Today's Two Great Stories Help You Get Smart: Homes Sold for .30 to .40 Cents on the Dollar? And the Bear Sterns Story You Should be Reading.

As we predicted yesterday, the Bear Sterns' emails would draw the sexy headlines (and deservedly land on the front page). But, again don't let the headline bury the lead. It might be A1 in the NY Times, but the most important story related to Bear Sterns is C1 of the Times' business section. It is about asset valuation. Boring you say? Why you care is because that simply means how banks and investment firms decide what their portfolio is really worth. In other words, the toughest part for a Bear Sterns is trying to decide what a bundle of mortgages are really worth when the market is gyrating like an amusement park. It is more magic math, and the rest of Wall Street has the same struggle.
Out West, the LA Times has a terrific and instructive piece on buying foreclosure properties that you might miss but shouldn't. The sexy headline here is how investment firms have been buying homes at .30 to .40 cents on the dollars from homebuilders. That's the wow factor. Why you care is the reporting on what it takes to buy a foreclosed home and the pitfalls. As finance and real estate attorneys we say bravo to this type of reporting especially the warning about stepping into the original owners' shoes and finding yourself faced with the liens and mortgages that sunk their boat.