Don't Buy a House Yet

By Steven Goldberg, Contributing Columnist, Kiplinger.com
Dec 3rd, 2009

When housing prices hit bottom, they will languish near those low levels for years to come. So don’t be in a rush to buy.
Mortgage interest rates are at a 50-year low. Last month, Congress extended a tax credit for home buyers through April. The economy is beginning to crawl out of what by some measures is the deepest recession since the 1930s. One survey already shows house prices beginning to rise.

So isn't it time to buy a home? Kiplinger's certainly thinks so. But if I were in the market for a new home, I would wait. Housing prices typically don't rebound quickly after a bust; instead, they level out and stay near that low base line for years.

I don't see why this time should be different. True, prices seem as though they can't drop further, and in some areas they even show signs of an upturn. But if prices won't be taking off and might well resume their decline, you lose nothing but a little time by waiting to buy.

Of course, if you're buying out of necessity — because you're moving to a new area and need to sell your old house and buy a new one, for example -- there's no need to wait. But if you're planning to buy your first house, if you want to move to a larger home, or especially if you're buying a house for investment purposes, take your time.

The housing picture is complex — and frightening. House prices have plunged 30%, on average, from their 2006 peak. But from 2000 to 2006, average prices nearly doubled. That means average house prices are still almost 40% higher than they were a decade ago. Forty percent is a healthy increase — even in a robust economy.

And the economy, of course, is anything but robust. A fragile recovery seems to have begun last summer, but unemployment stands at 10.2% and is likely to rise even higher. It may not begin to fall substantially until late next year. Companies were quick to lay off workers, but they are being slow to hire.

As bad as the overall economy is, residential real estate is in much worse shape. About seven million households — or 12.5% of all homeowners — either are behind on their mortgages by 30 days or more or are in foreclosure. It's hard to make the house payment if you're unemployed. Millions of houses already stand empty — victims of the subprime loans that sparked the Great Recession. Almost a quarter of homeowners owe more on their mortgages than their houses are worth.

The history of busts.
Nationally, housing prices haven't declined from one calendar year to the next since accurate record keeping began in 1968. But in 2005, the Federal Deposit Insurance Corp. identified 21 regional housing busts since 1968. (The FDIC defined a bust as a decline of 15% over five years.)

Busts occurred in Texas when oil prices sank in the mid 1980s, in Southern California in the early 1990s amid defense-industry cutbacks, and in much of the Northeast corridor in the late 1980s and early 1990s. The 21 busts happened for varying reasons, and each unfolded differently. But they all shared one common trait: A nasty regional recession triggered each one.

Many (but not all) busts followed booms — just as our national housing crash followed an unprecedented boom.

Most (but not all) of the regional busts tended to be painfully protracted affairs. Why? Because unless you're forced out, most of us would rather stay in a house, pay the mortgage and hope for an eventual upturn rather than sell and realize our losses quickly. That means home prices don't go down all at once; they tend to slide agonizingly slowly on infrequent sales.

True, the tax credits and low mortgage rates make buying a house tempting today. But if you buy into a slumping housing market, those incentives won't add up to much. So while the worst of the real estate decline is surely behind us, the odds are strong that you'll be able to buy later at the same price — or a lower one.

Steven T. Goldberg is an investment adviser.

Hagens Berman Sobol Shapiro Investigating Pulte Homes in Arizona and Nevada

PHOENIX--(BUSINESS WIRE)--Hagens Berman Sobol Shapiro announced today it is investigating Pulte Homes (NYSE: PHM) in Arizona and Nevada based on reports that claim the company may be engaged in a fraudulent scheme to artificially inflate home sale prices and drive sales by controlling the home sale process.

The firm filed a lawsuit against Pulte Homes in California last week, citing similar claims and believes the practice is widespread throughout Pulte neighborhoods in Arizona and Nevada.

The lawsuit in California claims Pulte placed unqualified homeowners in loans that they could not afford in an effort to sell more homes and at higher prices. Since Pulte controls the entire home buying process, its settlement and appraisal arms can take whatever steps necessary to close a sale at prices demanded by Pulte.

“We believe Pulte Homes spent a lot of time and effort to develop a sophisticated scheme in California, and decided they didn’t want to stop there,” said Rob Carey, a partner in the HBSS Phoenix office. “We believe that Pulte targeted homeowners in states with high foreclosure rates, including Arizona and Nevada, and we’re interested in learning more about the company’s sales process in these states on behalf of homeowners.”

HBSS is interested in hearing from anyone who purchased a home from Pulte in the past several years in Arizona or Nevada. Homeowners can contact the firm at pulte@hbsslaw.com, visit the Web site at www.hbsslaw.com/pulte or call (206) 623-7292.

Hagens Berman Sobol Shapiro will treat all information as confidential.

About Hagens Berman Sobol Shapiro

Hagens Berman Sobol Shapiro is a nationally recognized class-action and complex-litigation law firm based in Seattle with offices in San Francisco, Chicago, Boston, Los Angeles and Phoenix. Among recent successes, HBSS negotiated a $300 million settlement in the DRAM memory antitrust litigation, the largest antitrust settlement in U.S. history, recovered $340 million on behalf of Enron employees, and was part of the leadership team in the $3 billion Visa/MasterCard settlement. In pharmaceutical litigation, the firm’s recent successes include a $350 million settlement with McKesson, more than $200 million with other parties in drug-pricing litigation, and a $150 million settlement regarding Lupron. HBSS represented Washington and 12 other states against the tobacco industry that resulted in the largest settlement in history. For a complete listing of HBSS cases, visit www.hbsslaw.com.

Contacts:
Hagens Berman Sobol Shapiro
Rob Carey, 602-840-5900
Rob@hbsslaw.com
or
Firmani + Associates, Inc.
Mark Firmani, 206-443-9357
Mark@firmani.com

Pulte Homes Lawsuit

A law firm filed a class-action lawsuit against Pulte Homes in California claiming the company artificially propped up home sale prices and pushed homeowners into dangerous loans for additional profits.

The suit claims that Pulte’s practices created ‘toxic subdivisions’ resulting in foreclosures, a steep decline in home values, a loss of buyer’s down payments, loss of mortgage payments and ruined credit.

The suit represents anyone who purchased a home in a Pulte neighborhood between Jan. 1, 2005 and March 1, 2007. If you fall into this category, please visit http://www.hbsslaw.com/pultehomes. You can share your story with attorneys and learn more about the lawsuit.

Pulte Downgraded To Junk

DOW JONES NEWSWIRES

Moody's Investors Service lowered its credit ratings on Pulte Homes Inc. (PHM) one notch further into junk territory following the company's $1.4 billion purchase of Centex Inc.
The ratings agency expects the combined homebuilder's "currently robust cash flow will decline substantially this year and next" as the benefits of inventory liquidation play out.
Once that happens, Moody's said Pulte will need to generate increasing portions of its cash flow from operations. That will pose a "considerable challenge," citing the company's large land position, below-industry-average margins and somewhat-low revenue per employee compared with peers.
The downgrade closes Moody's review of the company's begun in April, after the deal was announced. At the time, Moody's said it was examining whether the new company's larger land portfolio would increase risks to debt holders.
The combined company has nearly 190,000 housing lots in 29 states, one of the largest land supplies in the industry and will be a major builder of homes for first-time home buyers and retirees. By units it will be the nation's largest builder.
Pulte was lowered by Moody's to B1, or four steps into junk territory. The ratings outlook is stable, with Moody's noting that increased risks from its large combined land position are offset by potential cost-savings benefits.
Standard & Poor's Ratings Service and Fitch Ratings last week affirmed their ratings on Pulte but have negative outlooks.
Shares were down 4.1% at $12.78 in recent trading.

Housing Outlook

Foreclosure sales, short sales and first-time homebuyers taking advantage of tax credits is purely illusionary and hides the underlying problems of lending and inventory," says Anthony Sanders, a finance professor at George Mason University's Hall School of Management. "Plus, the jumbo and non-first-time market has to show volume."

The spring sales bump many had hoped for didn't materialize. According to the National Association of Realtors, pending sales activity only climbed 0.1% from April to May--not exactly a market rally.

There are too many sales in markets that are affordable to first-time buyers, driven by foreclosures and short sales, and too few sales in expensive parts of town thanks to a lack of financing and the impression that prices are coming down.

In neighborhoods rich and poor alike, it's going to be a long summer--with no sign of recovery on the horizon. "

and is right on with market trends and the abandonments found all over the country.

Now Comes The Real Crash

June 5, 2009

Here's the good news: The worst of the subprime mortgage carnage is behind us.

Here's the bad news: That was just the tip of the iceberg. There's probably much worse ahead.

Fool retirement guru Robert Brokamp recently sat down with noted value investor Whitney Tilson to talk about his thoughts on the continuing mortgage crisis.

I thought this was a subprime problem!
It was, at first.

Many subprime mortgages started out with a low "teaser" interest rate that then increased to a market-level subprime rate after a set period of time. When that happened, the payments would go up -- often by a lot -- and the hapless overleveraged borrower would go, "Oh fiddlesticks, I can't afford to pay the mortgage anymore."

(Except that most of them probably didn't say "fiddlesticks." But I digress.)

Tilson notes that the number of loans facing payment shock started climbing in early 2006, reached a very high level in early 2007, and stayed high until about the end of last year, at which point they started falling off sharply. Likewise, the massive wave of defaults and foreclosures triggered by these higher payments is abating. That wave is behind us.

But subprime mortgages weren't the only ones with teaser rates.

Now, it's mostly not a "subprime" problem
The emerging problem is with prime mortgages, those issued to people with good credit. The crash in housing prices has left many of those folks "underwater" -- owing more than their house is now worth. And the crash in the global economy has left many of those folks unemployed -- and many who are still employed are making less money now than they were a year or two ago.

Tilson cites figures that about a quarter of all prime U.S. mortgages are underwater at the moment, and that number is likely to grow if housing prices continue to fall. Despite some beliefs that home prices are bottoming, unemployment is still a big problem -- Deere (NYSE: DE), among others, just announced new rounds of layoffs. And now mortgage interest rates are suddenly rising -- the average 30-year mortgage is up to 5.32% this week, up from 4.91% just last week, according to the most recent Freddie Mac (NYSE: FRE) survey.

Nobody knows quite how all these factors will play out, but clearly the potential for a huge wave of defaults in the near future is growing.

What, you thought things were stabilizing?
Tilson recently argued that the appearance of stabilization in the housing market is a "head fake," caused by the usual spring surge in homebuying and a temporary reduction in the inventory of foreclosed homes sitting on the market. The crisis, Tilson says, is actually getting worse.

