A trio of U.S. economic indicators released Wednesday show an American economy continuing to veer off course as Christmas approaches.

Americans spent less in November, the first real proof that the yuletide selling season will be tough for retailers, while U.S. durable goods orders slumped in the same month, a further sign that American manufacturers still face bleak economic prospects.

Finally, in mid-December, the number of first-time jobless benefit claimants hit the highest level in 26 years.

Frank Gehry laid off more than two dozen staffers in late November after client Forest City Ratner ordered the architect to put down his pencils on the $4 billion Atlantic Yards project, according to people familiar with the matter. A Gehry Partners LLP spokeswoman declined to comment.

A Forest City spokesman declined to comment and pointed to a previous statement that said work on the Brooklyn, N.Y., project was delayed because of legal challenges. Forest City has said it is committed to the 22-acre site, slated to be anchored by a basketball arena plus residential and office skyscrapers.

By EVAN PEREZ

WASHINGTON -- The U.S. government is attempting to seize a piece of a storied Manhattan skyscraper, alleging it is owned by a front for the Iranian government.

In documents filed Wednesday in U.S. District Court in New York's Southern District, federal prosecutors said the building at 650 Fifth Ave., long known as the Piaget building, is 40% owned by a company that funnels money to Iranian state-owned Bank Melli. The bank is subject to Treasury Department sanctions for allegedly financing Iran's nuclear proliferation efforts.

By TAMARA AUDI

Casino giant Las Vegas Sands Corp. will cut 216 full-time employees from its Las Vegas properties as part of an overall effort to reduce costs at the struggling company.

The company confirmed it would notify employees starting Friday. Sands is also eliminating $6.5 million in management bonuses for 2008.

The cuts come as all of Las Vegas endures a sharp consumer downturn that has seen revenues plummet every month since late last year. This week, Nevada gambling regulators said gambling revenue on the Las Vegas Strip fell 26% to $475 million in October, compared with the same month last year.

By MAURA WEBBER SADOVI | SPECIAL TO THE WSJ

Oregon's bid to cash in on its green appeal has given Portland's weakening commercial-real-estate market an early holiday gift.

Denmark-based Vestas Wind Systems AS said this month that it is planning to build a new North American headquarters in the city. Negotiations still are under way and the site isn't set, but the project is likely to be more than 500,000 square feet and be valued at about $250 million.

By MAURA WEBBER SADOVI | SPECIAL TO THE WSJ

Oregon's bid to cash in on its green appeal has given Portland's weakening commercial-real-estate market an early holiday gift.

Denmark-based Vestas Wind Systems AS said this month that it is planning to build a new North American headquarters in the city. Negotiations still are under way and the site isn't set, but the project is likely to be more than 500,000 square feet and be valued at about $250 million.

By WILLIAM BOSTON

During every economic crisis, personal empires rise and fall, but the decline in the fortunes of Spain's Sanahuja family and its real-estate group, Metrovacesa SA, is a preview of what is in store for Europe's real-estate tycoons.

A week ago, family patriarch Roman Sanahuja Pons was the owner of some 80% of Metrovacesa, the fifth-largest property company in Europe in terms of assets. By the end of last week, Mr. Sanahuja had swapped shares amounting to 55% of Metrovacesa to pay off €2.1 billion ($2.72 billion) in debt to six Spanish banks.

By MAURA WEBBER SADOVI | SPECIAL TO THE WSJ

Oregon's bid to cash in on its green appeal has given Portland's weakening commercial-real-estate market an early holiday gift.

Denmark-based Vestas Wind Systems AS said this month that it is planning to build a new North American headquarters in the city. Negotiations still are under way and the site isn't set, but the project is likely to be more than 500,000 square feet and be valued at about $250 million.

By WILLIAM BOSTON

During every economic crisis, personal empires rise and fall, but the decline in the fortunes of Spain's Sanahuja family and its real-estate group, Metrovacesa SA, is a preview of what is in store for Europe's real-estate tycoons.

A week ago, family patriarch Roman Sanahuja Pons was the owner of some 80% of Metrovacesa, the fifth-largest property company in Europe in terms of assets. By the end of last week, Mr. Sanahuja had swapped shares amounting to 55% of Metrovacesa to pay off €2.1 billion ($2.72 billion) in debt to six Spanish banks.

By JONATHAN CHENG

HONG KONG -- A member of Macau's Ho casino family unveiled preliminary plans to develop a five-star hotel on Macau's Cotai Strip, even as hotel and casino operators there grapple with a slowdown and travel restrictions from mainland China.

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By JONATHAN CHENG

HONG KONG -- A member of Macau's Ho casino family unveiled preliminary plans to develop a five-star hotel on Macau's Cotai Strip, even as hotel and casino operators there grapple with a slowdown and travel restrictions from mainland China.

View Full Image

By JONATHAN CHENG

HONG KONG -- A member of Macau's Ho casino family unveiled preliminary plans to develop a five-star hotel on Macau's Cotai Strip, even as hotel and casino operators there grapple with a slowdown and travel restrictions from mainland China.

View Full Image

By JONATHAN CHENG

HONG KONG -- A member of Macau's Ho casino family unveiled preliminary plans to develop a five-star hotel on Macau's Cotai Strip, even as hotel and casino operators there grapple with a slowdown and travel restrictions from mainland China.

View Full Image

America's $11 trillion home-mortgage market is heading for a makeover.

Mortgage lending in the U.S. relies heavily on institutions set up in the 1930s by politicians and government officials seeking remedies for the Great Depression. Now, bankers say, the current economic crisis will force Congress and the Obama administration to decide how to repair or rebuild those institutions, including Fannie Mae, the Federal Home Loan Banks and the Federal Housing Administration.

The Federal Reserve's attempt to stabilize the housing market set off a chain reaction across the U.S. on Tuesday, dropping interest rates and quickly spurring a burst of refinancing activity by borrowers eager to lower their mortgage costs.

Some brokers said it was the most activity they've seen in at least one year, although there was no way to determine the volume of refinancing.

At Bank of America Corp., call volume was roughly twice what was expected at call centers and via the Internet, said Matt Vernon, national sales executive. "It's the folks who have been sitting on the sideline. They're jumping in with this news."

The construction industry, beset by one of the biggest drops in employment in the current economic downturn, could be poised for a rebound under President-elect Barack Obama's expected stimulus package.

Mr. Obama hasn't offered details, but anticipating a surge in public-works spending, investors bid up construction and engineering stocks. URS Corp., a San Francisco-based engineering and construction company, rose 34%, global giant Fluor Corp. rose nearly 17% and Granite Construction Inc., a domestic engineering company, rose 22%.

Struggling U.S. auto makers left Washington empty-handed after weeks of pleading for a handout, but that hasn't deterred home builders from stepping up to lobby Congress for help.

But any federal assistance would require policy makers to figure out how to stimulate demand for housing -- the problem at the root of the global financial meltdown -- without artificially propping up home values.

Even as Hawaii basks in the glow of native son President-elect Barack Obama, its hotel industry is beginning to feel the pinch of the global financial crisis.

High fuel prices earlier in the year, the bankruptcy filings of Aloha Airgroup Inc. and ATA Airlines Inc., which previously served the region, and the nationwide slump in consumer confidence has slammed Hawaii's tourism industry. It welcomed 9.3% fewer visitors this year through September compared with the year-ago period, according to Hawaii's Department of Business, Economic Development and Tourism.

