Again, I say, Credibility is the key, Mr. Hovnanian

Don't think that this is just my quarterly carping and caviling of the CEO of a succcessful 3rd generation family business that has fallen on the ropes. I have a lot of respect for hard won, multi-generational wealth. I really mean that, lot of respect. It is very difficult to become a centi-millionaire while finding the time to instill within your children the principles and drive to continue what you have built. What I am doing quarterly though, is taking note of the significant mishaps of this latest in the generational success story. Ara Hovnanian has fallen on some relatively rough times, like practically everyone in the residential real estate industry. I know the feeling, and I defintiely sympathize. In this particular case though, I truly doubt the CEO's ability to weather through the storm - a storm which he is responsible for turning his ship straight into. As a recap, Hovnanian was one of the first builders to really market their sharp cost cutting through the national press, which I simply thought was laughable in its simplistic attempt to conceal the true results of the effort. Then I browsed through their financials and the usual due diligence stuff to see that they have a whole host of problems, most of which are not mentioned in the press, such as:

• a lot of bad mortgages on the books (I warned of this risk in detail in the first post on my blog),
• a CEO that purchased personally at the top of the market with a 100% LTV loan (yeah, that's right) now trying to flip it very shortly thereafter in a down market,
• legal issues stemming from overly aggressive loan underwriting, etc.

I glanced at the results the following quarter, and more of the same . I attempt to provide a useful contrarian perspective, one that would have come in handy during the heady, debt driven, purchase boom peak of 2005.

1. The Coming Land Recession, Part 1 and Part2
2. Straight Talk From the ex-Homebuilder CFO: Yes.. straight from the Lennar CEOs mouth... land has zero value
3. Straight Talk From the Homebuilder CFO: The tricks builders use to disguise the true losses on their books
   
4. Myths, Markets & Manipulators: The Real Deal on the Homebuilders
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