As Tilson sees it, although the worst of the losses suffered by speculators and subprime borrowers are over, problems with prime loans are just now starting to pick up steam. Many conforming prime loans are owned by Fannie Mae (NYSE: FNM) and Freddie Mac. But other mortgages will likely also prove problematic, including home equity lines and prime "jumbo" mortgages, as well as the scarier Alt-A and Option ARM loans.

Eeeek?
Why scarier? According to Tilson, nearly half of Alt-As and over 70% of Option ARMs are underwater. Alt-A resets are just starting to take off -- they won't peak until 2012 or 2013. And Option ARMs don't just reset, they recast -- borrowers go from making just interest payments, in many cases, to making full proper 30-year-amortized mortgage payments. Some could see their monthly payments increase by 60% or more.

Results From Lowes Not Good For Homebuilders

Lowes is doing very well because their customers are buying up Foreclosures and they need to fix up those homes with much needed items from Lowes. People are not buying new homes because the value is in Foreclosures. Homebuilders will struggle to keep their heads above water for a very long time to come.

Pulte Homes Is A Dead Business

With unemployment up, deficit up, interest rate up, cost of basic needs like electricity & water up, even though 1st time buyers are supposed to get $8000 credit, nobody mentioned that you need to make less than $75,000/yr to get it; I find it hard to imagine that these homebuilders will survive this environment. No wonder they even knocked down some unfinished projects.

"U.S. unemployment rate in April hit 8.9%, its highest in a quarter century. The labor force lost 539,000 non-farm jobs in April, down from March's 699,000 decline. A 72,000 rise in government jobs, mainly new workers for the 2010 Census, helped narrow the gulf."
But if you dig in those numbers carefully, you need to add Birth Death Assumption and seasonal adjustment, Census one-timers (because those are one-timers, temporary workers), plus revisions, bringing the REAL Adjusted Non-Farm Payroll job losses to 847,000 not 539,000.
And this was supposed to be WORSE THAN EXPECTED.

It is very obvious that they are manipulating their data, accounting rules, people to pump up this market, all that with the goal of restoring confidence so that the general unaware investors would put money back in the market;
in the mean time, the companies can then take advantage of the hype to raise capital at a higher price. No wonder everybody wants to raise capital.
Even MSFT who has tons of cash already, comes out raising capital to take advantage of the stock price, not that they need the cash! This proves that stock prices are inflated, companies know this, the smart people know this, but the average investors don't. Because of greed, they don't want to miss the boat by not investing.
Once they are all in, the market will become overbought and it's the little guys who will end up holding the bag.

Homebuilders are losing money building homes

Homebuilders are losing money building homes. Some even knock down unfinished projects.
Wait until interest rates go up more (already moved up the last 2 weeks), when government has no more money "because of their other projects", also housing prices will go down another 15%, then it will be a complete disaster for homebuilders. Papering up losses and bad news can only last a while before the real truth comes out.

New Home Prices Have to Go Up 10 to 15 % Before Builders Can Start Making Profits

New Home Prices Have To Go Up 10 To 15% Before Builders Can Make A Profit. I don't foresee That Until 2 More Years. There Is Just To Much Builder Inventory & Foreclosures On The Market To Deal With Before You Can Start Increasing New Home Prices 10-15%. It May Take More Than 2 Years To Start Seeing A Decrease In Those Inventories & Foreclosures. My Question Is-How Much Longer Can These New Home Builders Survive? Even When They Start Making A Profit, It Will Be A Long Time Before They Can Start To Keep Their Heads Above Water, Literally. The Market Will Never Be The Same As It Was, Which In My opinion, Is A Good Thing For The Consumer.

Pulte Homes reported a net loss of $514.8 million for the 1st quarter of 2009

BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)--May. 5, 2009-- Pulte Homes (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2009. For the quarter, the Company reported a net loss of $514.8 million, or $2.02 per share, compared with a $696.1 million net loss for the prior year first quarter, or $2.75 per share. The first quarter 2009 net loss included $410.2 million of pre-tax charges related to inventory impairments and other land-related charges. Impairments and land-related charges for the prior year quarter were $663.6 million. Consolidated revenues for the quarter were $587.4 million, a decline of 59% from prior year quarter revenues of $1.4 billion.

Merging Pulte Homes with Centex possibly making for the largest housing disaster

Just two months ago, Pulte Homes CEO Richard Dugas told analysts that not only did the homebuilder have too much inventory, but that it also had more land than it could possibly need, considering the housing industry's current malaise. Now he's gone out and bought Centex, which is going to end up giving him an estimated eight years’ worth of land. On top of that, the deal is going to give the combined companies so much debt that it will result in one of the worst cash-debt ratios in the industry.

Merging Pulte Homes with Centex may make for the nation's largest homebuilder, but it's also quite possibly making for the largest housing disaster.

Pulte & Centex?

Why would Pulte buy Centex with 60,000 lots for $1.3 billion if the Foreclosure rates and the inventory levels are the highest it has ever been? Doesn't make much sense,homebuyers have plenty of foreclosures and builder inventory to choose from at a lower cost. Seems to me that management has their heads up their ass.

The highest foreclosure rates in the U.S. are all located in four states

The 26 cities with the highest foreclosure rate in the nation are all located in four hard-hit states, with Las Vegas topping the list, according to a report released Wednesday.

Metro areas in California, Florida, Nevada and Arizona topped the foreclosure filing list for the first quarter of 2009 in a report from RealtyTrac, an online marketer of foreclosed properties. A foreclosure filing includes default papers, auction sale notices and repossessions.

Las Vegas had the highest rate of foreclosures of any city, with one in every 22 homes subject to a foreclosure filing in the first three months of the year. The rate of foreclosure filings was 4.5%, seven times the national average.

Merced, Calif., had the second highest rate, with Cape Coral-Fort Myers, Fla., Stockton, Calif., and Riverside-San Bernardino-Ontario, Calif., rounding out the top five.

"The metro areas with the highest levels of foreclosure activity in the first quarter of 2009 paint a picture of concentrated problems in a relatively small number of hard-hit areas," said James J. Saccacio, chief executive officer of RealtyTrac, in a written statement.

Foreclosure rates have been very high in the 4 key states throughout the bursting of the housing bubble, and so it was to be expected that cities from those states would pepper the top of the list.

However, it was a surprise to see the list so top heavy, according to Rick Sharga, senior vice president at RealtyTrac.

"The concentration of troubled metro areas within the hardest-hit states, candidly, was even more severe than we expected it to be," Sharga said. "The degree to which those four states dominated the rankings surprised even us."

New problem cities: Meanwhile, some metropolitan areas had a surge in foreclosures. Boise City-Nampa, Idaho, in 27th place, Provo-Orem, Utah, in 37th, and Charleston-North Charleston, S.C., in 51st were examples Sharga gave of areas that had particular strong gains in filings.

Sharga said the rise of foreclosures in additional regions indicates new factors influencing the housing market as the recession drags on.

"What we believe we are seeing is some of the areas with unemployment problems," said Sharga. "These are people living paycheck to paycheck and, when the paycheck is gone, suddenly they can't afford to make their mortgage payments."

The data for RealtyTrak's metro area foreclosure report is collected from 2,200 counties across the nation, and those counties represent more than 90% of the U.S. population. Some 203 areas are covered by the report.

Across the nation, foreclosure activity in the first quarter hit a record high, according to another RealtyTrac report issued last week. Total foreclosure filings reached 803,489 in the first three months of the year, the highest monthly and quarterly totals since RealtyTrac began reporting in January 2005.

The national report also found that the worst of the foreclosures were centralized in a handful of worst-hit states. California, Florida, Arizona, Nevada and Illinois accounted for nearly 60% of the total foreclosure activity in the first quarter, with 479,516 properties received foreclosure filings in those states.

US foreclosures up 24 percent in 1st quarter

WASHINGTON (AP) -- The number of American households threatened with losing their homes grew 24 percent in the first three months of this year and is poised to rise further as major lenders restart foreclosures after a temporary break, according to data released Thursday.

The big unknown for the coming months, however, is President Barack Obama's plan to help up to 9 million borrowers avoid foreclosure through refinanced mortgages or modified loans. The Obama administration expects its plans to make a big dent in the foreclosure crisis. But it remains to be seen whether the lending industry will fully embrace it, despite $75 billion in incentive payments.

The faltering economy is causing the housing crisis to spread. Nationwide, nearly 804,000 homes received at least one foreclosure-related notice from January through March, up from about 650,000 in the same time period a year earlier, according to RealtyTrac Inc., a foreclosure listing firm. During the quarter, Ohio was the state with the seventh highest number of homes seeing foreclosure activity with about 31,600 receiving at least one filing, up 1 percent from a year earlier.

In March, more than 340,000 properties were affected nationwide, up 17 percent from February and 46 percent from a year earlier. Ohio had 12,600 homes receiving foreclosure notices during the month, 12 percent more than during March 2008.

Foreclosures "came back with a vengeance" last month and are likely to keep rising, said Rick Sharga, RealtyTrac's senior vice president for marketing.

Nearly 191,000 properties completed the foreclosure process and were repossessed by banks in the quarter. While the number was down 13 percent from the fourth quarter of last year, it is expected to rise through the summer and then possibly taper off.

Fannie Mae and Freddie Mac, the big mortgage finance companies, together with many banks had temporarily halted foreclosures in advance of Obama's plan. Now armed with the details about which borrowers can qualify, the mortgage industry has begun foreclosing on ineligible borrowers.

The Treasury Department has signed contracts with six big loan servicing companies -- including Citgroup, Wells Fargo and JPMorgan Chase. Many have already started processing loans as part of the government's "Making Home Affordable" plan.

"We need to get the long-term solutions for these folks," Shaun Donovan, Obama's housing secretary, said in an interview.

In the coming months, Donovan said, there are still likely to be increased foreclosures, especially from vacant houses, second homes and those owned by speculators. None of those properties will qualify for a loan modification. However, he remained optimistic that overall foreclosures could start to decrease this summer.

But even industry executives who emphatically support the plan emphasize that it's success isn't guaranteed.

"The effectiveness of the plan overall obviously is going to depend on the level of industry participation," said Paul Koches, general counsel of Ocwen Financial, which collects loan payments on subprime loans.

Many borrowers and consumer groups claim the modifications offered by the lending industry don't do enough to help cash-strapped homeowners, despite more than a year of public prodding from regulators. Fewer than half of loan modifications made at the end of last year actually reduced borrowers' payments by more than 10 percent, data released last month show.

Plus, the lending industry has been swamped by the unprecedented wave of calls from distressed borrowers. "You can't wave a magic wand and make the loans suddenly modified," Sharga said. "They're all individual transactions."

