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Thanks to Spain’s slumping property market, house buyers are as popular as movie stars — and they can cause even more excitement.

Reporters outnumbered bidders as lot No. 1 hit the slate in Europe’s first “Dutch auction” for real estate last weekend in Madrid. Of 216 lots, 194 were withdrawn when they weren’t purchased at the reserve price. One man, investor Manuel Sainz, bought almost half of everything sold.

“Next stop Hollywood!” laughed Sainz, head of property company Las Terrazas de San Blas SA, as he fought off the press after buying 10 properties at discounts of as much as 30 percent.

The event shows the depth of Spain’s housing bust after prices tripled in the past decade. In January, the government’s housing policy director, Rafael Pacheco, called the slowdown “moderate and orderly” after January sales volume fell 27 percent from a year earlier as the global credit shortage forced banks to reduce lending.

“Official figures are one thing and reality is something else entirely,” said Alberto Espelosin, a strategist at Zaragoza, Spain-based Ibercaja Gestion, which manages $12 billion. “It’s really difficult for people to afford a home with the credit restrictions.”

For Tulipp Showrooms and Auctions SA, set up in September, the Madrid auction was the first in a series of monthly events taking place in Malaga, Barcelona and London over the summer.

Dutch Auction

The Dutch auction, developed in 17th century Amsterdam after the collapse of the tulip bubble and used today to sell fish in Spanish ports, starts with the seller’s asking price and then moves down until the property finds a buyer.

“Six months ago if people made an offer below the list price then developers took offense,” said Tulipp managing director Jorge Zanoletty, whose father established Spain’s first regular property auctions 16 years ago. “Now they are in the mood to be more open.”

As higher borrowing costs and rising unemployment deters buyers, Tulipp aims to profit from the slump by providing a new way to negotiate a price.

“People are hanging on and hanging on and when they can’t hang on any longer they have to sell at whatever price,” Espelosin said.

Still, developers in the Tulipp auction capped their discounts at 30 percent off the original sale prices for properties ranging from beachside apartments to family homes in the Madrid suburbs.

Constitutional Right

“We expected that nothing would be sold because the idea is so new,” Zanoletty said. “Now we hope that with the media exposure this is a formula that individuals will get comfortable with.”

Spaniards’ real estate obsession — the right to “a decent and fitting home” is in the constitution — helped drive a 15- year economic boom that saw the economy almost triple to 1.1 trillion euros as the country overtook Italy in income per head.

House prices began their surge in 1998 spurred by falling interest rates as Spain prepared for euro membership. Spain has built about 5 million new homes since then, attracting immigrant labor from Eastern Europe and Latin America to fuel a boom that peaked in 2006.

Now the turmoil in global credit markets is cutting demand.

The world’s biggest financial companies have reported about $232 billion in credit losses and writedowns since the start of 2007 and the credit shortage is filtering through to Spain.

Mortgage Slowdown

In January, mortgage lending in Spain fell 28 percent from a year earlier, according to the government statistics office. House prices rose 4.8 percent in the fourth quarter, the slowest pace since 1998.

“Clients are having problems with financing,” said Eustaquio Moleon, head of Moleon Construcciones, a family construction business in Granada, southern Spain. “Right now you have to try anything.”

With Spain facing the slowest economic expansion in 15 years, even a 30 percent price cut wasn’t enough to persuade most buyers that they were getting a bargain at the Madrid auction.

“We’ve picked out a few properties we like but at the moment we just want to see if there are some good discounts,” said Eva Suarez, who visited the auction with her baby. “If the apartments we like aren’t sold in the auction we’ll talk to the developers and see if we can do a deal.”

Still, for developers such as Madrid-based Sainz, the time to pick up bargains has already arrived. His investments included a 117 square-meter (1,259 square-feet) top-floor apartment on the Costa del Sol with views of the sea. He paid 396,000 euros compared with a sticker price of 565,800 euros.

“I’m a developer and I’ve bought these apartments to sell them,” Sainz said. “Not now, but perhaps in a year or a year and a half, once the crisis has past.”

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April 4 (Bloomberg) — The collapse of the $330 billion auction-rate securities market has brought debt sales by U.S. public student-loan agencies to a halt.

No municipal bonds backed by student loans were sold in the first quarter, the first time that happened in almost 40 years, according to Thomson Financial. The inability to obtain financing differs from states, cities, schools and hospitals, which sold $82 billion of bonds to fund public works and replace failed auction debt that stuck them with penalty rates as high as 20 percent.

