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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (24544)	1/13/2005 9:58:11 AM
From: ild	Respond to of 110194

NEW YORK (Dow Jones)--Rainstorms and mudslides in California likely won't hurt home builders in the fourth quarter, but they could potentially push some first-quarter home closings into the second quarter. Hovnanian Enterprises Inc. (HOV), whose fiscal first quarter ends Jan. 31, issued a statement Wednesday to say that its first-quarter earnings would likely fall short of expectations as a result of "unprecedented" rain in California. "The torrential rainfall in California prevented us from staying on schedule to complete land-development activities, exterior finishing work and landscaping, which will delay us from receiving certificates of occupancy on a number of homes," said Ara K. Hovnanian, president and chief executive of Hovnanian. Also, power companies are focusing on repair work rather than setting up meters in new homes, he said. Hovnanian estimates the delays will affect earnings by about 20 cents a share, and this amount will be shifted into the fiscal second quarter. UBS analyst Margaret Whalen said Hovnanian is being hit particularly hard because its fiscal quarter ends on Jan. 31, and much of the rainfalls began in the last couple of weeks of December. She said home builders whose quarters ended on Dec. 31 won't be affected. However, some builders' first quarters that end on March 31 could see delays in some deliveries, analysts speculate. Companies with the biggest exposures to California include Meritage Corp. (MTH), KB Home (KBH), Lennar Corp. (LEN), D.R. Horton Inc. (DHI), Pulte Corp. (PHM), Standard Pacific Corp. (SPF), Toll Brothers Inc. (TOL), M.D.C. Holdings (MDC) and Centex Corp. (CTX). Meritage Chief Financial Officer Larry Seay estimates about 30% of his company's closings are in California. However, he said the rainfalls have not had a material impact on deliveries so far. "It may slow things up a bit" and could possibly push some closings into the second quarter, but the delays have not been significant yet, he said. KB Home's Kate Mulhearn said her company has seen "little or no impact so far." About 20% of KB Home's closings come from California. Toll Brothers, whose fiscal first quarter ends on Jan. 31 as Hovnanian's does, gets about 15% of its deliveries from California. However, Chief Financial Officer Joel Rassman said the rain has had "no material impact" on the company. His company constructs luxury homes, which take longer to build and where workers spend longer "under the roof," he said. And Toll has a smaller exposure to California than Hovnanian, he said. As a result, the rain likely won't hurt deliveries much. Even if some closings for some builders are delayed between the first and second quarters, Whelan emphasized, they will not affect the companies' 2005 full-year results. "This is a timing issue," she said. Hovnanian remains a top pick for Whelan for 2005.

To: Ramsey Su who wrote (24544)	1/13/2005 10:04:51 AM
From: ild	Read Replies (3) \| Respond to of 110194

biz.yahoo.com New business down, delinquency up, stock up.

To: Ramsey Su who wrote (24544)	1/13/2005 10:46:57 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

A Wizard sounds a warning, but cry wolf syndrome still seems to be in the order of the day. How long do these sycophants have to "monitor" things, until the pit bull leaps up and rips their noses off?: Subprime lending a worry for Fed exec By Sue Kirchhoff, USA TODAY 1/12/2004 WASHINGTON — Federal Reserve Governor Edward Gramlich expressed concern Wednesday about some lending practices in the subprime mortgage market and said the central bank was closely monitoring the overall housing sector for signs of price speculation. During a panel discussion on housing, Gramlich said mortgage brokers, who make about half the subprime loans, might not have incentives for careful underwriting. Subprime lenders offer higher-interest loans to borrowers with poor credit ratings who may not qualify for prime financing. Most subprime loans are resold on the secondary market. "The subprime incidence of mortgage brokers without a lot at stake in the game is getting pretty high," Gramlich said. While initially stating that that portion of the subprime industry was veering close to a breakdown, he later called that phrasing too strong. But pointing to the higher delinquency rates in the subprime market and the fact many subprime borrowers are highly leveraged, he said it might be time to look with a little more jaundiced eye at some practices. Some organizations representing mortgage brokers have endorsed tighter oversight, while others have laid out best lending practices. Overall, Gramlich said, the Fed was closely watching U.S. home sales, which have been setting volume and price records in recent years. But he said the housing market did not qualify for specific monetary policy treatment at this point. Gramlich said while housing price bubbles were possible, there were other reasons, such as land shortages, for strong price run-ups. "We are always looking for signs that some relative prices are out of line," Gramlich said. "It's certainly possible it's a bubble, but it's also possible, for various reasons, the cost of housing has shifted."