In RealtyTrac's report, Nevada, Arizona, California and Florida had the nation's top foreclosure rates. In Nevada, one in every 27 homes received a foreclosure filing, while the number was one in every 54 in Arizona. Rounding out the top 10 were Illinois, Michigan, Georgia, Idaho, Utah and Oregon.

Homebuyers: Please Beware of Pulte Homes

Pulte Homes, Inc. builds homes under the Pulte, Del Webb and DiVosta brands. Homebuyers: don’t settle for tales of “dream homes” you hear from Pulte salespeople or realtors working on commission. In 2008, Building Justice surveyed over 870 Pulte brand homeowners from three of the company’s biggest markets – California, Arizona and Nevada. Download our free report and hear directly from Pulte and Del Webb homeowners about how they feel about their homes and this company. Or, click here.

57% of homeowners surveyed reported that they filed a home warranty claim with Pulte or Del Webb. Read Here!


Defective Construction
Broken 2x4, attic framing. Ridgemont Heights tract. Adelanto, California. August 8, 2008.


Pulte salespeople will probably boast that it is one of J.D. Power & Associates’ highest ranking home builders in its “New-Home Builder Customer Satisfaction Study.” However, only 20 percent of the J.D. Power’s survey ranks builders on workmanship and materials. Don’t judge them on the basis of J.D. Power rankings. Construction quality is just one of five factors they consider. Listen to what actual Pulte and Del Webb homeowners have to say. Some homeowners paint a much less rosy picture of Pulte brand homes. As one Pulte homeowner from Buckeye, Arizona put it, “Between all the problems, the non-responsive customer service and the poor ‘fixes’, we are very saddened that our ‘dream home’ has become a nightmare.”

www.PoorlyBuiltbyPulte.info

Current and prospective owners of poorly built homes by Pulte need a place to go. To organize. To share information. To compare notes. To tell their stories. www.PoorlyBuiltbyPulte.info is that place.

I Sold 3,250 Shares of Pulte Home Stock

03/12/2009 YOU SOLD
PHM PULTE HOMES INC FORMERLY PULTE CORP TO
Cash Shares: -3,250.000 Price: $10.00 Amount: $32,446.11
Comm: $53.70 Fees: $0.19
Settlement Date: 03/17/2009

Major Funds Dumping Pulte Stock

Blackstone Group Lp
2009-02-17 Sold All shares -350,000

Lmm Llc Md
2009-02-17 Sold All shares -5,796,649

Traxis Partners Llc
2009-02-17 Sold All shares -483,680

Old Mutual Asset Managers Uk Ltd 2009-02-17 Sold All shares -372,800

Wellington Management Co Llp
2009-02-17 Sold All shares -148,694

Everest Capital Ltd
2009-02-17 Sold All shares -640,000

Algert Coldiron Investors Llc
2009-02-17 Sold All shares -47,165

Newbrook Capital Advisors Lp
2009-02-17 Sold All shares -272,759

Legg Mason Capital Management Inc 2009-02-17 Sold All -420,900

Capital International Inc
2009-02-13 Sold All -506,600

Systematic Financial Management Lp 2009-02-12 Sold All shares -1,463,606

Credit Suisse Institution
2009-02-17 Sold 37% of their PHM holdings down from 1,288,201 -472,631 to 815,390

Charles Schwab Investment Management Inc 2009-02-13 Sold 58% of their PHM holdings down from 1,098,051 -626,773 to 471,278

Not looking good for Pulte Homes.

Bankruptcy?

NEW YORK, Feb 10 (Reuters) - A review of the 33 U.S. home builders generating more than $10 million in revenue found that more than 30 percent are in danger of filing for bankruptcy, according to a restructuring consultancy.

"It's striking when you see just how much cash flow has continued to decline for the better builders," said John Bittner, partner at Grant Thornton Corporate Advisory and Restructuring Services.

Already this year, several home builders have filed for bankruptcy, including Florida's Mercedes Homes Inc, which filed on Jan. 26, citing the collapse in demand for new homes and an oversupply of existing homes for sale. The company called itself the No. 20 home builder in the United States and their operations were spread throughout 13 markets.

Fulton Homes Corp also filed for Chapter 11 bankruptcy protection this year in Arizona, while Landmark Homes and Development Inc filed in Nevada.

To avoid the same fate, the survivors have, and continue to, cut costs and prices and ramp up incentives on inventory in order to increase cash flow at the expense of profitability.

Expense reduction will be critical, said Tim Skillman, a Grant Thornton principal.

Average revenue per home builder declined nearly 50 percent from peak levels to $1.9 million last year. Home builders that slash land spending and maximize cash flow will help themselves combat the specter of distress, the firm said.

But there is a limit to how much builders can cut costs and sell off assets, said Bittner.

"It'll get to a point when builders get rid of the assets with the most value and expenses can't be cut much further. After that, there's not much they can do except wait for a turnaround in the housing market."

Pulte chairman to sell 4.75M shares in homebuilder

BLOOMFIELD HILLS, Mich. (AP) -- Pulte Homes Inc.'s chief executive intends to sell about 4.8 million shares, or 11 percent of his personal stake in the homebuilder, through a prepaid variable forward contract, according to a regulatory filing Monday.

The contract allows William J. Pulte, who also founded the company, to receive cash now, while also keeping the right to maintain ownership of the stock at the end of the contract's 16-month term by settling it with cash.

Pulte also may keep an interest in a possible increase in the shares' value over the next same period, the company said. In addition, the contract protects Pulte against the potential decline in value of the shares.

The executive will use some of the proceeds of the contract to settle a previous, prepaid variable forward contract he entered into a year ago, the company said. The new contract combines the roughly 3.4 million shares pledged in the February 2008 contract with 1.4 million new shares.

Pulte Homes currently has about 257.5 million shares outstanding.

Pulte's Last quarter result was horrendous

Pulte's Last quarter result was horrendous if you look at it carefully. Their sales were very inflated.
PHM used to sell 40% or so of their existing backlog, and the rest coming from new orders. But in 2008 4th quarter, it was 89% and in the 3rd quarter, it was 63% from existing backlog.
They are now entirely selling out of existing backlog.
Therefore, sales numbers will have to go down considerably next quarter.

Pulte Homes Inc.'s (PHM) fourth-quarter net loss

Pulte Homes Inc.'s (PHM) fourth-quarter net loss narrowed due to lower write-downs, but revenue and net new-home orders tumbled as the company said the housing market took "yet another step down."

"Sinking consumer confidence, excess foreclosure inventory and continued very tight mortgage availability put dramatic downward pressure on the homebuilding market," said President and Chief Executive Richard J. Dugas Jr.

The home builder reported a net loss of $338.2 million, or $1.33 a share, compared with a year-ago loss of $874.7 million, or $3.46 a share.

The latest results included $380 million of pretax impairments and other land-related charges, while year-ago results included $509 million in impairments.

Revenue tumbled 43% to $1.65 billion.

Analysts polled by Thomson Reuters projected a loss of 71 cents a share, including the impairments, on revenue of $1.44 billion. In October, the company declined to provide a fourth-quarter guidance, citing a high degree of volatility in the housing industry and overall economy. Net new-home orders in the quarter slumped 61% to 1,763 homes. Closings decreased 37% to 5,474 as the average sales price declined 13% to $278,000. The backlog as of Dec. 31 was valued at $631 million, or 2,174 homes, down from $2.5 billion, or 7,890 homes, a year earlier.

Sold 2,400 Shares of Pulte Homes Stock Today @ 12.70

Well, today was a very good day! I sold 2,400 shares of Pulte Homes Stock today @ 12.70 for a profit of $15,000.

Stock Order: PHM-PULTE HOMES INC FORMERLY PULTE CORP
Status Filled at $12.70
Symbol PHM
Action Sell
Quantity 2,400 Shares
Route KNIGHT CAPITAL MARKETS, L.L.C.
Order Type Limit at $12.70
Time in Force Good 'til Canceled
Conditions None
Trade Type Cash
Market Session Standard
Order Date 02/06/2009, 02:24:48 PM
EXECUTIONS FOR THIS TRADE
Date Time Price Quantity Total
02/06/2009 02:30:34 PM $12.70 2,400.000 $30,479.82
NET TOTAL 2,400.000 $30,479.82

FBI Should Look At Pulte Home Loans

September 24, 2008

I have contacted several agencies requesting they do a full investigation of Pulte Home practices in the state of New York, New Jersey, Pennsylvania, & Delaware.

Wall Street Bail Out

Congress must not write the no-strings-attached blank check the Bush administration wants to bail out Wall Street with. The $700 billion (at minimum) for Wall Street and $0 for Main Street deal that gives the Treasury secretary absolute control of who gets cash is not the way to address the nation’s financial crisis.

There Is Little Light at The End of The Tunnel For Homebuilders

The tunnel is very long and dark. Homes prices are coming down, but who needs a homebuilder, when there are plenty of great foreclosed homes on the market?

Here's the problems for Homebuilders:

1. Lending is so tight they make you squeeze lemons for lemonade, and you cant use your hands.

2. As you say, why would anyone buy a new home when there are so many foreclosure properties available at very reduced prices.

PHM will need to morph their business from being a run-of-the-mill cookie-cutter shop to being a "Custom Home Builder" in order to survive as a company. This perhaps extremely limits their market, but they might survive.

What Are Homebuilder Employee's Doing?

What are 4000+ PULTE or Lennar employees doing every day? dusting?

Officials announce takeover of mortgage giants

Sunday September 7, 12:34 pm ET
By Alan Zibel and Martin Crutsinger, AP Business Writers

Government assumes control over mortgage giants Fannie Mae and Freddie Mac

WASHINGTON (AP) -- The Bush administration, acting to avert the potential for major financial turmoil, announced Sunday that the federal government was taking control of mortgage giants Fannie Mae and Freddie Mac.

Officials announced that the executives and board of directors of both institutions had been replaced. Herb Allison, a former vice chairman of Merrill Lynch, was selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp, was picked to head Freddie Mac.

Treasury Secretary Henry Paulson says the historic actions were being taken because "Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe."

The huge potential liabilities facing each company, as a result of soaring mortgage defaults, could cost taxpayers tens of billions of dollars, but Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious.

"A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance," Paulson said.

Both companies were placed into a government conservatorship that will be run by the Federal Housing Finance Agency, the new agency created by Congress this summer to regulate Fannie and Freddie.

The Federal Reserve and other federal banking regulators said in a joint statement Sunday that "a limited number of smaller institutions" have significant holdings of common or preferred stock shares in Fannie and Freddie, and that regulators were "prepared to work with these institutions to develop capital-restoration plans."

The two companies had nearly $36 billion in preferred shares outstanding as of June 30, according to filings with the Securities and Exchange Commission.

