President George Bush seems an unlikely hero for Wall Street, but he is just that this morning.
The president intends to announce his plan to ease the plight of the subprime mortgage industry. Having so many voters without homes is not working out.
But, the law of unintended consequences is kicking in. Home builders are up big while the market waits for the Bush plan announced in about two hours. Beazer Homes (NYSE: BZH) is rallying off a level near its 52-week low and is up 8% to $10.65. Lennar (NYSE: LEN), Hovnanian (NYSE: HOV) and other large home builders are up sharply was well.
Over on the real estate lending side of town, Fremont General (NYSE: FMT) is up 15% and Countrywide Financial (NYSE: CFC) is in the green by 7%.
According to several press reports picked up by MarketWatch: "The Federal Housing Administration mortgage insurance program will be changed to allow more people to refinance with FHA insurance if they fall behind on adjustable-rate mortgages."
However, no one outside the Bush administration is likely to know much about the details of the plan yet and some of the proposals may require approval from Congress.
This means that just after Mr. Bush's speech, the home building and mortgage lending stocks could go right back down.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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