What’s with the masks? Is that a bucket of swine flu? Nah, just toxic drywall. From earlier this week:

Lennar, the second-worst performer among U.S. homebuilding stocks last year, also announced that it’s a defendant in a lawsuit over drywall in its houses. The Miami-based company has begun to identify homes that contain “defective” Chinese- manufactured drywall, which emits sulfur gases, according to a regulatory filing today.

This was enough to keep the stock down for all of five minutes or so, because lately the homebuilders can do no wrong. (Read that Bloomberg article I linked: “They’re going to raise capital to… Oh, I don’t know! But it will be brilliant!”)

In addition to the attorneys, this is also proving to be a festive occasion for fake drywall inspectors, proving that for every calamity there is potential graft. Lennar has already started repairs in a few instances, provided you’re willing to sign a waiver that says they’re off the hook once it’s out. Two other homebuilders – Taylor Morrison and Icahn-darling WCI – also used the failboard. WCI is bankrupt, though they’ve set aside $11 mil per SEC documents for repairs. Lennar has made $15 million in provisions.

The only estimate I’ve found so far of the total number of affected houses is from Florida’s WFTV: “the drywall may be in more than 100,000 homes, more than 35,000 in Florida alone.”

Okay – that’s $26 million set aside (granted, I don’t have the # for Taylor Morrison, so we’ll pretend they didn’t set aside anything, though that’s hopefully not the case), and 100,000 homes. $26 million divided by 100,000 tells me that – there is a whopping $260 per home reserved by the builders to repair 100,000 homes that need their entire interiors gutted and re-built. Lennar says don’t worry, they have insurance to cover the rest. I wonder who is the lucky insurer, how likely they are to challenge this particular payout and how solvent they are.

If the little hamsters on their wheels are churning over at Lennar, WCI and Taylor Morrison – you think they’d ask for a government bailout to help tear down the communities built with poison drywall. The benefits are too numerous to count. The communities are mostly on the outskirts of suburbia, so they won’t be missed if you give them back to the kudzu. There’s serious oversupply of domiciles in most of the affected states like FL, so you’re helping bring the housing market into equilibrium. Hell, maybe you could even rig a Displaced Chinese Drywall Homeowners Act Of 2009 to allow these nice folks to take advantage of the $8,000 tax credit for ‘new’ homebuyers when they pick out their replacement home, so they’d be pleased as punch and hopefully stop with all the suing.

And besides, autos and banks have had their bailouts, so isn’t it housing’s turn?

(Obviously, I am not being serious on that last point  – I don’t actually want to see a homebuilder bailout. But I wouldn’t be surprised if they have a couple of lobbyists on some iteration of this idea right now.)