The good news is your home may be worth more than the rock-bottom price that your neighbors' houses fetched. The bad news: No one but you might think so.

The one point of widespread agreement in the real-estate industry is that there is no single accurate index of home prices. They are all over the map, cover different sets of homes and may exclude parts of the country or be unduly influenced by the mix of homes sold in a given month.

Even as Hawaii basks in the glow of native son President-elect Barack Obama, its hotel industry is beginning to feel the pinch of the global financial crisis.

High fuel prices earlier in the year, the bankruptcy filings of Aloha Airgroup Inc. and ATA Airlines Inc., which previously served the region, and the nationwide slump in consumer confidence has slammed Hawaii's tourism industry. It welcomed 9.3% fewer visitors this year through September compared with the year-ago period, according to Hawaii's Department of Business, Economic Development and Tourism.

The good news is your home may be worth more than the rock-bottom price that your neighbors' houses fetched. The bad news: No one but you might think so.

The one point of widespread agreement in the real-estate industry is that there is no single accurate index of home prices. They are all over the map, cover different sets of homes and may exclude parts of the country or be unduly influenced by the mix of homes sold in a given month.

Mortgage giants Fannie Mae and Freddie Mac will suspend foreclosure sales and evictions on certain properties until after the holiday season, as they prepare to implement a previously announced loan-modification program.

The temporary foreclosure suspension announced Thursday applies to 10,000 borrowers with Fannie-owned mortgages and 6,000 with Freddie-owned mortgages in occupied single-family and two- to four-unit properties with foreclosure sales scheduled between Nov. 26 and Jan. 9. Fannie and Freddie, which are under government control, last week said they would begin to modify the loan terms on potentially hundreds of thousands of mortgages that are at least 90 days past due.

The troubles facing most Seattle-area landlords are more like a Puget Sound drizzle than the stormy skies swirling around markets such as Phoenix or Orange County, Calif.

Certainly the economic turmoil buffeting the nation's property markets has touched Seattle. The area's median home prices are falling, and average commercial rent gains are slowing. The volume of large office, retail and warehouse sales has dropped dramatically this year, according to Real Capital Analytics. The area's job growth slipped to 2.3% in July, down from 3% in the year-earlier month, according to the Bureau of Labor Statistics.

DETROIT -- The faded elegance of this city's Boston-Edison neighborhood, once the home of Henry Ford, has survived white flight, the 1967 riots that destroyed nearby shops, and the long decay of the U.S. auto industry. But three years ago, residents started noticing a disturbing trend: More and more of the stately homes were vacant.

A buyer who agreed to pay $53.5 million for two penthouse condominiums in New York's Plaza Hotel sued developer El-Ad Properties NY LLC for fraud, seeking a refund of his $10.7 million deposit and more than $20 million in damages.

The lawsuit, filed Sept. 5 in New York State Supreme Court, is one of the highest-profile examples of the mushrooming legal actions by condo buyers throughout the country because of the collapse of home values. Until recently, Manhattan's luxury-condo market was relatively unscathed by the crisis, but it is beginning to show signs of stress.

In the library of her 5,800-square-foot house in Glen Cove, N.Y., Linda Teitelbaum keeps trophies from dog shows, needlepoint pillows of bulldogs and gold-framed photos of family. Though the plaid-papered room has a scattering of books, she often retreats to it not just to read but to remember the dogs she used to breed, to nap, or to get away from the TV. "It's my veg-out room," Ms. Teitelbaum says.

Reading rates are down and Americans say they love casual living. And yet, one of the most popular rooms in big new houses is a library. Rather than being about books, their appeal is often about creating a certain ambiance. "Libraries connote elegance and quality," says New York architect and interior designer Campion Platt, adding that most of his wealthy clients want one, even if they do most of their reading online.

When Richard Rainwater, the renowned Texas investor, sold Crescent Real Estate Equities Co. to Morgan Stanley for $2.78 billion early last year, some Crescent shareholders complained the price was too low.

Now it looks like Morgan Stanley's shareholders are the ones who should have been griping.

Morgan Stanley, one of the largest real-estate investors among Wall Street firms, originally planned to put Crescent's office buildings, resorts, housing projects and other properties in one of the real-estate funds it manages for institutions and wealthy individuals. But the firm decided to keep what is now $4.6 billion of assets on its balance sheet instead, exposing Morgan Stanley to potential losses. The company didn't disclose the value of the assets at the time, but the overall deal was valued at $6.5 billion, including the assumption of $3.1 billion of debt.

The number of homes listed for sale declined in many metropolitan markets last month.

The supply of homes available for sale in 29 major metropolitan areas in August was down 2.6% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The ZipRealty data cover all listings of single-family homes, condominiums and town houses on local multiple-listing services in metro areas where the firm operates.

With Florida awash in tens of thousands of empty or unfinished condominiums, many investors there are turning to the courts in an effort to cancel their contracts and recoup their deposits.

So far, they haven't had much luck.

I wish I felt like joining the party that sent the Dow Jones Industrial Average up nearly 300 points on Monday on news of the Treasury plan to put mortgage giants Fannie Mae and Freddie Mac into a "conservatorship."

Not that I disagree with Treasury Secretary Henry Paulson's approach. People can and will argue about the details, such as whether the huge government-sponsored mortgage companies should have been put into receivership, wiping out shareholders, rather than being allowed to linger on as New York Stock Exchange-traded companies trading like penny stocks. But the important thing is that decisive action was taken.

The beaten-down stocks of commercial real-estate companies initially got a big boost in response to the government's decision to take over mortgage giants Fannie Mae and Freddie Mac. But that excitement started to quiet after investors began to contemplate the long-term outlook.

Investors had pushed up the stocks of real-estate investment trusts on Friday and Monday as the federal government moved to stabilize the reeling agencies. The Dow Jones Equity REIT Index -- which tracks the stock of 116 REITs -- gained nearly 4.7% from Thursday's close to Monday's after a 10.9% drop in the previous year. But the index retreated by 4.1% on Tuesday as investors started fretting about Fannie and Freddie perhaps scaling back their mortgage portfolios under the government's watch.

Shopping-mall owners have struggled this year with a darkening economy, slowing consumer spending and store closings by retailers. But they face another problem that may persist long after the economy bounces back: a decade of overbuilding.

LODZ, Poland -- In 1990, Jacek Szwajcowski disregarded the advice of friends and gave up a prospering engineering business to invest €3,000 of his own money in his mother-in-law's pharmacy.

Soon he was supplying a handful of local pharmacies in Lodz (pronounced "Wootch") with medicines and his wholesale pharmaceuticals business was born. Today he is running a 4.4 billion-zloty ($1.92 billion) wholesale and retail pharmacy business with a 20% share of the Polish market. As Polska Grupa Farmaceutyczna SA grew, he built 12 distribution centers throughout Poland. Now he is about to expand into Central and Eastern Europe.

The rate of U.S. home mortgages overdue or in foreclosure rose again in the second quarter as housing markets weakened, particularly in California and Florida, and more borrowers defaulted on so-called prime loans.

