPS Trends	Current Qtr Oct-06	Next Qtr Jan-07	Current Year Oct-06	Next Year Oct-07
Current Estimate	1.05	0.46	4.97	2.71
7 Days Ago	1.05	0.49	4.97	2.84
30 Days Ago	1.07	0.51	5.00	3.13
60 Days Ago	1.07	0.51	5.00	3.18
90 Days Ago	1.08	0.52	5.02	3.29

"We did not anticipate the suddenness or magnitude of the fall in pricing that occurred this year in many of our communities. Our profitability and the pace of new home sales in our markets continues to be adversely impacted by high contract cancellation rates, increases in the number of resale listings and increases in the number of new homes available for sale," Mr. Hovnanian said. The Company's contract cancellation rate for the fourth quarter was 35%, compared with 25% in the fourth quarter of 2005 and a 33% rate reported in the third quarter of fiscal 2006.

"In the fourth quarter, we decided to walk away from $141 million in land deposits and predevelopment costs and took impairment charges of $174 million,"

the Company had 60,714 lots held under option contracts and controlled a total of 94,618 lots, a 22% decline

For the first quarter of fiscal 2007 we anticipate modest earnings of between $0.05 and $0.10 (estimate 0,45)

We anticipate that our average ratio of net recourse debt to capitalization will average close to our target of 50% during fiscal 2007

gross margin including interest 17,7 in vs 24,7 in q4 2005!

interest capitalized up over 100%!!!! to 103 m$

mortage loans held for sale up 33% to 282 m$. (problems in the mbs market!?, maybe charges needed.....)

net contracts in the southeast down 77%!

backlog in the west down over 60%

and take this: crispy from the http://bakersfieldbubble.blogspot.com/ has researched the cash flow from operations in the last 5 quarters ! lots of read inc............

click here!" to see the bloodbath/details.......

update after the call.

disclosure: short hov