Paulson said that it would be up to Congress and the next president to figure out the two companies' ultimate structure.

"There is a consensus today ... that they cannot continue in their current form," he said.

Paulson and James Lockhart, director of the Federal Housing Finance Agency, stressed that their actions were designed to strengthen the role of the two mortgage giants in supporting the nation's housing market. Both companies do that by buying mortgage loans from banks and packaging those loans into securities that they either hold or sell to U.S. and foreign investors.

The companies own or guarantee about $5 trillion in home loans, about half the nation's total.

Lockhart said that both Fannie and Freddie would be allowed to increase the size of their holdings of mortgage-backed securities to bolster the housing industry as it undergoes its worst downturn in decades.

Lockhart said in order to conserve about $2 billion in capital the dividend payments on both common and preferred stock would be eliminated. He said that all lobbying activities of both companies would stop immediately. Both companies over the years made extensive efforts to lobby members of Congress in an effort to keep the benefits they enjoyed as government-sponsored enterprises.

Both Paulson and Lockhart were careful not to blame Daniel Mudd, the CEO of Fannie Mae, or Freddie Mac CEO Richard Syron for the companies' current problems. While both men are being removed as the top executives, they have been asked to remain for an unspecified period to help with the transition.

Full Uninterrupted Speech of Gov. Sarah Palin At The RNC

http://www.visualtube.com/view_video.php?viewkey=f4c4db0902a8a395ced9

PHM Stock = Obvious Manipulation

September 3, 2008

Dow is down over 170 points - Lower Income & Home Builders are up....Well not all, just the ones being manipulated "PHM"....HEDGE FUNDS.

Large Homebuilder May Be Near Bankruptcy

September 1, 2008

Woodside Homes, which bills itself as the third largest private homebuilder in the U.S., may be nearing bankruptcy.

The Utah-based company is part of a group of builders developing the Inspirada master-planned community outside Las Vegas. Other developers at the community include Toll Brothers TOL, KB Home KBH, Meritage Homes MTH and Beazer Homes BZH.

The Inspirada project is being built on 2,000 acres in Henderson, Nev., that Woodside and the various joint venture partners purchased at auction from the Bureau of Land Management. The project was originally dubbed South Edge.

Earlier this year, another partner in the project, private builder Kimball Hill Homes, filed for bankruptcy.

Last week, a group of note holders filed an involuntary petition against Woodside Homes in U.S. Bankruptcy Court in the Central District of California. Involuntary petitions are often made by creditors to force a company into Chapter 11 bankruptcy. Woodside has 20 days from the date of the Aug. 20 filing to respond.

“First and foremost, Woodside continues to operate in the normal course of business — paying employees, vendors and subcontractors, and building and selling homes,” Jennifer Mercer, a spokesperson for Woodside Homes, told TheStreet.com.

“The company is working with both the note holder and bank groups and will be presenting its position to the judge requesting an orderly resolution on Wednesday,” Mercer said. She refuted the Tuesday report from Standard & Poor’s LCD News that said Woodside had already filed for Chapter 11.

The petitioning creditors listed on the filing against Woodside are John Hancock Life Insurance, AXA Equitable Life Insurance, Metropolitan Life Insurance, New York Life Insurance and Security Life of Denver Insurance. The total claim amount is $156 million.

Pulte Homes In Trouble Again

The Clearman Law Firm Announces Patent Infringement, Fraud Lawsuit Against Nation's Largest Homebuilders and Home Products Manufacturers.

Pulte, Lennar, David Weekley Homes, Honeywell, Whirlpool, others named as defendants.


MARSHALL, Texas, August 21, 2008 /PRNewswire/-- Attorneys from Houston's The Clearman Law Firm are announcing a federal lawsuit filed late yesterday on behalf of the owner of HomeBuilderShowroom.com against a group of nationally recognized homebuilders and home products manufacturers. The 72-page petition alleges the defendants committed trade secret theft, fraud, patent infringement and violated antitrust laws and confidentiality agreements in order to build a competing Web-based business.


According to the lawsuit filed in the U.S. District Court for the Eastern District of Texas in Marshall, the owners of HomeBuilderShowroom.com invented the "Builder's On-Line Assistant" in 1999. The revolutionary service was created as a means of using the Internet to connect homebuilders, manufacturers and homebuyers. The company's design allowed builders to offer standards and upgrades for homes as well as the opportunity for homebuyers to make their purchasing decisions online using virtual showrooms.

The owner of HomeBuilderShowroom.com -- OLA, LLC, a privately held company based in Chicago -- applied to patent the processes associated with "Builder's On-Line Assistant" in January 2000, and received two related patents in 2006 and 2007.

The lawsuit alleges that, prior to securing the patents, OLA reached confidentiality agreements with several of the defendants before providing a demonstration of "Builder's On-Line Assistant." Relying on the confidentiality agreements, the petition continues, OLA revealed details about its methods and service after receiving positive responses from several homebuilders and manufacturers.

However, according to the complaint, the defendants declined to purchase the service offered by OLA, and instead formed a new company that began marketing a nearly identical service in 2005 called "Envision."

The Austin, Texas-based company formed by the homebuilders and home products manufacturers -- Builder Homesite Inc. -- claims on its Web site that the "Envision" service has increased homebuilders' profits by $2,000 to $5,000 per home on more than 150,000 homes thus far. The same language is included on the Web site for New Home Technologies Inc., a Builder Homesite subsidiary.

Attorney Scott Clearman, lead counsel for OLA and founder of The Clearman Law Firm, says his client took every precaution to protect its valuable idea only to see it replicated in violation of the company's patents and agreements.

"The defendants obviously saw the benefit in OLA's idea, but they apparently didn't think they needed the company's permission to use its patents or to honor their confidentiality agreements," Mr. Clearman says. "It's hard for me to believe that these huge companies didn't know what they were doing when they basically copied our client's process verbatim and collaborated to market it themselves."

In addition to Mr. Clearman, OLA also is represented by Brian D. Walsh of The Clearman Law Firm and Matthew J.M. Prebeg, Edward W. Goldstein and Holly H. Barnes of Houston's Goldstein, Faucett & Prebeg.

Notable homebuilders named as defendants in the lawsuit include Atlanta-based Beazer Homes USA, Inc. (NYSE: BZH - News), Newport Beach, Calif.-based Capital Pacific Holdings, Inc., Dallas-based Centex Real Estate Corp., Houston-based Weekley Homes, L.P. d/b/a David Weekley Homes, Los Angeles-based KB Home (NYSE: KBH - News), Miami-based Lennar Corporation (NYSE: LEN - News), Bloomfield Hills, Mich.-based Pulte Homes, Inc. (NYSE: PHM - News), Irvine, Calif.-based Standard Pacific Corp. (NYSE: SPF - News) and Horsham, Penn.-based Toll Brothers, Inc. (NYSE: TOL - News).

Also named as defendants are home products manufacturers Atlanta-based Georgia-Pacific Corporation, Lakeville, Minn.-based Hearth & Home Technologies, Inc., Morristown, N.J.-based Honeywell International Inc. (NYSE: HON - News), Kohler, Wisc.-based Kohler Co., Taylor, Mich.-based Masco Corporation (NYSE: MAS - News), Lewisville, Texas-based Overhead Door Corporation, Toledo, Ohio-based Owens Corning (NYSE: OC - News), Greenville, S.C.-based Progress Lighting Inc., Palatine, Ill.-based Square D Company, Maumee, Ohio-based Therma-Tru Corp., Federal Way, Wash.-based Weyerhaeuser Company (NYSE: WY - News), Benton Harbor, Mich.-based Whirlpool Corporation (NYSE: WHR - News) and York, Penn.-based York International Corporation.

A copy of the lawsuit and more information about The Clearman Law Firm is available at http://www.clearmanlaw.com.

For more information or to schedule an interview with Mr. Clearman, please contact Bruce Vincent at 800-559-4534 or bruce@androvett.com.

Hey Pulte Homes! "The Problem Is Demand"

Pulte Homes: "The Problem Is Demand"; No, the Problem is Pulte Homes

We heard from Toll's Bob Toll on bended knee looking for Congress to stimulate housing demand, and Pulte Homes joined in. Nothing really new there - the homebuilders are asking Congress for a $15,000 tax credit similar to the $2,000 tax credit offered to kickstart housing 35 years ago during the Ford Administration (they'll likely get half of that amount) - however, there were some interesting comments related to pricing that are worth sharing.

Richard Dugas, PHM CEO, said he believes it is a mistake to believe the new housing market can correct without the resale market also correcting. This is an important point of distinction. New homes are now selling at a 10% to 15% discount to resale in most areas of the country. Historically, that ratio has been reversed.

"We clearly need resale pricing to correct, and correct dramatically,' Dugas said. He cited the most recent data from the S&P/Case-Shiller index showing a 14% decline in prices year-over-year, by far the largest on record, but noted that even that kind of decline is not enough.

"We view that [price decline] as a good thing," Dugas said, "and frankly we think resale pricing needs to continue to move down, because existing buyers are telling us they would like to buy our homes, but need to sell their existing homes, but they've obviously got
to get realistic about price before they have a chance to sell those homes."

This view - that prices still need to come down significantly - makes some sense, especially if your business is selling new homes, but there are other issues at work. Foremost is the problem facing both Fannie Mae (FNM) and Freddie Mac (FRE) if Dugas gets his wish for dramatically lower home prices. We believe both companies are underestimating coming price declines.

Fannie recently relaxed downpayment rules so borrowers approved by Fannie Mae's automated underwriting program will now be able to borrow up to 97% of the value of their homes. At the current pace of decline using the Case-Shiller composite, it would take just four months to be underwater on your mortgage with a 3% down payment.

Meanwhile, the real issue facing homebuilders is the psychological impact of housing price deflation. "Of [the issues facing housing], I think by far the biggest issue is buyer confidence and the lack of the ability for the buyer to make a decision to get in housing, because they are fearful of price declines," Dugas said. That's why he's looking to Congress to help. "The whole idea here folks would be to put a floor under pricing and get people back in the market," Dugas said.

If Dugas and Toll get their way, we taxpayers will essentially become home price guarantors as existing homeowners are forced to reprice their homes downward while only they (the homebuilders) get to share in the profits. The rationalization for this disjointed and incongruous view of risk and reward is that housing is a "key linchpin" of the U.S. economy. Well, so was the cotton industry in 1790. Some things need to change.

Housing At All Time Low and Still Declining

The end of the real estate recession seems nowhere in sight, in light of a slew of bleak news Tuesday of falling sales and prices, a severe decline in construction and deep losses and layoffs at one of the nation's largest builders.

Sales of existing homes fell last month to their lowest point in five years, the National Association of Realtors says. The NAR says it expects more dismal figures for September as the housing market reels from the crisis in the mortgage industry.