Among mortgages on one- to four-family homes, 9.16% were at least a month overdue or in the foreclosure process in the second quarter, according to the latest survey by the Mortgage Bankers Association, a trade group. That is up from 6.52% a year earlier and is the highest level since the MBA began such surveys 39 years ago.

Andre LeBel knew he had come home when he walked into a bar in St. Petersburg, Fla., ordered a Bloody Caesar and the bartender made it without cocking an eyebrow.

The spicy drink -- a blend of vodka, Tabasco, Worcestershire sauce and tomato and clam juices -- is popular in his native Canada, but until recently it was virtually unknown elsewhere. That was before Canadians started to snap up property in the U.S., drawn by the buying power of the newly strong Canadian dollar and the depressed prices of American real estate. The largest proportion of foreign buyers of U.S. homes from May 2007 to May 2008 -- 24% -- were Canadian, double the percentage a year earlier, according to a recent report by the National Association of Realtors. (See today's House Talk column for tips on how to attract Canadian buyers.)

After a couple of years of falling home prices, homeowners are understandably nervous about how they can protect what for most is their biggest asset.

For investors in stocks and bonds, successful strategies to combat the ups and downs of the marketplace are fairly straightforward. Have a diversified portfolio to balance risk, be disciplined about consistently saving money and don't chase returns or the latest fad.

Homeowners face a trickier landscape. Diversification, for one, isn't really possible. Owning ten homes, besides being very expensive, just multiplies the trouble in a falling market. Also, buying and selling homes isn't as easy as buying and selling mutual funds or shares.

Residential Capital LLC hopes a $1 billion facelift will revive the struggling mortgage lender.

But the nips and tucks -- including cutting jobs, closing offices and exiting from business lines -- will sharply curtail ResCap's ability to lend and its potential to earn money.

ResCap's plan to slash expenses, announced Wednesday, could lead to savings of $1 billion each year starting in 2009, according to a company official. In 2007, it had total expenses of $3.86 billion, so a reduction of $1 billion would shave more than a quarter off ResCap's noninterest costs -- an ambitious goal.

Residential Capital LLC hopes a $1 billion facelift will revive the struggling mortgage lender.

But the nips and tucks -- including cutting jobs, closing offices and exiting from business lines -- will sharply curtail ResCap's ability to lend and its potential to earn money.

ResCap's plan to slash expenses, announced Wednesday, could lead to savings of $1 billion each year starting in 2009, according to a company official. In 2007, it had total expenses of $3.86 billion, so a reduction of $1 billion would shave more than a quarter off ResCap's noninterest costs -- an ambitious goal.

A Very Recession-Like Employment Report

The unemployment rate jumped 0.4 percentage points to 6.1 percent in August, which is the highest it has been since September 2003. Legislative changes may be causing the unemployment rate to be slightly overstated but there is no denying the labor market is deteriorating. Nonfarm employment fell 84,000 during the month.

Extended Unemployment Benefits May Be Boosting The Jobless Rate

The unemployment rate jumped 0.4 percentage points in August, which was much worse than expected. The increase results from a 342,000 job drop in household employment and a 250,000 person rise in the civilian labor force. While the household numbers move around quite a bit, the recent increase in the labor force looks suspicious. The labor force normally declines when labor market conditions deteriorate. The extension of unemployment claims benefits may be causing a larger number of people than usual to state they are unemployed because this allows them to receive extended benefits. Jobseekers may also be lengthening their job search a bit. If the labor force had remained unchanged in August, the unemployment rate would have risen just 0.2 percentage points to 5.9 percent.

NFP Signals the Start of a Recession Currency Pair Overview

Overall: Friday's non-farm payrolls report showed that the unemployment rate (6.1%) jumped to the highest in five years, and the rate of unemployment excluding 16 to 19 year olds rose to 5.8%. The economy has now lost 605,000 jobs in 2008. The number of unemployed has risen by 2.24 million over the past 12 months and the 1.4% increase in unemployment over that time is the highest in the post World War II period. The report also showed that the private sector shed 101,000 in August.

Toll Brothers Inc. swung to a fiscal-third-quarter net loss as the U.S. housing-market declines led to more write-downs for the builder and sales continued to fall.

Home builders have written off billions of dollars of land and land options bought before the housing market cracked. Toll Brothers recorded $139.4 million in write-downs during the quarter ended July 31.

Two NBA All-Stars who listed their houses last year have cut their prices -- Allen Iverson by 37% in the Philadelphia area, Rasheed Wallace by 6% in Portland, Ore.

Long & Foster Denver Nuggets guard Allen Iverson has cut the price of his 14,000-square-foot, six-bedroom home in Villanova, Pa., by 37% to $4 million. Iverson put the home on the market last year.

Starwood Hotels & Resorts Worldwide Inc.'s high-end St. Regis brand will make its first appearance on the Las Vegas Strip as part of a deal in which Starwood will manage a luxury condominium development for Las Vegas Sands Corp.

Could CVS Caremark's pending $2.61 billion purchase of Longs Drug Stores come undone?

Dissident shareholders hope so, having intensified their campaign to disrupt the deal just as the proceedings hit the home stretch. Their potential wedge is the value of Longs' real estate.

Longs' largest stakeholder, the hedge fund Advisory Research, has renewed calls for the Walnut Creek, Calif., drugstore chain to release details about its real-estate holdings. Longs owns as much as 20% of its 500 stores, and where it doesn't own, it holds long-term leases struck long before real-estate prices boomed. Its stores also are in high-traffic areas, such as town centers.

The Subprime Solution By Robert J. Shiller (Princeton University Press, 196 pages, $16.95)

In recent times, investment bankers have used "financial engineering" to design ever more complicated ways to manage risk. Such efforts, though, helped to bring about the current mortgage-default debacle: Bankers, overestimating the powers of their own sorcery, deluded money managers into thinking that there were safe ways to invest in subprime home loans, even the ones granted to flagrant deadbeats at the peak of a housing bubble.

Lehman Brothers Holdings Inc., trying to shore up its balance sheet, has settled on a structure that will allow it to offload billions of dollars in real-estate loans from its books.

The Wall Street firm run by Chief Executive Officer Richard Fuld is still hammering out the final details and it isn't clear when a plan will be unveiled. One sticking point: finding financing in this cash-strapped environment for a spinoff or sale of these assets.

LONDON -- The U.K. government is planning to unveil Tuesday plans to help homeowners facing repossessions as well as first-time buyers as it seeks to mitigate the impact of the economic downturn.

The government will take a bigger role as the landlord to the country's poorest households for the first time since Margaret Thatcher, in a landmark move, began allowing low-income households to buy previously public housing. Expanding on plans announced earlier this year, the government is now prepared to buy housing and rent it back to tenants; lend money to people to buy homes; and build more homes, a spokesman for the Department for Communities and Local Government said.

Gulfport, Miss., like the rest of the state's Gulf coast, was spared the full fury of Hurricane Gustav. It's also showing new signs of recovering from Katrina, which pulled no punches when it slammed into the region three years ago.

NEW YORK -- Fannie Mae and Freddie Mac are demanding higher returns from lenders in exchange for buying loans that help finance rental-apartment buildings, as the two mortgage-finance giants expand in the sector.

The rate increases, the most recent of which came in the past week, are attributable to generally higher borrowing costs and efforts by companies to maximize gains from the sole bright spot in their portfolios.

