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Two news items that have me scratching my new hair: An apparent drop in foreclosure filings in November and some truly dismal earnings from New Jersey-based home builder Hovnanian

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[HOV  Loading...      ()   ]. First to the foreclosure report, which comes from RealtyTrac.

You know the drill on this: it counts filings, not actual foreclosures, so these can be default notices, auction notices, bank repossessions, etc. A house can therefore be counted twice, but I think the percentage changes still hold true. Anyway, RealtyTrac is reporting a drop in foreclosures of 10 percent from October to November, although filings are still up 68 percent from November, 2006.

Possibilities: Could this signal that the foreclosure crisis has peaked? Are lenders really beginning to work things out with borrowers? Or are state and local systems overwhelmed with the numbers and can’t process any more (as was suggested by a Goldman Sachs analysis)?

One thing’s for sure, all the plans we’ve been spouting about for the last few weeks--the Paulson Plan to freeze certain subprime interest rates, the Fed plan to overhaul the lenders, the FHA Secure plan to get more people into government-backed loans-- none of them have scraped the tip of the foreclosure iceberg.

I’d like to think it’s more people contacting their lenders and being proactive to get help, but I’m inclined to wait a few months before I go anywhere near calling a peak to all this.

Especially when I see earnings like those from Hovnanian today. Losses at four times expectations!! Tons of charges and really weak gross margins don’t bode well for the future, despite the fact that the company CEO, Ara Hovnanian, says they are weathering the storm:

My father founded this company almost 50 years ago. We've been through many of these cycles, and every time it feels like the end of the earth is near for everybody that's a home builder. Frankly, in terms of balance sheet, we're in the best position we've been in any of our cycles in our history. That being said, of course, we wish we had less debt, more equity. You always wish that, particularly at these times, but we definitely feel we're prepared to weather this storm.

I admire Mr. Hovnanian’s tenacity, despite the rumors swirling around that his company will be the first of the big publics to fall. He’s an honest guy trying to survive in a business that lost its way for a while. The storm is still brewing, despite the incremental numbers, and the cleanup has only just begun.

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