But the September figures might be much worse. Re/Max International, which analyzed existing-home sales in five major cities for USA TODAY, says September totals so far are down sharply from last year. In Baltimore, Tucson and Seattle, for example, sales in the first three weeks this month are off more than 40%.

"I've given up forecasting how low housing sales will go," says Joel Naroff, president of Naroff Economic Advisors.

And Stuart Miller, CEO of Lennar, (LEN) has given up forecasting the builder's profits after reporting a record loss of $514 million in its third fiscal quarter, as it laid off 35% of its employees and wrote down the value of real estate.

Lennar warned that more pink slips are on the way. The company began construction on 60% fewer homes in the June-through-August period compared with the same fiscal quarter last year. At the same time, nearly one-third of buyers canceled their contracts.

"August seemed to be a melting pot of all things negative," Miller says. The declines were felt in every region of the country, he says.

FBI Probes Unusual Incentives for Home Buyers

The Wall Street Journal

Investigators Ask
Whether Payments
Misled Lenders
By NICK TIMIRAOS

When home sales began to slow at the start of the downturn, home builders offered buyers incentives -- instead of reducing prices -- to stimulate demand. The incentives included cars, tuition and credit-card payments, and even cash.

A sign is posted in front of a bank-owned home that is for sale in Richmond, Calif.
Now, federal investigators are questioning whether some of those incentives misled lenders and caused them to write mortgages that were artificially inflated, contributing to today's home-price crash.

Using incentives to sell homes has long been a marketing tool for builders. When properly disclosed and structured, the practice is legal. But the Federal Bureau of Investigation is looking into allegations that home builders, brokers and appraisers defrauded lenders by not disclosing unusually large incentives to buyers, which could have added as much as $100,000 to the price of a home.

Housing analysts say incentive schemes prolonged the housing boom in hot markets like Las Vegas and, consequently, have made the downturn all the more severe.

The FBI wouldn't name individuals or companies under scrutiny, but confirmed that it is looking at cases where the disclosures of incentives "haven't made it all the way to the ultimate lender," says William Stern, financial crimes supervisor for the FBI in Palm Beach County, Fla., and the bureau's former national mortgage-fraud coordinator.

Interviews with real-estate agents, home buyers and former employees at home builders describe an industry where competitive pressures fueled unusually creative giveaways in a last-ditch attempt to prevent price cuts. Home builders hate to cut prices, not only because it reduces profit, but also because their customers who paid full price complain.


In the Las Vegas division of Dallas-based Centex Corp., the home builder paid off car loans, credit-card bills and mortgage payments on existing homes to entice new buyers on homes priced between $350,000 and $550,000. Those payments weren't always disclosed to lenders.

"You weren't buying a house. You were buying a package," says Dana Ellis, who worked as an escrow manager for Centex from 2004 to 2006. To qualify, Centex required the buyer to use the company's in-house mortgage unit to originate the loan, and the loan application included an incentive "addendum" that listed the incentives but wasn't always sent to the lender. "They weren't disclosing any of this. That was on separate paper that was pulled," she says.

Centex says that the program was confined to about 50 sales and was shut down in June 2006, about six months after it began. Centex averaged 63 home sales a month for the year beginning April 2006. "These incentives did not reflect standard corporate practice and, once discovered, the practice was immediately halted," Centex spokesman David Webster says. Centex says only one of the loans was government-backed, through the Veterans Administration home-loan program, and the builder has promised to stand behind all of those loans.

Elsewhere, developers offered "sweat equity," or payments for buyers to receive home improvements such as landscaping. "You're basically getting banks to give you a cash advance," says Chip Hickman, the general manager of Easy Street Realty in Las Vegas. He said such programs weren't heavily advertised and were offered by many area builders, although he declined to name them. "It was more sales agents in the model home saying, 'Look, tell me what you need and I got a lot of money to play with.' "

There aren't any strict limits on incentives, but they could run afoul of federal regulations if they cause the mortgage to increase by more than the cost of the incentive. "It's a phantom incentive to mask it in an excessive loan," says Brian Sullivan, a Department of Housing and Urban Development spokesman.

Stronger due diligence by banks might have caught some of these problems. Banks, however, say they relied on professional appraisal companies to insure property pricing. Mortgage-fraud experts say appraisers sometimes cooperated with builders because it was the only way to get business. Appraisers say that determining the value of new homes is more difficult because comparable sales figures are provided by builders.

In some cases, developers gave outsized commissions to real-estate agents who then gave that money back to the buyer. The average commission on a home sale nationally was 5.2% last year, up from 5% in 2005, according to a survey by Real Trends, an industry newsletter.

At the height of the real-estate boom, commissions in Las Vegas regularly reached double digits, real-estate agents say. Kurt DeWinter, a Henderson, Nev., agent, received a $70,000 commission on a $550,000 home from Beazer Homes USA Inc. two years ago. He says he gave half of that to the buyer.

"They didn't care what you did with the money as long as the buyer paid the price they wanted for the house," says Mr. DeWinter, who personally went into foreclosure in that same neighborhood on a $500,000 Beazer home. He says he received a $50,000 incentive from the builder, which he used for his down payment. Beazer didn't return calls seeking comment.

Some builders continue to make generous offers. Wagner Homes Inc., a local home builder, advertises in big capital letters at the top of a flyer "$130,000 commission any way you like it!" for homes in developments like "Dawn Day Fusion," a northwest Las Vegas subdivision that offers homes with Asian-inspired architectural flourishes. New homes listed there in mid-July for $530,000 even though similar model homes in that development sold for $400,000 two years ago.

"A fee that high has got to raise a bunch of flags," says Kenneth LoBene, HUD's Las Vegas field director, because builders typically reduce the price of the home rather than offer such large incentives and because homes in that subdivision have sold for as little as $240,000 in foreclosure auctions. Representatives of Wagner Homes didn't return calls seeking comment. Steve Hawks, a Las Vegas real-estate agent, points to offers like this as one that a commercial lender wouldn't back if properly disclosed. "You find me an institutional investor that's going to buy this loan," he says.

Housing Slump's Third Year to Be "Deepest" Since WWII

As the U.S. housing slump enters its third year, there
is no sign of dawn in the darkness that is paralyzing home building, home buying and home lending. Standard & Poor's 15-member Supercomposite Homebuilding Index tumbled 62 percent this year as of yesterday, the largest drop since the benchmark was started in 1995. The companies have lost about $35 billion of market value.

The outlook is bleak with new home sales projected to fall 13 percent, according to estimates from the National Association of Realtors in Chicago, even as interest rates drop. Losses at Fannie Mae and Freddie Mac, the two biggest U.S. providers of mortgage financing, may restrict the availability of home loans, and chief executive officers at D.R. Horton Inc. and Centex Corp. expect another tough year. This looks like it's going to be the deepest correction of any housing correction since World War II, and the question really is, What's the duration, how long will it be?

Centex CEO Timothy Eller said at a JPMorgan Chase & Co. conference in
Las Vegas, the decline in the S&P homebuilding index has pushed the measure to March 2003 levels, with companies including Centex and Pulte Homes Inc. falling more than 65 percent in composite trading on the New York Stock Exchange. Credit Protection Costs Total new home sales peaked in July 2005 and have declined for 19 of the last 28 months, according to Commerce Department data. Existing home sales peaked in September 2005. The median price for a new home dropped 13 percent in October, the most since 1970, and the annual sales rate for new homes in September was the lowest in almost 12 years.

Bond investors have sought more protection against homebuilders defaulting on debt as revenue and cash flow have declined. Credit protection costs reached 12-month highs for Miami-based Lennar Corp., Bloomfield Hills, Michigan based Pulte, Dallas-based Centex and Fort Worth, Texas-based D.R. Horton, the four largest U.S. builders by revenue; as well as Calabasas, California-based Ryland Group Inc., a builder in 28 U.S. markets, and Hovnanian Enterprises Inc. of Red Bank, New Jersey, the biggest builder in that state.

"Bankruptcy Risks"

Credit default swap spreads climbed by as much as 335 basis points for
builders with investment-grade ratings and by an average 209 basis points for
those with junk ratings, according to CreditSights Inc., a New York-based research firm. Credit default swaps are contracts to protect bondholders against default. An increase indicates worsening perceptions for credit quality. If we talked two weeks ago, I'd say there wasn't much more downside, but the market is acting like there's still a lot more to go,'' said James Wilson, an analyst who follows home builders at San Francisco-based JMP Securities LLC.

Beazer Homes USA Inc, the Atlanta-based homebuilder under investigation
by the U.S. Securities and Exchange Commission, and Hovnanian are "bankruptcy risks," Wilson said. Those companies have too much debt and are exposed to slumping housing markets in Florida and Michigan, Indiana and Ohio, he said. Beazer CEO Ian McCarthy said at the conference in Las Vegas that it is going to be another tough year. The company has a secured credit line of $500 million, he said. The company is really looking to make sure its balance sheet and its credit position is strong as we go through this tough time, McCarthy said. The company also has agreements with our bankers and with our secured credit lenders that will put us in good stead going forward.

Worse 2008-2009?

Hovnanian CEO Ara Hovnanian said at the JPMorgan conference that
the company has a better financial structure than we've ever had. Hovnanian's bonds don't start coming due until 2010 and 2012, giving us plenty of breathing room, he said. We're experienced operators, been around for almost 50 years, Hovnanian said. We will clearly persevere and thrive in the eventual upturn as we have after every cycle. Many homebuilding executives at the conference said they expect the slump to last through 2008. Next year is going to be worse than for us and for the industry in general, said Donald Tomnitz, D.R. Horton's CEO.

At least three closely held companies filed for bankruptcy protection in the past month, including Fort Lauderdale, Florida-based Levitt and Sons LLC, the 1949 pioneer of planned suburbs with Levittown on New York's Long Island. Tousa Inc. of Hollywood, Florida, which has lost 99 percent of its stock market value this year, said this month it was considering filing for Chapter 11 bankruptcy protection.

"Tousa's Strategy"

Tousa acquired 22,000 home sites in Florida through a joint venture in
August 2005, when the housing market was close to its peak. Florida accounted for five of the top 25 U.S. metropolitan areas with the highest foreclosure rates this year, according to RealtyTrac Inc. The Irvine, California-based seller of foreclosure data has a database of more than 1 million U.S. properties. The New York Stock Exchange suspended trading in Tousa because the average closing price was less than $1 for 30 straight trading days. Tousa last traded at 8 cents, down from a seven-year high of $30 in August 2005.