Fannie and its smaller rival, Freddie, have recorded combined losses of about $14 billion in the past four quarters from soaring defaults on single-family-home mortgages. Those losses are expected to continue for at least another few quarters, and some analysts don't think the companies will return to the black before 2011.

Seeking views, Sara Antani bought a 17th-floor condo last August in a new Manhattan high-rise with floor-to-ceiling windows overlooking the Hudson River.

Glen DiCrocco The sun faded Sara Antani's sofas and made it tough to read her laptop until she installed shades in her Manhattan high-rise.

SHANGHAI -- In a big bet on China's post-Olympics economy, Japanese developer Minoru Mori opened the country's tallest skyscraper in a challenging environment.

Fannie Mae shook up its senior management in a move it said was designed to drive the mortgage company's efforts to conserve capital and contain a surge in costs stemming from defaults by homeowners.

WASHINGTON -- Federal bank regulators said they believe a plunge in the preferred shares of Fannie Mae and Freddie Mac would have limited impact through the banking system.

As we approach the seventh anniversary of 9/11, it is clear that the rebuilding of Ground Zero has failed. A recent editorial column in this newspaper by Daniel Henninger made the sad and insightful observation that even the coming together inspired by that awful event came apart as the process itself unraveled. He called the rebuilding arguably the greatest political and bureaucratic fiasco in the history of the world.

Hedge-fund manager John Paulson made more than $3 billion last year through smart bets, but his Hamptons house has sat on the market since spring and he recently shaved $2.6 million from the price, lowering it to $16.9 million.

SNOWMASS VILLAGE, Colo. -- Related Cos. has built signature buildings that helped to transform neighborhoods in Manhattan, Phoenix and South Florida. Now, the big-market developer is attempting a $3 billion redevelopment to transform this prosperous Colorado ski town.

Related's efforts to revamp the core of Snowmass Village, seven miles west of Aspen, is among the latest and most ambitious of many projects designed to overhaul Western America's aging ski towns -- many of which were built in the 1960s and 1970s.

MADRID -- Spanish home sales and new mortgage approvals fell sharply again in June, signaling continued pressure on Spain's once-flourishing home-building industry that fed the country's decadelong economic boom.

Home sales fell at an annual rate of 29.6% in June, while the number of new mortgages fell 37.7%, data released Thursday by Spain's National Statistics Institute, or INE, showed. In May, annual home sales plunged 34.3%, and the number of new mortgages fell 36.2%.

NEW YORK -- Manhattan District Attorney Robert Morgenthau announced that he has arrested and indicted highflying real-estate investor Adam Hochfelder for allegedly "stealing more than $17 million from a panoply of banks and individuals."

Mr. Hochfelder, who dazzled the New York real-estate industry in the late 1990s, when he could buy trophy properties less than 10 years out of college, was charged with grand larceny, forgery, falsifying business records and other crimes. The most serious charge, grand larceny, is punishable by as many as 25 years in prison.

The Federal Housing Administration, a U.S. agency that is rapidly shouldering more of the risk on home loans, raised the premiums it charges for insuring that mortgages will be repaid.

In a posting on its Web site Tuesday, the FHA said the upfront premiums charged to most borrowers will be 1.75% of the loan amount, effective Oct. 1. That is up from the 1.5% that was in effect until July 14, when the FHA adopted a "risk-based" pricing system that created a range of charges depending on borrowers' credit scores and the amount of the down payment or equity they owned in the homes. In late July, Congress approved a housing bill that included a provision requiring the FHA to revert to a standard premium at least until Oct. 1, 2009.

Three months ago, Eric Gray saw an opportunity to scoop up a vacant retail property in New York City's borough of Brooklyn. But he had a problem, one that has been plaguing many real-estate investors and owners: The nation's banks, burned by years of easy credit and the resulting devastating losses, are no longer eager to lend.

So Mr. Gray turned to an unlikely source for money -- a hedge fund. He took out a one-year, $2.3 million loan from Madison Realty Capital to pay for the $3.7 million property.

With each economic release related to the state of the housing market comes the hope that this one, finally, will prove that the residential real-estate market is on the way to recovery.

But disappointment has been the overriding influence for those trading home-building stocks, which have made several attempts to rebound from devastating losses over the past three years, only to resume the previous downtrend.

Sales of existing homes rose 3.1% in July, compared with the June rate of sales, but the National Association of Realtors also said that housing supply grew once again, to a record 11.2 months of supply on the market. That is trouble for publicly traded sellers of new homes, which have been aggressively reducing inventory in an attempt to get ahead of the housing recession.

SOME OF THE nation's top economists figure the government's response to Fannie Mae and Freddie Mac has come to a critical turning point: They expect Treasury will be forced to inject funds into the two firms, but they're not sure whether pulling the trigger will be enough to bolster the sagging economy.

The woes of the two mortgage-lending giants were the talk of the Federal Reserve Bank of Kansas City's annual mountainside conference here in Jackson Hole, Wyo. When the central bankers, academics and Wall Street economists met a year ago, the housing-market troubles had just begun to deepen global-credit problems.

Home prices are improving in some parts of the country but still falling sharply in hard-hit places like Phoenix, as the weak housing market and shaky consumer confidence continue to weigh on the battered U.S. economy.

REAL TIME ECONOMICS 

DUBAI -- A police dragnet continues to widen among senior corporate executives here, in what appears to be a concerted push by government officials to put the shine back on this Mideast boomtown's damaged reputation.

Dubai officials have detained and are questioning one current and one former executive at Nakheel, the real-estate-development subsidiary of government-owned Dubai World. One of Nakheel's showcase projects is the Palm, an archipelago of man-made islands in the shape of a palm tree.

Tropicana Entertainment LLC has decided to put one of its riverboat casinos on the auction block after delaying for months a proposed $220 million sale.

The company is seeking approval from the U.S. Bankruptcy Court in Wilmington, Del., to remarket the Evansville, Ind., Casino Aztar, which it has been trying to sell since late 2007.

Tropicana in March agreed to sell the casino to Reno, Nev., hotel and casino operator Eldorado Resorts LLC for $220 million, but filed for bankruptcy protection before the sale could close. The future of the casino has been in limbo ever since. Eldorado earlier this month asked a judge to force Tropicana to decide whether it wanted to sell the assets.

The Vail, Colo., ski retreat that President Gerald Ford owned for about a quarter century is on the market for the second time in less than two years, asking $14.9 million.

TOKYO -- Japan has seen a raft of property developers go to the wall this year as banks have refused to refinance their loans. Analysts say the bankruptcy filings are likely to set off a vicious cycle that will weigh on the sector's shares in the coming months.

The reason: Real-estate firms that have run into financial difficulty are selling off assets at fire-sale prices, which will put the value of properties under strain.

So far this year, 8,916 companies have filed for bankruptcy in Japan, a third of which were in construction or real estate, according to data compiler Tokyo Shoko Research Ltd. Big blowups include real-estate management firm Reicof and condominium developer Suruga. Just last week, Urban Corp., a Hiroshima-based condominium developer and sales agent, filed for bankruptcy.

CHESTER, Va. -- Barack Obama hammered at rival John McCain's personal wealth, part of the Democrat's more-focused message on the economy and the latest sign Sen. Obama is adopting attack politics to define his opponent.