Public lenders from Texas to Pennsylvania to Illinois relied on auction-rate bonds to raise money so they could make or buy student loans. Since mid-February, when Wall Street firms that supported the market for more than 20 years stopped buying securities investors didn’t want, almost all of the debt has failed to find buyers, according to data compiled by Bloomberg.

“The not-for-profit agencies have not raised significant money that I’m aware of in the past few months,” Andrew Davis, executive director of the Illinois Student Assistance Commission, said in an interview from Springfield. “The industry had grown so comfortable with the auction-rate securities.”

Without the ability to finance, public authorities in Michigan, Missouri, New Hampshire, Texas, Pennsylvania and Iowa have suspended or limited their origination of loans, according to an April 1 report from UBS AG.

Fewer Options

The squeeze means students and parents have fewer options to fund college educations. University financial-aid offices are scrambling to update lists of active lenders and help students find less costly private loan alternatives, said Phillip Day, head of National Association of Student Financial Aid Administrators in Washington.

Of the top 10 largest issuers of auction-rate debt among municipal issuers tracked by Thomson from 2000 through 2007, half were student lenders. The two biggest borrowers, Brazos Higher Education Authority of Waco, Texas, and the Pennsylvania Higher Education Assistance Agency, decided in the past two months to stop making new loans. The Illinois loan agency, 10th among issuers, will continue the business, officials said.

“We believe we have liquidity lined up that will take us through most of our needs, but not all of them, for the year,” said John Sinsheimer, chief financial officer of Illinois Student Assistance.

No New Loans

CIT Group Inc., based in New York, and NorthStar Education Finance Inc., a nonprofit organization in St. Paul, Minnesota, said this week that they will stop making new loans to U.S. students after their costs soared.

Auction-rate securities backed by student loans made up about $86 billion of the $330 billion market at the beginning of the year, according to Moody’s Investors Service. The market faltered in February, after dealers stopped acting as buyers of last resort when investor demand flagged.

On April 2, 115 tranches of student-loan bonds came up for auction and 114 failed, based on data compiled by Bloomberg from four major auction agents, including Deutsche Bank AG. The same day, there were 353 failed auctions, or 63 percent, involving a total of 563 municipal issues. Almost all auction-rate securities issued by closed-end mutual funds also failed.

Pegged to Formulas

When auctions fail, investors are unable to get their money and the rate resets to a high level or one based on a formula in the original bond documents and often pegged to money-market benchmarks such as the London interbank offered rate.

The latter situation is typical of student-loan debt, giving investors less of an incentive to buy, because benchmarks like Libor have declined, said Matt Fabian, managing director at research firm Municipal Market Advisors, based in Concord, Massachusetts. The one-month London interbank offered rate fell to 2.74 percent this week from 4.57 on Jan. 2.

“They fail to rates that are pretty low,” Fabian said.

Illinois Student Assistance is paying a taxable rate of 4.20 percent on $70 million of its $885 million in auction debt, compared with a 5.35 percent average during the past year, Bloomberg figures show.

Lender profitability suffered after the U.S. government last year slashed subsidies on guaranteed student loans made through the Federal Family Education Loan Program that back most student-loan auction bonds, according to UBS.

Liquidity `Extremely Expensive’

“The origination of new paper is the problem,” Fabian said. “Liquidity has become extremely expensive, it’s doubled or tripled, and the auction market is broken.”

Missouri’s student loan agency said in February that it would stop making private loans, or those not guaranteed by the federal government, and consolidation loans, which combine different student debts.

“We are non-profit; we operate on a razor-thin margin,” said Will Shaffner, director of business development for the Missouri Higher Education Loan Authority in Chesterfield. “It just doesn’t make sense to issue any debt at these prices and under these conditions.”

To contact the reporter on this story: Jeremy R. Cooke in New York at

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By Bob Ivry
Enlarge Image/Details

April 4 (Bloomberg) — Banks are so overwhelmed by the U.S. housing crisis they’ve started to look the other way when homeowners stop paying their mortgages.

The number of borrowers at least 90 days late on their home loans rose to 3.6 percent at the end of December, the highest in at least five years, according to the Mortgage Bankers Association in Washington. That figure, for the first time, is almost double the 2 percent who have been foreclosed on.

Lenders who allow owners to stay in their homes are distorting the record foreclosure rate and delaying the worst of the housing decline, said Mark Zandi, chief economist at Moody’s Economy.com, a unit of New York-based Moody’s Corp. These borrowers will eventually push the number of delinquencies even higher and send more homes onto an already glutted market.

“We don’t have a sense of the magnitude of what’s really going on because the whole process is being delayed,” Zandi said in an interview. “Looking at the data, we see the problems, but they are probably measurably greater than we think.”