Standard Pacific Corp., based in Irvine, California, is the worst performer in the S&P homebuilding index, dropping 89 percent. Home sales in California,
the company's largest source of revenue, fell 40 percent and median prices for existing homes slid 9.9 percent, data compiled by the California Association of Realtors show. Housing Glut A housing rebound is unlikely, as about 1 million adjustable loans made to subprime borrowers, those with weak or incomplete credit histories, are scheduled to reset at a higher rate in 2009, according to RealtyTrac. That may put many homeowners at risk of foreclosure and lower the value of neighboring houses, said Rick Sharga, vice president of marketing at RealtyTrac. About 1.3 million subprime mortgages will be in foreclosure by September 2009, including actions already under way, according to estimates from New York- based analysts at Credit Suisse Group.

There is just no quick fix, including further rate cuts, to stabilize the current weakness in the housing market, said CreditSights analysts Frank Lee and Sarah Rowin in a report to clients. Discounted Prices Builders must contend with a glut of existing homes on the market. There's an almost 11-month supply of unsold existing homes, the highest in more than eight years, according to data from the National Association of Realtors. The decline in the market for existing homes is lagging "far behind" the new home market, and resale prices have only started to erode, said Citigroup Inc. analyst Stephen Kim in a report.

We have never before seen how a belated dropoff in existing home prices will
affect already discounted prices for new homes, but it is difficult to be optimistic here, Kim wrote.

Citigroup cut its rating on Lennar, Centex, Los Angeles- based KB Home,
D.R. Horton, Ryland, Pulte and Standard Pacific to ``hold'' from ``buy.'' Meritage Homes Corp. in Scottsdale, Arizona, was reduced to sell from hold. Cash flow will assume even greater importance as homebuilders owe $875 million in debt payments in 2008 and then about $1.6 billion in 2009 and 2010, data compiled by CreditSights show.

"Hard Year"

Potential legal costs also may hurt the builders, said Lee of CreditSights. D.R. Horton, Hovnanian and Reston, Virginia- based NVR Inc. are being sued by consumers who saidthey were coerced into taking loans from the company's mortgage units. The top 10 builders made $2.1 billion from providing financial services such as mortgages and title insurance last year, according to data compiled by UBS AG. Investigations of builders may also weigh on the companies.

The U.S. Department of Housing and Urban Development is examining whether builders received kickbacks when selling property. Pulte and KB Home are among six homebuilders that agreed to pay a total of $1.4 million to settle federal probes into whether they accepted rebates from insurers for referrals when selling homes.

New York, Ohio and at least six other states are investigating the
mortgage industry, including whether appraisers, mortgage brokers and lenders may have inflated home values. Resolving the complaints "could run into the millions or billions of dollars," CreditSights's Lee said. There will be some bankruptcies, some consolidations, some private equity plays, said Kenneth Rosen, chairman of the University of California's Fisher School of Real Estate and Urban Economics in Berkeley. It's going to be another hard year.

Why Pulte Homes Are Crap

"And why no one should buy one"

From a dissatisfied Pulte Homeowner...

My house is only 7 months old. i have 3 full bathrooms. the 3rd bathroom is only used when guests stay over, and to date no guests have stayed over, as such the bathroom is never used. yesterday i was placing some items in the sink cabinet and noticed that the veneer was pulling back away from the floor of the cabinet, a whole big section of it. no signs of water or anything (a leak may have explained it). then i noticed the face frame of the cabinet on the lower right where the right side rail mates with the bottom rail, it separated and now has 1/2" gap between the pieces and i can see the dowels used to join the two.

further inspection of the exterior stucco revealed a few places where i can stick my pinky finger through to the foam insulation underneath.

the patio screen door seemed to have warped. how i don't know because its under a covered patio out cove. warped so much it no longer closes into the slider frame and it cannot be locked.

did i mention the shit iDrive garage door opener. after breaking 5 times i had Wayne Dalton install a standard belt driven overhead. so far no problems.

i have a massive flooding issue in the front of this home when it rains (we have monsoons, so that means lots of water all at once). idiots poured this slab below street grade so when it rains water flows towards the front door and garage!

the refrigerator and AC condenser unit was damaged during install.

PHM homes are cheap and way overpriced. most of the homes around me for sale shed 100K from their sale price 1yr ago. current prices are about what these crap homes should sell for. need i say more?

Bad News for Housing Stocks, Good News for Homeowners?

It seemed like a great idea at the time. Sign folk's up to mortgages and sell the mortgages to another financial player who then bundles the mortgage with thousands of others and sells various risk based slices.

It failed in three different ways - two of which we know about, but one which is just emerging.

Firstly, the original mortgages were offered to people that couldn’t afford to pay them back, particularly when the so called “fixed” interest rates rose after an initial one or two year period. Much has been written about this (NINJA, Subprime etc)

Secondly, the riskier slices of the mortgages were vastly under priced, and so the interest rate premium didn’t begin to compensate for the very real probability of a high rate of failure to service the loans.

The third one is a doozy. It turns out that because of the mortgages being sold and sliced and sold, the ownership of the original mortgage is often in doubt. It took Mamie Ruth Palmer in Atlanta, Georgia to bust this one open, in a court case that has just ended a six year saga.

Her bank tried to foreclose on her, but couldn’t prove that they actually owned the mortgage. The bank ended up in the humiliating situation of losing on pretty much all fronts.

Stocks slide as financials again pull back

July 28, 2008

NEW YORK - Wall Street again surrendered to investors' anxiety about the financial sector Monday, sending the Dow Jones industrials down 240 points and back into bear market territory. The flight from equities sent investors into safe-haven bets like Treasury bonds.

Financials that had rallied in recent weeks after logging huge declines, suffered from the same worries about souring debt that caused an abrupt end to their run-up late last week. Wall Street is concerned that a further withering of the housing and credit markets will damage bank balance sheets.

An International Monetary Fund report added to some of the stress in the market. The IMF predicted continuing problems in the credit and housing market that will continue to hurt the financial industry. It said, "at the moment a bottom for the housing market is not visible."

Frederic Dickson, chief market strategist at D.A. Davidson & Co., said investors are still trying to get a longer-term view on the stability of the banking industry, particularly the regional banks.

"Corporate depositors and individual depositors are looking at balances at individual financial institutions. I think that's unsettling some of the banks."

On Friday, federal officials closed branches of the 1st National Bank of Nevada and First Heritage Bank N.A. — owned by Scottsdale, Ariz.-based First National Bank Holding Co., adding to investors' jitters about the ability of some banks to stay afloat.

According to preliminary calculations, the Dow Jones industrial average fell 239.61, or 2.11 percent, to 11,131.08.

Broader stock indicators also fell. The Standard & Poor's 500 index declined 23.39, or 1.86 percent, to 1,234.37, and the Nasdaq composite index fell 46.31, or 2.00 percent, to 2,264.22.

Bond prices jumped as investors again sought the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.02 percent from 4.10 percent from late Friday.

The dollar was mixed against other major currencies, while gold prices fell.

Monday's pall over the market wasn't solely because of flagging confidence in the financial sector. Investors are also waiting to see whether oil prices' sharp drop of recent weeks has come to an end, or is just pausing. Light, sweet crude rose $2.23 to settle at $123.26 on the New York Mercantile Exchange.

The troubles that banks are having with bad debt underscore the difficulty that consumers are facing not only in keeping on top of their mortgages but to make their credit card and car payments. That is leading to worries about the broader economy. Investors should get some insight with big economic reports due at the end of this week.

On Thursday, investors will be looking for the first report on gross domestic product for the second quarter. Economists polled by Thomson Financial/IFR expect the Commerce Department to report that gross domestic product rose thanks in part to the government's tax rebate checks.

Then, on Friday, Wall Street will be awaiting the employment report for June. Often such reports are regarded as the most important economic readings of the month because of the insight into the well-being of the consumer. Their health is important because consumers account for more than two-thirds of U.S. economic activity. The latest Labor Department report is expected to show the seventh month of jobs losses and that the unemployment rate ticked higher.

Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams, said investors were selling off financial shares because of their continued concerns about housing.

"They're taking the financials to the woodshed," he said. "Until the housing market stabilizes you're really not going to see the financials stabilize."

Among financials, Citigroup Inc. fell $1.42, or 7.5 percent, to $17.43, while Morgan Stanley declined $1.79, or 4.9 percent, to $34.96.

The other corporate news Monday wasn't enough to support the market. Verizon Communications Inc. said its second-quarter profit rose 12 percent, although revenue came in short of Wall Street's forecasts. The company, one of the 30 that comprise the Dow industrials, made some investors uneasy after customers disconnected their landlines faster than before. Verizon fell 85 cents, or 2.5 percent, to $33.60.

Kraft, the maker of Velveeta, Oreo cookies and Maxwell House coffee, said higher prices helped offset rising commodity costs and listed second-quarter earnings nearly 4 percent. The company rose $1.45, or 4.9 percent, to $30.83 after raising its forecast for the year.

Private equity firm Kohlberg Kravis Roberts & Co. said Sunday it plans to go public on the New York Stock Exchange through a takeover of its Amsterdam-listed affiliate investment fund KKR Private Equity Investors LP.

Tyson Foods Inc., the world's largest meat company, fell $1.14, or 7 percent, to $15.09 after reporting a 90 percent drop in its fiscal third-quarter profits because of rising cost of grain used to feed chicken.

Amgen Inc. surged $6.56, or 12.2 percent, to $60.48 after the company reported positive trial results for its osteoporosis drug candidate denosumab. Late-stage clinical trial results showed denosumab reduced the incidence of fractured vertebrae in post-menopausal women. It tacked on another 2 percent in after-hours trading after it reported second-quarter profit surpassed projections.

Declining issues outnumbered advancers by more than 3 to 1 on the New York Stock Exchange, where volume came to 1.17 billion shares.

The Russell 2000 index of smaller companies fell 14.23, or 2.00 percent, to 696.11.

Overseas, Japan's Nikkei stock average rose 0.14 percent. Britain's FTSE 100 fell 0.75 percent, Germany's DAX index fell 1.33 percent, and France's CAC-40 declined 1.20 percent

New Single Family Home Sales Fell By 0.6 Percent

The Commerce Department said the pace of new single-family home sales fell by 0.6 percent from May to June. Sales are now 33 percent below a year ago, while prices are off 2 percent.

"I'm surprised only that it's declined more in June over May," said Tim Eller, chief executive Centex Corp. in Dallas. "The markets are continuing to deteriorate and I think that's an illustration of that fact."

The company is expected to report a quarterly loss of $1.10 a share on Tuesday, according analysts surveyed by Thomson Financial. Earlier this week, Pulte Homes Inc. also reported a loss for its second quarter.

Wall Street Tumbles, Led By Financials

July 24, 2008

NEW YORK (Reuters) - Stocks tumbled more than 2 percent on Thursday after a report showing yet another drop in U.S. home sales prompted investors to take profits in financial shares, which had rallied over the past week.