Sen. McCain "said the economy is fundamentally strong," Sen. Obama told 250 people gathered outside John Tyler Community College. "If you don't know how many houses you have, then it's not surprising that you might think the economy was fundamentally strong."

High gas prices and growing environmental concerns are making more home buyers interested in bicycle-friendly neighborhoods. Seeing a market, some real-estate agents have traded their suits for spandex and are leading clients from house to house on two wheels instead of four.

While the development is nascent, agents in many areas of the country are offering home tours by bike. Craig Della Penna of Murphys Realtors Inc. in Northampton, Mass., started the service more than a year ago when he realized it would help clients judge whether properties are easily accessible to bike paths. "Because of the bike niche, I have new calls coming in every week," he says. Mr. Della Penna estimates about half of his 18 closings last year came about because he emphasized homes near bike trails.

(See Corrections & Amplifications item below.)

For the past year, apartment buildings have been one of the few bright spots in the real-estate industry as people forced out of the home-buying market by foreclosures or the credit crunch have turned to renting.

But now the specter of job losses is beginning to spread the gloom into that sector as well. As would-be renters are doubling up in apartments or moving in with friends and families, rents and occupancy rates are beginning to fall in many cities.

To see how difficult the condominium-development market has become, consider the plight of 100 Eleventh Ave., which was designed to be one of the hottest addresses in New York.

Kurt Wilberding/The Wall Street Journal Developers Craig Wood and Curtis Bashaw have seen their condo development 100 Eleventh Ave. in Manhattan hit some bumps.

Some 1,000 miles from the Olympic Games in Beijing, China's manufacturing hub of Guangzhou is preparing for its own moment in the sports spotlight as it gears up to host the Asian Games in 2010. In the works are ultramodern skyscrapers, new stadiums and a 2,000-foot-high television and sightseeing structure that is slated to be nearly double the height of the Eiffel Tower.

WASHINGTON -- The federal government threw a lifeline to borrowers of failed thrift IndyMac Bancorp Inc., unveiling a plan to quickly modify thousands of mortgages to keep consumers in their homes and limit the government's potential losses from taking over the firm.

The Federal Deposit Insurance Corp. said the modification would combine interest-rate reductions, longer repayment periods and principal forbearance on first mortgages either held or securitized by IndyMac. The agency said it will send new loan terms to around 4,000 borrowers this week, with a target of about 25,000 offers in the coming weeks.

Freddie Mac was forced to offer unusually rich terms to investors in a $3 billion auction of its debt, raising anew concerns about the health of the mortgage giant, a vital prop for the U.S. housing market.

Investors increasingly believe the U.S. government will take steps to rescue Freddie Mac and its sibling, Fannie Mae. The Treasury Department recently received authority from Congress to bail out the two companies, although it stopped short of doing so. Both now play a dominant role in financing mortgages. A rise in the companies' borrowing costs could translate into higher mortgage rates for consumers, prolonging the housing slump.

LONDON -- Alliance & Leicester PLC, a British bank, sold about £400 million ($747 million) of high-quality bonds backed by home loans this week, in a rare sign of life in the market for mortgage securities.

However, bankers say the U.K. lender's Monday sale isn't yet a sign of growing momentum in the mortgage-finance market, which has been a ghost town since the credit crunch last summer.

In an early sign that investors are starting to pounce on the billions of dollars of troubled land and construction loans that banks are looking to unload, a venture headed by LandCap Partners is buying $40 million of such assets from Wachovia Corp.

LandCap, a residential-land company headed by real-estate veteran Jeffrey Gault, has created a joint venture that will buy the loans which have a book value of $75 million to $80 million, according to people familiar with the deal.

Macau -- With his grip on Asia's gambling capital slipping, Stanley Ho has gone on the offensive.

Last month, the Hong Kong-born gambling magnate announced plans to tear down his flagship Lisboa casino and hotel and build his biggest and most opulent showcase yet, at a cost of HK$12 billion (US$1.54 billion). The 86-year-old also pushed through a long-delayed initial public offering for the company he controls, SJM Holdings Ltd., raising $494 million despite stock-market jitters.

When British Land PLC, the U.K. property group, reports fiscal-first-quarter earnings Thursday, it will most likely confirm what is becoming increasingly clear about the European property sector: The troubles are far from over.

Financial reports by property companies such as Liberty International PLC and Hammerson PLC have held some unpleasant surprises. Not only is it obvious that property yields are continuing to widen, causing property values in the U.K. and throughout continental Europe to decline. Perhaps more unexpected, said analysts and investors, is the possibility that some commercial property could soon be valued at less than the loans on the property. This could turn the subprime-mortgage debacle into a commercial-property crisis.

HONG KONG -- Hong Kong's former top housing official stepped down from his new post as an executive at one of the city's most prominent property developers, as the company acknowledged accusations of a conflict of interest had taken a political toll.

When it comes to housing, it's a buyer's market -- especially for first-time home buyers eligible for new tax breaks.

The American Housing Rescue and Foreclosure Prevention Act of 2008, passed by Congress at the end of July with hopes of shoring up the ailing housing market, also includes an important tax break. First-time home buyers who purchase a home after April 8, 2008, and before July 1, 2009, are eligible for a $7,500 tax credit (or, if the home costs less than $75,000, a credit equal to 10% of the purchase price).

The Amish have long been famous for barn raisings. Now, they're becoming known for building houses for the non-Amish, often using ancient construction techniques.

About 600 Amish contractors or subcontractors work in at least a dozen states, a rapid increase over the past decade, says Donald B. Kraybill, who has written more than a dozen books on the conservative Christian sect. Not only do some of them specialize in the timber-frame construction method that doesn't use nails, they often can erect a house faster and for less money than traditional contractors, customers say.

Congress and the Bush administration so far have failed to end a foreclosure crisis that is ejecting hundreds of thousands of American families from their homes. Can Donald Trump save the day?

The owners of the 1,230-unit, rent-controlled Riverton Apartments in Manhattan's Harlem neighborhood anticipate defaulting on the property's $225 million mortgage by next month, marking one of the housing bust's largest collapses of a New York City residential development.

Developers Rockpoint Group LLC and Stellar Management have told the mortgage's servicer that they made minimal progress toward their goal of converting half of the 61-year-old complex's units to market-rate housing since obtaining the mortgage in December 2006, according to Trepp LLC, a data-and-analytics provider that tracks commercial-mortgage securities.

Twenty years ago the Eames House in Pacific Palisades, Calif., existed in people's minds more as a photograph in numberless histories of architecture than as a place many of us had seen in person. Ray Eames, the widow of Charles, lived here until her death in 1988, and unless you were a friend of hers or a devoted student of California modernism with the right connections, chances were nil you could inspect one of the most celebrated private homes built in postwar America.

WASHINGTON -- Home mortgage rates stayed mostly flat this week, as fresh economic and housing data sent mixed signals to the market, Freddie Mac's chief economist said Thursday.

The 30-year fixed-rate mortgage didn't change at all from last week, according to Freddie Mac's weekly survey, remaining an average 6.52% on a nationwide basis. The mortgage averaged 6.62% a year ago.

The 15-year fixed-rate mortgage slipped just slightly, averaging 6.07% for the week ending Aug. 14, down from 6.10% last week and the year-earlier 6.30%.