Lenders took an average of 61 days to foreclose on a property last year, up from 37 days in the year earlier, according to RealtyTrac Inc., a foreclosure database in Irvine, California. Sales of foreclosed homes rose 4.4 percent last year at the same time the supply of such homes more than doubled, according to LoanPerformance First American CoreLogic Inc., a real estate data company based in San Francisco.

Reluctant Banks

“Some people stay in their houses until someone comes to kick them out,” said Angel Gutierrez, owner of Dallas-based Metro Lending, which buys distressed mortgage debt. “Sometimes no one comes to kick them out.”

Banks are reluctant to foreclose on homeowners for a variety of reasons that include the cost, said Peter Zalewski, real estate broker and owner of Condo Vultures Realty LLC, a property consulting firm in Bal Harbour, Florida.

Legal fees and maintaining a vacant property while paying the mortgage, insurance and taxes can add up to as much as 15 percent of the value of the home, and it may take months for the foreclosure to work through the legal system, he said.

“The end result is taking back a property that the bank will have to manage, rent out and or sell,” Zalewski said.

In many cases, lenders also have to foot the bill for fixing up vacant homes that have been vandalized.

Empty Houses

Real estate broker Georgia Kapsalis is offering a home for sale in Birmingham, Michigan, a Detroit suburb, where the owner last wrote a mortgage check in July. He still lives in the house, she said.

“Some of the banks just don’t want the houses to be empty, especially if it’s in an area where there’s a lot of theft or there are five other houses empty on the street,” said Kapsalis, who works at Added Value Realty LLC in Livonia, Michigan, another Detroit suburb. “They’ll lose toilets, plumbing, appliances, everything. Banks are getting wise and allowing people to live there longer.”

Alexis McGee, president of Internet database Foreclosures.com in Sacramento, California, said she toured a property where the departing resident tried to make off with the outdoor air conditioning unit by sawing the metal legs off its concrete apron.

“People take what they want to take,” McGee said. “They feel that they’re owed.”

Flooded Market

With home sales dropping and national inventories rising, the lenders have another reason to delay foreclosures, said Howard Fishman, a real estate investor based in Minneapolis.

“What are the banks going to do?” Fishman said. “They don’t want the house. They have a mortgage for $1 million and the house is worth $750,000.”

In February, 5 million existing homes were sold on a seasonally adjusted, annualized rate, down 31 percent from the peak of 7.25 million in September 2005, data compiled by the Chicago-based National Association of Realtors show. More than 4 million existing homes were on the market in February, 53 percent more than the 2.6 million average of the past nine years, the Realtors reported.

“Excess inventories pose the biggest risk to the market,” Michelle Meyer and Ethan Harris, New York-based economists at Lehman Brothers Holdings Inc., wrote in a report last month. “As long as inventories are high, home prices will fall.”

New Foreclosures

Growing inventory pulled median home prices down to $195,900 in February, a 15 percent drop from the peak of $230,200 in July 2006, the Realtors said.

New foreclosures rose to 0.83 percent of all home loans in the fourth quarter from 0.54 percent a year earlier, according to the Mortgage Bankers Association.

The civil court in St. Lucie County, Florida, is getting about 44 foreclosure cases to file every day. That’s the same number it averaged in a typical month in 2005, said Clerk of the Circuit Court Ed Fry.

“It’s pretty overwhelming,” he said.

Fry said he has 12 full-time employees and two temporary workers he just hired handling nothing but foreclosures. Still, the 50-page filings sit in cardboard boxes for three weeks before the court staff can process them, Fry said. Then it takes another two months to get a date on the court docket, he said.

Mortgage servicers, who collect monthly payments and are responsible for starting the foreclosure process, also were caught short-staffed, said Grant Stern, a mortgage broker and owner of Morningside Mortgage Corp. in Miami Beach, Florida.

`Moral Hazard’

“The most experienced people you can bring in are origination people,” Stern said. “But for a bank it’s a moral hazard to have the same people who originated the loans now modifying those loans. That wouldn’t be desirable. Once around is enough.”

The five largest servicers — Countrywide Financial Corp., Wells Fargo & Co., CitiMortgage Inc., Chase Home Finance Inc. and Washington Mutual Inc. — together manage more than half the home loans in the U.S., according to New York-based National Mortgage News, an industry publication.

While more than 100 mortgage originators have suspended operations, closed or sold themselves since the beginning of 2007, mortgage servicing units are expanding.