The Dow fell the most in a month, as the rising price of oil compounded worries about the economy. The jump in crude spurred unease that the recent sharp declines may have run their course. Shares of companies particularly vulnerable to higher fuel costs, such as airlines and retailers, sank.

Financial companies, which have been incurring huge losses from the housing slump, slid after the data from the National Association of Realtors showed June sales of existing homes hit a 10-year low. An index of bank stocks (.BKX) fell 6.7 percent -- after rising about 40 percent over the past week.

Trading has been very volatile in recent weeks and the market has been on tenterhooks, given a flood of serious setbacks stretching from a high-profile bank failure to the cobbling together of a last-minute rescue plan of the two pillars of the U.S. housing market-- Fannie Mae (FNM.N) and Freddie Mac (FRE.N). The plan was passed by the House on Wednesday night, and is expected to be approved by the Senate on Saturday.

"The bailout plan restored enough confidence in the sector to take some pressure off the stocks, but the pretty nice bounce we saw seems to have run its course," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

"When people take another look at the underlying economics, they see that the overhang in housing has gotten a bit worse."

The Dow Jones industrial average (.DJI) fell 283.10 points, or 2.43 percent, to close at 11,349.28. The Standard & Poor's 500 Index (.SPX) slid 29.65 points, or 2.31 percent, to 1,252.54, while the Nasdaq Composite Index (.IXIC) shed 45.77 points, or 1.97 percent, to 2,280.11.

Shares of mortgage finance companies Fannie Mae (FNM.N) and Freddie Mac (FRE.N) fell more than 18 percent, just a day after the House approved the housing rescue package that would include a U.S. government lifeline for the two companies.

Fannie Mae's stock lost nearly 20 percent to $12.02, while

Freddie Mac's stock was down 18.4 percent at $8.81.

Other financial shares also fell. Citigroup (C.N) shed 9.8 percent to $19.06 and Goldman Sachs Group (GS.N) fell 4.1 percent to $180.26.

Bill Gross, chief investment officer of PIMCO, said the U.S. housing market faces $1 trillion in losses. The manager of the world's biggest bond fund said in his investment letter the best way to help the ailing U.S. housing market recover would be to cut the cost of mortgages via the U.S. housing bill and rescue package for the mortgage finance companies.

Home builder Ryland Group's (RYL.N) shares fell 19.1 percent to $21.43 after reporting a wider-than-expected loss late on Wednesday. The Dow Jones home construction index (.DJUSHB) fell 12.5 percent.

Ford (F.N) shares fell 15.3 percent to $5.11 on the New York Stock Exchange after the automaker posted a wider-than-expected loss on declining sales of pickup trucks and sport utility vehicles (SUVs) in North America.

Dow Chemical said its profit missed Wall Street's expectations as it grappled with higher energy prices. Its stock fell 3.3 percent to $33.11 on the NYSE.

Adding to the negative tone were brokerage downgrades on three Dow components.

U.S. aircraft company and defense contractor Boeing's shares fell 6.3 percent to $62.53 after Citigroup and Sanford Bernstein cut their price targets on Boeing, while Cowen & Co slashed its rating on the stock. Shares of AT&T, the largest U.S. telecommunications company, dropped 4.1 percent to $31.70 after JPMorgan cut its rating to "neutral" from "overweight." McDonald's stock dropped 2.2 percent to $58.37 after Deutsche Bank downgraded the world's largest fast-food chain's stock, according to theflyonthewall.com, a financial Web site.

Apart from the housing data, another economic report on Thursday showed a larger-than-expected rise in the number of Americans filing for jobless benefits in the latest week, adding to concerns about a slowing labor market.

U.S. oil futures rose $1.05 to settle at $125.49 a barrel after a drop of more than 5 percent over the previous two sessions. Earlier during Thursday's NYMEX session, oil hit an intraday high above $126.

An index of retail stocks (.RLX) fell 2.3 percent, while an index of airline stocks (.XAL) plunged 11.1 percent.

Apple Inc (AAPL.O), the maker of the iPod and iPhone, led the Nasdaq's major decliners, falling 4.4 percent to $159.03.

Trading was moderate on the New York Stock Exchange, with about 1.64 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.55 billion shares traded, above last year's daily average of 2.17 billion.

Declining stocks outnumbered advancing ones by 4 to 1 on the NYSE and by 2 to 1 on the Nasdaq.

U.S. home builders risk bankruptcy in 2008, experts say

WASHINGTON: The collapse of the subprime mortgage market may push some big U.S. home builders toward Chapter 11 bankruptcy protection, according to bankruptcy advisers and lawyers who specialize in the real estate industry.

The weakest publicly held builders are staying out of bankruptcy by relying on the profit they made when sales boomed, and on the public debt they sold in those years, said Ronald Greenspan, a lawyer and financial adviser to the creditors of four bankrupt subprime mortgage lenders. Home builders issued $3.6 billion in public debt in 2005 and 2006, though only $600 million of that comes due this year, he said.

"There is no sword over the industry's head yet," Greenspan said Saturday at a conference of the American Bankruptcy Institute in Washington. "That doesn't mean the industry is not wounded. Instead, the breaking point could come in late 2008 or 2009."

The real estate market has been powered in recent years by subprime homebuyers, who typically have shaky credit histories. Now that such loans are no longer being made, demand for new homes will plunge, pushed down even further by the more than one million homes now in foreclosure, Greenspan said. At least 30 home lenders have halted operations or sought buyers in the past 12 months, including 5 that went bankrupt since November.

None of the major, publicly traded home builders have declared bankruptcy, though there are signs that many are in financial trouble, Greenspan said, declining to name specific companies. The value of shareholder equity for some companies equals or exceeds the value of the undeveloped land that the companies have under contract, Greenspan said. As the housing downturn continues, that land will fall in value.

The perceived risk of owning the bonds of some of the biggest U.S. home builders has risen since a wave of bankruptcies hit the mortgage industry that caters to homebuyers with poor credit histories. Credit default swaps have more than doubled in price since Feb. 1 for two of the four biggest builders, D.R. Horton and Pulte Homes, and for Toll Brothers, the big luxury-home builder.

Credit default swaps are financial instruments based on bonds and loans that are used to speculate on a borrower's ability to repay debt, and were created to shield bondholders from default.

Kara Homes, a New Jersey builder, was one of the first major, closely held home builders to file for Chapter 11 bankruptcy protection, in October. Such regional builders are likely to precede any of the big public companies into insolvency, said Kara's bankruptcy lawyer, David Bruck.

By 2008 or 2009, some of the larger companies will have to restructure as the housing crunch continues, he said, adding, "It's only a matter of time."

Pulte Homes Reports Second Quarter 2008 Financial Results-Another Record Loss

July 23, 2008

Pulte Homes (NYSE: PHM) announced today financial results for its second quarter ended June 30, 2008. For the quarter, the Company reported a net loss of $158.4 million, or $0.63 per share, compared with a $507.6 million net loss for the prior year second quarter, or $2.01 per share. The second quarter 2008 net loss included $220.1 million of pre-tax charges related to inventory impairments and other land-related charges. Impairments and land-related charges for the prior year quarter were $749.4 million. The second quarter 2008 also included a tax benefit of $56.8 million, primarily due to an adjustment in the Company's deferred income tax assets. Consolidated revenues for the quarter were $1.6 billion, a decline of 20% from prior year revenues of $2 billion.

"The operating environment for homebuilding continued to deteriorate during the second quarter of 2008," said Richard J. Dugas, Jr., President and CEO of Pulte Homes. "The downward trend in home prices persisted, and the softness in overall buyer demand remained a challenge for the industry, leading to unsold inventory for both new and existing homes still well above historical levels. Buyer confidence remains under pressure, both from the weakness in housing as well as concerns about the overall economy.

Second Quarter Results

Revenues from homebuilding settlements in the second quarter decreased 18% to $1.6 billion compared with $1.9 billion in last year's second quarter. The change in revenue for the quarter reflects an 8% decrease in closings to 5,438 homes, and an 11% decrease in average selling price to $286,000.

Second quarter homebuilding pre-tax loss was $221.3 million, compared with an $803.2 million pre-tax loss for the prior year quarter. The pre-tax loss for the 2008 second quarter reflects a decline in gross margins primarily related to the impact of impairments recorded in connection with our land inventory. Homebuilding SG&A expense decreased $118 million, or 40%, compared with the prior year quarter. During the second quarter of 2008, the Company recorded $220.1 million of impairments and land-related charges, including $153.6 million related to land impairments, $20.1 million associated with the write-off of land deposits and pre-acquisition costs, $44.7 million of impairments of land held for sale and $1.7 million related to the Company's investment in unconsolidated joint ventures. For the prior year quarter, these impairments and land-related charges totaled $749.4 million.

Net new home orders for the second quarter were 5,133 homes, valued at $1.4 billion, which represent declines of 32% and 42%, respectively, from prior year second quarter results. Pulte Homes' ending backlog as of June 30, 2008 was valued at $2.4 billion (8,254 homes), compared with a value of $5.2 billion (14,928 homes) at the end of last year's second quarter. At the end of the second quarter 2008, the Company's debt-to-capitalization ratio was 48%, and on a net debt-to-capitalization basis was 39%.

Six Month Results

For the six months ended June 30, 2008, Pulte Homes' net loss was $854.6 million, or $3.37 per share, compared with a $593.2 million, or $2.35 per share, net loss for the prior year period. Consolidated revenues for the period were $3.1 billion, down 21% from $3.9 billion for the first six months of last year.

Revenues from homebuilding settlements for the period were $3 billion, down 20% from the prior year. Lower revenues for the period resulted from an 11% decrease in average selling price to $290,000, combined with a 10% decrease in the number of homes closed to 10,171.

Homebuilding pre-tax loss for the period was $926.5 million, compared with a $951.6 million pre-tax loss for the prior year period. The pre-tax loss for the period reflects a decline in gross margins primarily related to the impact of impairments recorded in connection with our land inventory. Homebuilding SG&A expense decreased $197.3 million, or 34%, compared with the prior year period. During the first six months of 2008, the Company recorded $883.7 million of impairments and land-related charges, including $752.3 million related to land impairments, $20.4 million associated with the write-off of land deposits and pre-acquisition costs, $109.3 million of impairments of land held for sale, and $1.7 million related to the Company's investment in unconsolidated joint ventures. For the prior year period, these impairments and land-related charges totaled $881.5 million.