Office and retail developer Vornado Realty Trust struck a joint venture with Indian conglomerate Reliance Industries Ltd. to spend $500 million building and operating shopping centers in India, signaling the latest effort by a U.S. retail developer to expand abroad.

Vornado, of the U.S., and Reliance will spend $250 million each to buy and build shopping centers spanning 500,000 to one million square feet in Indian cities. Many of the centers will be anchored by a hypermarket -- a massive store selling both groceries and general merchandise -- operated by Reliance.

Stuck with a growing glut of foreclosed houses, banks and investors are shedding them at increasingly steep losses, potentially adding to the banking industry's red ink this year.

Banks are selling foreclosed homes in some cases for less than half the price they fetched two or three years ago. The cuts are coming as the U.S. banking sector, slogging through its worst crisis in decades, bites the bullet out of fear that prices will keep falling.

DUBAI -- Cracks are starting to show in Dubai's well-crafted and glitzy property-marketing machine.

Flipping properties has reached such a feverish pace, driving up prices, that Dubai's Real Estate Regulatory Authority, or RERA, is looking at measures to crack down on the practice, which involves quickly reselling property at a profit.

Meantime, a series of legal tussles and property-related scandals have rocked investor confidence, and analysts are forecasting that property prices, which have risen sharply in a matter of months, could tumble by as much as 10%, hurt by oversupply.

A steep decline in the stock price of General Growth Properties Inc. prompted a top executive of the company to sell half of his common shares this week to cover a margin call.

Bob Michaels, General Growth's president and chief operating officer, sold 700,000 shares Tuesday at an average price of $27.13, according to a filing with the Securities and Exchange Commission.

The sale left Mr. Michaels with 690,507 common shares in General Growth, which develops and owns shopping malls.

Suzanne and Dave Francione figured they could reduce their heating bill by $1,300 this winter by switching from oil to natural gas, so they called the utility company and plumbers. That was in May. Today, the couple is still waiting on their conversion, which won't be done until September because of a growing backlog of other Northeasterners desperate to abandon costly heating oil.

"We were watching the price of oil escalate" and determined that the winter heating-oil bill would hit $3,000, says Mr. Francione, a Needham, Mass., investment banker. "That's when we decided to convert."

Fannie Mae reported a wider-than-expected second-quarter loss of $2.3 billion and said it expects more heavy losses from the surge in home-mortgage defaults.

Mounting losses at both Fannie and Freddie Mac, the two main providers of money for home mortgages, are limiting their ability to buy and guarantee home loans. That may mean higher interest costs for consumers.

CONFERENCE CALL 

As head of the giant investment firm that controls ailing Chrysler, Stephen Feinberg has a fixer-upper on his hands.

As a homeowner, he's been in a similar predicament for years.

David M. Russell for The Wall Street Journal This 103-year-old building in Manhattan has been a major renovation project.

Even reality television isn't immune from the current real-estate downturn.

"Hope for Your Home," the newest addition to TLC's slate of property-related reality programming, is a direct response to the needs of financially-strained homeowners. Eschewing emotional hysterics in favor of pragmatics, each half-hour show provides participating families with tangible advice on how best to increase the value of their home so they can sell or refinance. The show debuts Saturday at 8:30 p.m. EDT.

Five of the nation's largest credit unions are reporting big paper losses on mortgage-related securities, a sign that housing-market distress is spreading even to the most risk-averse financial sectors.

The federal regulator overseeing credit unions says the losses are likely to be reversed when mortgage markets stabilize, and that the institutions are sound and adequately capitalized. But some outside observers are concerned that the credit unions are underestimating the depth of their mortgage-market problems.

LOS ANGELES -- The Securities and Exchange Commission escalated its scrutiny of Countrywide Financial Corp. into a formal investigation, according to a regulatory filing by Bank of America Corp.

The document didn't specify what aspect of the lender the SEC's probe is focused on, although regulators launched an informal inquiry into Countrywide Chairman and CEO Angelo Mozilo's stock trades last fall.

Representatives for Charlotte, N.C.-based Bank of America and Countrywide declined to comment beyond the filing Friday.

Hollywood couple Sean Penn and Robin Wright Penn have put their San Francisco-area home on the market for $15 million.

Sean Penn's San Francisco home

Beazer Homes USA Inc. reported a narrowed fiscal third-quarter loss as the company slashed its land and land-development spending but continued to see home closings, sales prices and new orders slide.

Chief Executive Ian J. McCarthy said as "potential home buyers remain reluctant due to eroding consumer confidence amid concerns about employment growth, higher energy costs and the overall economy," the company expects "challenging" industry conditions will continue, and is maintaining "a disciplined and cautious operating approach."

Denver

Anticipating a crush of attendees at the Democratic National Convention this month and a shortage of hotel rooms, some Denver residents are renting out their homes at mile-high prices.

BERLIN -- The global hotel industry is in panic mode as the effects of the U.S. credit crunch spread, high oil prices threaten to curtail travel and the broader economic outlook dims.

Just don't tell Horst Schulze, the former president and chief operating officer of Ritz-Carlton. The 68-year-old Mr. Schulze now runs hotel-management company West Paces Hotel Group, which was started by him and former Ritz-Carlton executives and operates the premier Capella brand.

Moscow

When Robert Jenkin, CEO of a multimillion-dollar property firm, travels, he stays in four- and five-star hotels in Tokyo, New York and most other major cities. In Moscow, he rents apartments, braving shabby stairwells, Soviet-era furnishings and sketchy management agencies.

As one of the most powerful chief financial officers among U.S. mall owners, Bernie Freibaum has held considerable sway for years over financial backers of General Growth Properties Inc.

But as Mr. Freibaum begins to refinance General Growth's $18.4 billion in debt that comes due during the next 3½ years, he is finding that the tables have turned, and lenders are making the most of their new negotiating strength. Industry executives are watching to see how lenders treat companies that have valuable assets yet are saddled with massive debt.

The Treasury Department, which recently received authority to help shore up Fannie Mae and Freddie Mac, hired Morgan Stanley to provide "market analysis and financial expertise" in connection with its rescue plan.

Congress recently agreed to allow the Treasury to provide an unlimited line of credit to the mortgage titans and take an equity stake in either company over the next 18 months. Treasury Secretary Henry Paulson has said he has no plans to use the agency's new authority but had asked for it to help reassure the markets.

Connecticut Attorney General Richard Blumenthal has sued Bank of America Corp.'s Countrywide Financial Corp. for allegedly deceptive lending practices.

Echoing the many other legal complaints against the mortgage lender, the Connecticut lawsuit alleges Countrywide engaged in several types of inappropriate lending behavior and made loans to consumers that were unaffordable or unsuitable for the borrower. The complaint, filed in state court in Hartford, alleges violations of Connecticut's unfair trade practices and banking laws.

IndyMac Bancorp Inc., the failed California mortgage lender whose bank was seized by regulators last month, filed for Chapter 7 protection in U.S. Bankruptcy Court in Los Angeles.

The holding company's bankruptcy filing was widely expected. It doesn't include IndyMac Federal Bank FSB, which is run by the Federal Deposit Insurance Corp. and is the successor to IndyMac's former banking unit. IndyMac Bank, the third-largest bank failure in U.S. history, was taken over by the FDIC last month after a run on the bank. IndyMac Federal Bank FSB said it isn't affected by the bankruptcy filing of IndyMac Bancorp.