Chase Home Finance, a unit of New York-based JPMorgan Chase & Co. and the fourth-largest U.S. servicer, expects to spend $200 million more servicing loans in 2008 than it did last year, said spokesman Thomas Kelly.

Delayed Foreclosure

Kelly wouldn’t say how many Chase borrowers have quit paying their mortgages and remain in their homes.

Efforts to keep borrowers paying their bills have slowed the foreclosure process, Mark Rodgers, a spokesman at CitiMortgage, a division of New York-based Citigroup Inc., said in an e-mail message.

“In a number of cases, we have delayed foreclosure proceedings to allow our loss mitigation teams additional time to explore potential solutions to keep distressed borrowers in their homes,” Rodgers said.

Joe Ohayon, vice president of community relations for Wells Fargo Home Mortgage in Frederick, Maryland, a unit of San Francisco-based Wells Fargo, said trying to modify loan terms case by case adds time to the foreclosure process.

“Foreclosure is only a last resort after all available options for keeping the customer in the home have been exhausted,” Ohayon said in an e-mail message.

Affordable Payments

Olivia Riley, a spokeswoman at Seattle-based Washington Mutual, said in an e-mail that the company’s goal is to keep customers in their homes “with payments they can afford.”

Representatives for Calabasas, California-based Countrywide, the biggest U.S. mortgage servicer last year, didn’t respond to requests for comment.

Few mortgage companies will admit they allow homeowners to stay in their homes without paying their bills.

“No servicer will say you can live rent-free for six months, go ahead,” said Paul Miller, a mortgage industry analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia. “Eventually, the servicers will clear these guys out.”

Homeowners usually get 90 days to resume paying before foreclosure proceedings begin with the filing of a complaint or notice of non-payment.

State laws determine the length of time between the filing and an auction of the house. In most states, it’s two to six months, according to Foreclosures.com. In Maine, it can be up to a year and in New York, 19 months; in Georgia, it’s as quickly as one month, and in Nevada, it can be 35 days, according to the database.

Borrowers in California who fight foreclosure can stretch the process to 18 months, said Cameron Pannabecker, chapter president of the California Association of Mortgage Brokers and president of Cal-Pro Mortgage Inc. in Stockton.

That doesn’t take into account the woman he knows who hasn’t made a mortgage payment in eight months and hasn’t heard from her lender, Pannabecker said.

“Now she’s afraid to mail in a payment for fear it’ll come to somebody’s attention,” he said.

To contact the reporter on this story: Bob Ivry in New York at

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By Ryan J. Donmoyer

(Corrects name of foundation in 13th paragraph.)

April 5 (Bloomberg) — Former President Bill Clinton has earned $15.4 million from billionaire Ron Burkle’s Yucaipa Cos. investment firm since 2003, according to tax documents released by his wife, presidential candidate Hillary Clinton.

The earnings represent 20 percent of the approximately $75 million Bill Clinton earned during the same period, according to the documents. That may raise new questions about what services he performed for Los Angeles-based Yucaipa, whose investors include the ruler of Dubai, Sheikh Mohammed Bin Rashid al- Maktoum.

Tax lawyers said the Yucaipa partnership income for Bill Clinton looks to be a form of salary because it was in round numbers for most years.

“Most people who make that much money work for it,” said Yale University tax law professor Michael Graetz, a former Treasury Department official in President George H.W. Bush’s administration. “What are they being paid for, and if it’s the Sheikh of Dubai paying the husband of somebody who might be the next president of the United States, what do they think they’re paying for?”

Jay Carson, a spokesman for New York Senator Clinton, said in an e-mailed statement that former President Clinton is a partner in a Yucaipa fund and “provides his best advice on potential investments, advocates generally on behalf of the funds, and seeks to create opportunities for investors to consider investing in the fund.”

Carson didn’t respond to a question about whether Bill Clinton did any work for Dubai. In 2006 Senator Clinton opposed efforts by a Dubai-based company to acquire control over six U.S. ports.

Tax Returns

The payments from Yucaipa to Bill Clinton were detailed in seven years of tax returns released by Hillary Clinton, 60, following pressure to disclose them from rival Barack Obama, the Illinois senator who made public his own returns in March.

The returns covered tax years 2000 through 2006. Hillary Clinton’s campaign also released information about the couple’s 2007 income, although they haven’t yet filed a return for that year. Obama has yet to release information on his 2007 income.

The former president, 61, received $1 million from Yucaipa in 2003, $4 million in 2004 and $5 million in 2005. In 2006, he received a guaranteed payment of $2.5 million plus a $156,611 share of the profits. The campaign said he earned $2.75 million from partnership income in 2007.

