(Homebuilder Winners article updated for closing prices)

WASHINGTON D.C. ( TheStreet) -- The House of Representatives voted down a mortgage relief bill that would have allowed overleveraged home owners to reduce payments through an empowered bankruptcy court. One of the big arguments against the bill had been that by creating more risk for lenders of receiving less repayment from foreclosed properties, interest rates would have to be increased.

The historically low rates that exist today have been one of the few helpful economic engines for the homebuilding sector as it slumps toward recovery. And there have been arguments that as rates inevitably rise, that could make the pace of homebuilder recovery harder to peg.

With the death of the latest attempt by Congress to give the bankruptcy courts more leniency with foreclosed home owners, in the least, the homebuilders will not face an immediate threat of a rapid rate rise in response to Congressional action. It does not necessarily mean things look bright for the homebuilders. Indeed, there are many reasons to fear a protracted road to recovery, but it's a minor piece of good news to end the week.

Many of the big homebuilder shares were up on Friday afternoon, too. Ryland Group ( RYL), NVR ( NVR) and M.D.C. Holding ( MDC - Get Report) had the biggest gains.

KB Home ( KBH) led the big homebuilders with a gain of 2.6% on Friday. Ryland was up 2.1%; NVR 1.6%; and M.D.C. Holdings, a little over 1%. Lennar ( LEN)was also up in the afternoon.

One analyst who covers the homebuilders, but did not want to be quoted since he had not seen the congressional vote, said, "To the extent that lenders would have lost their rights by a third-party and be summarily granted 80 cents on dollar, that would have implied a level of increased risk and the rates would go up, that logic is pretty much irrefutable."

Still, the analyst viewed the news as a minor win for the homebuilders -- it had actually been the banks and credit unions lobbying most hard against this mortgage relief. "Interest rates at the margins aren't the solution to the homebuilding problem. There are much more fundamental issues, and regardless of the attempts to empower the bankruptcy process in favor of the foreclosed buyer, overleveraged homeowners are the problem," the analyst noted.

On balance, the net result is probably one less problem for the homebuilders, rather than one significant step closer to rehabilitation road.

Pulte Homes ( PHM - Get Report) and D.R. Horton ( DHI - Get Report) were down marginally. Hovnanian Enterprises ( HOV - Get Report)was down 1.4%.

Hovnanian's fourth quarter earnings are expected next Friday, Dec. 18.

The latest foreclosure filings data from RealtyTrac for November was both good and bad: the rate increased 18% from the previous year, but declined 8% from October. There were 306,627 foreclosures on U.S. properties in November, or one in every 417 U.S. housing units.

Nevada, Florida and California posted the top state foreclosure rates in November. Even with a foreclosure rate decreasing by double digits in November, Nevada was still 3.5 times the national average and the nation's top foreclosure rate.

Florida posted the nation's second highest state foreclosure rate in November with one in every 165 housing units receiving a foreclosure filing. Florida was in the No. 2 spot, and California in third place among states with the highest foreclosure rates.

Arizona also took a turn for the worse in November. After three straight months of decreases, foreclosure activity in Arizona increased nearly 8% in November. The state documented the nation's fourth highest foreclosure rate with one in every 186 housing units receiving a foreclosure filing.

California, Florida, Illinois and Michigan accounted for 52% of the nation's total foreclosure activity for the second consecutive month. In California, foreclosure activity decreased 13% from the previous month, but California still has the highest total number of foreclosed properties.

-- Reported by Eric Rosenbaum in New York.

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