Burl East is looking for a good deal on a foreclosed house. Make that a good deal on 1,500 foreclosed houses.

Mr. East, a managing principal of Silver Portal Capital LLC, a small real-estate investment bank, is raising $150 million to purchase foreclosed houses in and around the firm's hometown of San Diego. He is scouring lender portfolios and real-estate listing services -- as well as spots to get a cup of coffee -- for houses that he can rent out and then resell in five years. That is when he bets that the local housing market will have recovered.

Fannie Mae and Freddie Mac, trying to contain mortgage-default losses, are redoubling efforts to prevent foreclosures.

In some cases, though, these moves may only delay the inevitable, easing pressure on the companies' finances in the short term without resolving their troubles.

The two U.S.-government-sponsored guarantors of home loans last week said they will increase fees they pay loan-servicing companies for "workouts" that prevent foreclosures. (Servicing companies collect loan payments and handle other administrative tasks.) Freddie also said it will give servicers more time to pursue such workouts.

Bankrupt retailer Steve & Barry's LLC stepped back from the brink of liquidation, agreeing to be acquired by turnaround specialist Bay Harbour Management LC for $163 million.

Bay Harbour plans to operate the chain store as a going concern, so long as a deal on renegotiated leases can be reached. The ability of Steve & Barry's to stay in business would be a godsend to mall owners across the country, who ponied up hundreds of millions of dollars to attract the stores into huge, empty spaces, often as large as 100,000 square feet.

London's historic financial center is losing a marquee bank -- to real-estate rival Canary Wharf. After efforts to build a new headquarters in the City, as the square-mile area is known, ran into problems, J.P. Morgan Chase said Friday it would instead move to Canary Wharf, the rival financial district developed over the past two decades.

A recent improvement in beleaguered home-equity loans has been a rare sign of encouragement for banks. But bullish investors need to remove their rose-colored glasses.

Banks have about $700 billion of home-equity loans -- in which a bank lends money to a homeowner against the equity in his house. That includes both fixed-rate loans and floating-rate debt drawn from credit lines. Lenders usually can't collect on a defaulted home-equity loan by seizing a house unless the borrower has no mortgage, since mortgage lenders have first claim.

When Skanska AB secured the contract last week to manage the $500 million renovation of New York City's Madison Square Garden, it was the latest coup for a company that has racked up a string of high-profile projects across the U.S.

The Stockholm-based company, one of the world's largest construction firms, also is leading the renovation of the United Nations headquarters in Manhattan, building a new American football stadium for the New York Giants in New Jersey and is involved with constructing the $2.2 billion transportation hub in the World Trade Center rebuilding.

Like many harried people, when we're stressed we forget things, like the milk we meant to grab at the grocery store. We also forget to stow our house keys in pockets and pocketbooks -- which means we occasionally must call a 24-hour locksmith service to help us break back into our own home.

Unfortunately, it's hard to tell whether a locksmith is reputable -- particularly when you're locked out and relying on directory assistance or a neighbor's Internet connection. The Council of Better Business Bureaus and the Federal Trade Commission both issued warnings about some locksmiths' business and pricing practices in 2007, and Associated Locksmiths of America, a Dallas-based trade group with more than 10,000 members, advocates that members petition their states to require locksmith licensing. Preliminary data from the Council of Better Business Bureaus show that complaints about locksmiths more than doubled from 2005 to 2007, from 247 to 560.

Less than two years after auctioning off the contents of her Malibu, Calif., mansion, singer Cher has put the Italian Renaissance-style villa on the market for $45 million.

BENTONVILLE, Ark. -- Dennis Pflueger and his wife won a rent-free year in a nice new house in an expensive subdivision not far from the headquarters of Wal-Mart Stores Inc. As part of the prize, they then have the option to buy the four-bedroom home for $452,000.

Mr. Pflueger, a telephone-cable installer who describes himself as an "old redneck," is in the middle of his free year. But the Pfluegers are a bit lonely. Just one other family lives in any of the 28 new or unfinished houses on Foxboro Court. Up the street, a sign announcing "Elegant Homes" sits on a lot choked with weeds. The block is as quiet as an old ghost town.

Helena Peterson's favorite show these days depicts shadows flickering on artwork and furniture in a deserted dining room.

It's not an avant-garde production but a Webcam view of the vacation house that Ms. Peterson bought last year in Southport, N.C. Using a computer at her primary home in Ellsworth, Maine, she monitors the house in the tiny fishing town via an Internet connection. Though there's little to see she says she finds it mesmerizing -- and a way to spend time, at least virtually, in her second home while stuck at her first one. "It's a fantasy experience," says Ms. Peterson, a public-health program director.

The housing bill signed Wednesday by President George W. Bush will provide a stream of billions of dollars for distressed homeowners and communities and the nonprofit groups that serve them.

WASHINGTON -- President George W. Bush signed a housing-rescue bill into law Wednesday, completing Congress's ambitious legislative effort to head off rising foreclosures and stabilize jittery financial markets.

The law is wide-ranging and could have a big impact on home buyers, lenders and investment banks, and an even bigger effect on housing-finance giants Fannie Mae and Freddie Mac.

Until recently, the biggest challenge facing iStar Financial Inc. was how it would handle billions of dollars of loans and funding commitments to condominium developers that it picked up when it acquired Fremont General Corp. a year ago, the kinds of assets that have higher chances of default in today's housing slump.

Now, the big question is whether iStar can maintain its investment-grade credit rating, on which its lending business is predicated.

WASHINGTON -- The housing rescue bill passed by the Senate Saturday hasn't been signed into law, but top Democrats already are putting pressure on regulators and bankers to make sure a major program to prevent foreclosures doesn't fall flat.

For struggling U.S. homeowners, the success or failure of the program -- which would let roughly 400,000 owners refinance into affordable, government-backed loans -- depends largely on bankers' willingness to take a partial loss on the loans and to reduce the amount of money borrowers owe.

Although a bill aimed at reviving home sales and curtailing foreclosures is about to become law, some of its provisions are proving a drag for the nation's large home builders.

Despite a rally Tuesday, the Dow Jones Wilshire U.S. Home Construction Index, which tracks the stocks of major builders, has fallen about 8.5% since President George W. Bush indicated last week that he wouldn't veto the bill that has been approved by Congress.

Home vegetable gardening is surging thanks to rising food prices and health scares with commercial supplies. But at the rarified end of this horticultural renaissance is a world of backyard produce that has more in common with designer boutiques than the local farm stand.

America's shopping venues are getting an international makeover as moderately priced apparel retailers from Europe, Asia and Canada increasingly set up shop in the U.S.

Reuters Beverly Center in Los Angeles added 12 foreign retailers in the last two years.

The housing legislation that is close to becoming law may help as many as 500,000 cash-strapped homeowners avoid foreclosure, by assisting them in refinancing into more-affordable government-backed mortgages.