Amounts `Odd’

“The flat amounts received from Yucaipa are odd,” said Tom Ochsenschlager, vice president of taxation at the American Institute of Certified Public Accountants, who agreed that it signaled Bill Clinton was performing a service. “That’s quite unusual.”

Previously, Hillary Clinton reported only that the former president earned “more than $1,000” a year from Yucaipa on financial disclosure forms she is required to file in the Senate.

In all, the Clintons earned $109 million from 2000 through 2007 and paid $33.8 million in federal taxes, the returns and campaign documents show. They donated $10.3 million of their income over that time to charities.

The bulk of those charitable donations went to the family foundation. From 2002 through 2006, $5.9 million of the $6.4 million, or 93 percent, of the Clinton’s charitable giving went directly to the Clinton Family Foundation, according to the tax returns and the foundation’s 990 forms. The 990s for 2000 and 2001 were not immediately available and it has not yet filed for 2007.

Cayman Islands Funds

The tax returns indicate the couple paid all the U.S. federal taxes owed on the income from Yucaipa, which controls three funds located in the Cayman Islands. The Cayman Islands doesn’t charge any individual or corporate income tax and has strict bank secrecy laws.

Bill Clinton’s ties to Yucaipa have sparked controversy over the past year, including a September report in the Wall Street Journal that detailed how one of the former president’s aides had helped arrange a partnership with Burkle that dissolved amid litigation over allegations of misused funds.

Yucaipa spokesman Frank Quintero didn’t return calls seeking comment about what services Bill Clinton performed for the company. Forbes Magazine listed Burkle, 55, as the 91st richest American last year, with a net worth of $3.5 billion.

Carson said in December that the former president “is taking steps to ensure” that “there will be an appropriate transition from those relationships” if his wife receives the Democratic presidential nomination.

Rising Income

The 210 pages of documents released yesterday chronicle the Clintons’ rising income since 1999, the last year for which they had previously released a tax return. The couple earned $20.4 million last year, compared with less than $420,000 in 1999, the year before they left the White House.

The bulk of their income, $51.9 million, came from Bill Clinton’s speeches, the campaign said in a summary. The former president also earned $1.2 million from his presidential pension and $29.6 million from royalties and an advance for his autobiography.

Hillary Clinton earned $10.5 million in book royalties and advances and a total of $1.1 million from her Senate salaries since 2001. In 1999, the Clintons earned $417,467, had $334,681 in taxable income after deductions including $39,200 to charity, and paid $92,104 in federal taxes.

At a Democratic Party convention in Grand Forks, North Dakota, last night, Hillary Clinton said that her husband “has made a lot of money since he left the White House doing what he loves most, talking to people.”

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We want to have a public image, hiding what's inside our mind. A new research made by a team at the USC-Caltech Center for the Study of Law and Politics and to be published in “Political Research Quarterly” shows that men are less tolerant than women, and the most likely victims of prejudice are poorly educated immigrants and Arab-American airplane travelers, while the least likely victims are the genetically disadvantaged category.

The survey was made on over 3,300 subjects and showed …

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Thailand is the realm of sexual tourism, this is a well known fact. Sex for any orientation. The country is famous for its beauty contest of drag queens. And in such a sexually libertine country, some things seem to have escaped control.

Thailand's Health Ministry has temporarily banned the performing of castrations for non-medical reasons, signaling that this operation, asked by many transsexuals, requires stricter monitoring.

“A letter will be sent to medical facilities around the …

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All is in our genes. From speaking to laughing. Even the sex yells. A new research published in the journal PLos One has even found the first genes of sex calls in male mice.

A male mouse on the way of having a hanky-panky session emits ultrasonic delight squeals. These vocalizations are the results of a gene controlling the synthesis of the brain molecules (amphetamines) involved in emotions, both in mice and men. Thus, mice squeak of joy.

The fact that adult mice emit ultrasounds (soun…

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Monkeys have a very pervert sexuality. And one of the kinkiest species is the Barbary macaques (Macaca sylvanus). A new research published in “Animal Behavior” shows that males spy around in search of other pairs having sex so that they get a chance to copulate.

The same team lead by Dana Pfefferle of the German Primate Center in G

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See the user screens and take a control by controlling the mouse and keyboard

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The New York Comic Con will feature a special game summit day, on April 20, the last day of the comic convention. The summit is being organized by Epic Games (oh, how I loved that company when it was named MegaGames) and apparently a showcase of Gears of War 2 is being prepared for the attendants.

The New York ComicCon started in 2006 and grew quickly to become the main event related to comics in New York. Last year's event took place in February, but this year the convention was moved t…

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