Third Quarter 2008 Guidance

"For the third quarter of 2008 we are providing guidance in the range from a net loss of $0.15 per share to breakeven from continuing operations, exclusive of a tax benefit and any additional impairments or land-related charges," said Dugas. "As part of its ongoing balance sheet focus, after reducing its outstanding senior debt by $313 million in the current quarter, Pulte targets a cash position by the end of 2008 of $1.7 billion to $1.9 billion."

A conference call discussing Pulte Homes' second quarter results will be held Thursday, July 24, 2008 at 8:30 a.m. Eastern Time, and web cast live via Pulte.com. Interested investors can access the call via the Company's home page at www.pulte.com.

Certain statements in this release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) general economic and business conditions; (2) interest rate changes and the availability of mortgage financing; (3) the relative stability of debt and equity markets; (4) competition; (5) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (6) the availability and cost of insurance covering risks associated with the Company's business; (7) shortages and the cost of labor; (8) weather related slowdowns; (9) slow growth initiatives and/or local building moratoria; (10) governmental regulation, including the interpretation of tax, labor and environmental laws; (11) changes in consumer confidence and preferences; (12) required accounting changes; (13) terrorist acts and other acts of war; and (14) other factors over which the Company has little or no control. See the Company's Annual Report on Form 10-K and Annual Report to Shareholders for the year ended December 31, 2007 and other public filings with the Securities and Exchange Commission for a further discussion of these and other risks and uncertainties applicable to Pulte's business. Pulte undertakes no duty to update any forward-looking statement whether as a result of new information, future events or changes in Pulte's expectations.

I ended up making over $7,000.00 shorting PHM today

Well I ended up making over $7,000.00 today shorting PHM because when I sold the shares this morning it jumped to $11.45 a share, so it was a very good day!


Order Status
Sell 3,800 Shares of PHM
Order Number:********* Details Filled at $11.45

Stock Order: PHM-PULTE HOMES INC FORMERLY PULTE CORP TO 05/17/2001
Status Filled at $11.45
Symbol PHM
Description PULTE HOMES INC FORMERLY PULTE CORP TO 05/17/2001
Action Sell
Quantity 3,800 Shares
Route *************************
Order Type Market
Time in Force Day
Conditions None
Trade Type Cash
Market Session Standard
Order Date 07/16/2008, 08:18 PM
Cancel Date
Order Number ********
EXECUTIONS FOR THIS TRADE
Date Time Price Quantity Total
07/17/2008 9:30 AM $11.45 3,800.000 $43,509.75
NET TOTAL 3,800.000 $43,509.75

I made $6,004.00 Today On Pulte's Stock

Here is the profit I made today on Pulte Stock

PULTE HOMES INC FORMERLY PULTE CORP TO 05/17/2001

07/16/08

3,800.000 $10.700 $40,660.00 **$6,004.00** 17.32% $37,702.48 $2,957.52 7.84%


Total: $41,745.38

Profit: $6,004.00

Former Pulte Area VP Lynn Galindo Based In Las Vegas Nev. Received $300,000 In Compensation After Being Laid Off

After negotiating with Pulte Homes, she signed a severance agreement July 20, 2007 under which Pulte paid her nearly $300,000 in severance pay, bonuses and other compensation. The agreement, included in court documents, contained clauses prohibiting Galindo from keeping any documents or disclosing proprietary information.

Stolen Trade Secrets?: Lawsuit Claims Exec Took $1M Study From Pulte Homes

July 7, 2008 (Albuquerque Journal - McClatchy-Tribune Information Services via COMTEX)

PHM | news | PowerRating | PR Charts -- Hollywood's cloak-and-dagger world of industrial espionage and purloined trade secrets isn't typically associated with housing developments.

But Pulte Homes claims in a federal lawsuit that a top executive who was being laid off stole a highly confidential, $1 million Albuquerque market study and used it to create a similar report for a major competitor.

The lawsuit filed in U.S. District Court alleges that Lynn Galindo, a former area vice president based in Las Vegas, Nev., conspired with former subordinates and other employees to obtain the Albuquerque Operating Strategic Plan as she was negotiating her severance from Pulte.

Pulte claims Galindo entered into an agreement with Forest City Covington, developer of the 13,000-acre Mesa del Sol development south of the Albuquerque International Sunport, to provide that firm with a marketing study and used material from Pulte's report to do so.

There is no allegation of wrongdoing against Forest City, which is identified in the lawsuit but not named as a defendant.

"We would never contract with anyone with the specific aim of obtaining trade secrets," said Forest City Covington spokeswoman Anne Monson.

"That's just not what we're about."

An attorney for Galindo says the lawsuit is retaliation for Galindo's participation, as a witness, in a Nevada sexual harassment case against Pulte.

"This is a lawsuit where Pulte is going to have a great deal of egg on their face," said Marty Esquivel, an attorney for Albuquerque's Narvaez Law Firm, which is representing Galindo.

According to court documents, Galindo was served notice of her termination June 1, 2007, as part of a larger reduction of force by Michigan-based Pulte.

After negotiating with the company, she signed a severance agreement July 20, under which Pulte paid her nearly $300,000 in severance pay, bonuses and other compensation. The agreement, included in court documents, contained clauses prohibiting Galindo from keeping any documents or disclosing proprietary information.

The suit alleges that Galindo asked a colleague or colleagues, named as "Does 1 through X" in the suit, to provide her with a copy of the report during the period when she was negotiating the severance package.

The document contained information about the Albuquerque residential housing market, such as economic forces, population size and mobility and price sensitivity, and cost in excess of $1 million to produce, according to the lawsuit.

"The information is of great value to Pulte because it contains, in specific detail, the supply and demand characteristics of the entire Albuquerque market by Targeted Consumer Group, as well as detailed (and mapped) information about how the market breaks into component pieces ( submarkets), the perceptions of those submarkets among specific consumer groups and the desirability of the submarkets," the lawsuit alleges.

"Galindo, having served in a high level position at Pulte, knew or should have known that Pulte would not have executed the Severance Agreement had Pulte known that she was planning to, or in the process of, violating the Business Policy Agreement by obtaining and using its Confidential, Proprietary and Trade Secret Information," the lawsuit said.

Lynn Hynds, a Detroit-based attorney, told the Journal that Pulte discovered the alleged plot by reading e-mail communications by Galindo.

The Albuquerque market study is "the road map of (Pulte's) assessment of the market, today and into the future," he said. "It contains some of the most confidential information that can be known to a homebuilder."

But Esquivel said Pulte never saw the report Galindo prepared for Forest City -- for which the lawsuit says she was paid $250 an hour.

"They have no idea what was in that report," he said. "They're just making assumptions, and they're wrong."

He said Pulte was retaliating against Galindo because she is a witness in a case against Pulte brought by other employees in Nevada.

The plaintiffs in that case, he said, allege that they caught male Pulte executives referring to female colleagues as "bitches."

Pulte & Lennar Sell Land For 10 Cents On The Dollar

Centex, Pulte dump land in Rancho - Sacramento Business Journal:: "At the height of the local housing boom, $8 million would have fetched less than 20 acres of land approved for new homes as prices had escalated to $600,000 an acre in some areas. Builders and developers are still waiting for a new benchmark on what land is worth in today's economy. The buyers in this deal, Alvarado and Somers, paid $32,000 an acre."

The weird thing about this story is that - Centex, at least - had already begun building, had models up, even had some homes completed and, apparently, sold. And then - poof - Centex's web site doesn't show anything in Rancho Cordova anymore. So what happens to the fine folks who bought new homes in the midst of the graded fields of mud that Centex no longer plans to build upon?

Centex and Pulte, as partners together, paid $50 Million, plus they spent another $30 Million in improvements - and then sold the land for $8 Million. I'll be very curious to see who survives - the Centexes or the Lennars? Centex recognized the downturn and the falling prices ahead, and they cut prices before anyone else - so they sold out before anyone else. Lennar is still dreaming of 2005 prices. Is it smarter to cut the losses and run, or to squeeze the last no-money-down, gotta-have-granite, easy financing nickel out of what history will surely remember as a crazy, self-indulgent market.

Lennar Corp. Speaks

All builders are in the same boat, however some builders like Lennar seem to come out and just say it like it is. The Pulte Homes people at corporate, the construction office, or in a field sales office always try to bamboozle a prospective buyer by saying nah, Pulte is ok, it's just rough waters, we will survive, the market here is strong. It's a bunch of bullshit!!

Then when the shareholders get to see the numbers every quarter everyone seems shocked, how could this be? Pulte kept saying that everything was ok. It's refreshing to see builders like Lennar come out publicly and tell it like it is, that the forecast is very bad. Lennar Corp. said it's second quarter loss shrunk on lower expenses, but the revenue declined 60 percent as deliveries and new orders fell. The Miami based homebuilder also said it expects further deterioration in market conditions through the end of 2008.

More than 400 real estate industry players have been indicted since March — including dozens over the last two days.

By Greg Bowden

June 19, 2008

I suspect PHM's mortgage company will be pulled into this as the FBI investigates down deeper into the mortgage scams that were going on. Just more trouble ahead for PHM (and others).

WASHINGTON - More than 400 real estate industry players have been indicted since March — including dozens over the last two days — in a Justice Department crackdown on incidents of mortgage fraud nationwide that have contributed to the country's housing crisis.

The FBI put the losses to homeowners and other borrowers who were victims in the schemes at over $1 billion.

"Mortgage fraud and related securities fraud pose a significant threat to our economy, to the stability of our nation's housing market and to the peace of mind to millions of Americans," Deputy Attorney General Mark Filip said in a statement Thursday. The Justice Department and FBI planed to announce the cases at an afternoon news conference in Washington.

Since March 1, 406 people have been arrested in the sting dubbed "Operation Malicious Mortgage" that saw 144 cases across the country. Sixty people were arrested on Wednesday alone, including in Chicago, Miami, Houston and a dozen other regions policed by the FBI.

In a separate sweep, two former Bear Stearns managers in New York were indicted Thursday, becoming the first executives to face criminal charges related to the collapse of the subprime mortgage market.

Across the country, reports of mortgage fraud have soared over the past year as the subprime mortgage market collapsed and defaults and foreclosures soared.

Banks reported nearly 53,000 cases of suspected mortgage fraud last year, up from more than 37,000 a year earlier and about 10 times the level of reports in 2001 and 2002, according to the Treasury Department's Financial Crimes Enforcement Network.

The most common type of mortgage fraud was misstatement of income or assets, followed by forged documents, inflated appraisals and misrepresentation of a buyer's intent to occupy a property as a primary residence.

Over the last several months, the FBI has been investigating an estimated 1,300 mortgage fraud cases — including 19 involving subprime lending practices by U.S. financial institutions.

The Justice Department also is expected to ask Congress for more money to help combat mortgage fraud as part of a larger funding request to curb white collar crime and violent crime.