COUNSELING RESOURCES FOR STRUGGLING HOMEOWNERS • Neighborhood Assistance Corp. of Americanaca.com 1-888-302-6222• ACORNacorn.org 1-866-672-2676• Homeownership Preservation Foundation995hope.org 1-888-995-4673• HomeFree-USAhomefreeusa.org 1-866-696-2329

Supermodel Gisele Bündchen and quarterback Tom Brady have both re-listed their former Manhattan pads. Ms. Bündchen is now asking $5.9 million for her West Village penthouse, a bit more than half of her original asking price last September. Her boyfriend, the New England Patriots quarterback, wants $18.29 million for his Time Warner Center condominium, roughly 10% more than he asked last year.

The medical examiner in Arizona's Maricopa County said Wednesday that Scott Coles, the late chief executive of real-estate lender Mortgages Ltd., died on June 2 as a result of suicide induced by alcohol, the painkiller oxycodone and zolpidem, a prescription medication used in sleeping pills.

The Wall Street Journal profiled Mr. Coles, who was 48 years old, and Mortgages Ltd. in a page-one article July 16. He had built the 45-year-old company, which was founded by his father, into one of Arizona's biggest private lenders to commercial real-estate developers, including those building some of Phoenix's highest-profile condominium and retail projects.

A cadre of state-court judges scrutinizing foreclosure actions in a string of recent rulings have discovered flaws in documents that borrowers may be able to use to keep their homes.

The judges, including a committee from the Kings County Supreme Court in Brooklyn, N.Y., are highlighting shortcuts taken by mortgage companies in court filings, which borrowers might be able to exploit when facing foreclosure.

WASHINGTON -- James B. Lockhart III has spent the past two years telling almost anyone who would listen that the obscure federal agency he heads needed more power to do its job -- regulating the two government-backed providers of funding for mortgages, Fannie Mae and Freddie Mac.

Now Congress, after years of deadlock, is finally about to grant more power to the minders of Fannie and Freddie. And Mr. Lockhart will have to figure out how best to use that power.

SHANGHAI -- Outside a little convenience store, Shen Zaijie tells a tale of woe. According to a raging local rumor, a section of Shanghai will soon become the site of Walt Disney Co.'s long-anticipated theme park in mainland China. Mr. Shen tells passersby that the park might force him out of a two-year lease he just signed to operate a printing business.

Nobody buys the line. "Liar!" interjects a man listening to the story, as others join in to denounce the claim. Shifting in his brown flip-flops, Mr. Shen admits he doesn't have any employees or printing orders to go with his business license.

WASHINGTON -- A sprawling bill that reaches deep into the U.S. housing industry is close to becoming law, in what will likely stand as the federal government's most expansive effort to stabilize the mortgage and financial markets.

The bill, which began seven months ago as a modest attempt to help struggling homeowners, will now likely touch a vast array of borrowers, lenders, and investors: from owners in Colorado facing foreclosure to community banks in California and investment banks on Wall Street.

The number of U.S. workers filing new claims for unemployment benefits soared last week, suggesting no stabilization is in sight for labor markets.

Initial claims for jobless benefits rose 34,000 to 406,000 after seasonal adjustments in the week ended July 19, the Labor Department said. It matched the level of late March, which was the highest since September 2005, after Hurricane Katrina.

WASHINGTON -- The chief of the mortgage industry's most powerful lobby group resigned Tuesday, just as the industry is defending itself from a hostile Congress and a punishing housing slump.

Jonathan Kempner, president and chief executive of the 2,400-member Mortgage Bankers Association, will step down when his contract ends Dec. 31, he said. He will be succeeded by former board Chairman John Courson, who coordinates the association's state-level lobbying. Mr. Courson immediately will take the post of the association's chief operating officer.

Home-mortgage rates are nearing their highest levels in a year, adding to pressures on the already weak housing market.

Rates on conforming 30-year fixed-rate mortgages rose by nearly 0.40 percentage point in the past week to an average of 6.71%, according to HSH Associates in Pompton Plains, N.J. Rates on jumbo loans, which are too big to be eligible for purchase by Fannie Mae or Freddie Mac, currently average 7.84%.

The higher rates are making it more difficult for borrowers to refinance and putting another crimp on weak home sales. "It's a tough market and rates going up isn't helping it," said Steve Walsh, a mortgage broker in Scottsdale, Ariz.

The first tenants won't move into Vista del Sol in Tempe, Ariz., until next month, but its nearly 2,000 beds have been preleased for months. Cancellations aren't a concern: There's a lengthy waiting list for tenants eager to live in a resort-like setting with pool, fitness center and theater.

The secret is location, location, location. Vista del Sol is a private development that will house college students on the campus of Arizona State University. Across the country, more colleges are starting to loosen their grip on campus housing and strike deals with specialized developers to help meet housing needs. Modern dorms built and managed by professional real-estate companies can help colleges recruit and retain students while freeing up funds needed to improve classrooms, upgrade facilities and provide financial assistance.

WASHINGTON -- House and Senate leaders have largely hammered out a compromise deal on a mammoth housing package that would permit the government to bolster Fannie Mae and Freddie Mac in an emergency, overhaul supervision of the housing-finance giants and allow the government to insure up to $300 billion in refinanced mortgages.

The deal comes after tense negotiations and is likely to remain a source of contention when the House of Representatives votes Wednesday. The nonpartisan Congressional Budget Office said Tuesday that a temporary measure to prop up Fannie Mae and Freddie Mac could cost the government as much as $25 billion. And despite repeated White House veto threats, lawmakers plan to include a $4 billion program that would allow local governments to buy and rehabilitate foreclosed properties.

Bank examiners from the Federal Reserve and the Office of the Comptroller of the Currency are looking at the books of mortgage investors Fannie Mae and Freddie Mac, a person familiar with the situation said.

The examiners are working with the two companies' main regulator, the Office of Federal Housing Enterprise Oversight, or Ofheo, this person said. This joint effort to assess the financial condition of the two government-sponsored companies was first reported by the New York Times Web site late Monday.

WASHINGTON -- U.S. home prices fell 0.3% from April to May, the Office of Federal Housing Enterprise Oversight said Tuesday.

Additionally, the government agency, which overseas mortgage finance giants Fannie Mae and Freddie Mac, said U.S. home prices fell 4.8% for the 12 months ending in May.

Ofheo's monthly index is based on the purchase prices of houses backing mortgages that have been purchased or guaranteed by Fannie Mae and Freddie Mac.

Decades of white flight transformed America's cities. That era is drawing to a close.

In Washington, a historically black church is trying to attract white members to survive. Atlanta's next mayoral race is expected to feature the first competitive white candidate since the 1980s. San Francisco has lost so many African-Americans that Mayor Gavin Newsom created an "African-American Out-Migration Task Force and Advisory Committee" to help retain black residents.

Federal officials heap much of the blame for the subprime mortgage mess on lenders, claiming they recklessly made too many high-cost home loans to borrowers who couldn't afford them.

It turns out that the U.S. government itself was one of the lenders giving out high-interest, subprime mortgages, some of them predatory, according to government documents filed in federal court.

WASHINGTON -- House Democrats negotiating a rescue of Fannie Mae and Freddie Mac said they wouldn't exempt the proposal from the annual debt limit, a move designed to quell lawmakers' concerns that the Treasury's financial aid could be unlimited.

Mortgage giant Freddie Mac -- emboldened by emergency regulatory actions that have triggered a two-day rebound in its battered stock -- is considering raising capital by selling as much as $10 billion in new shares to investors, according to people familiar with the matter.

The selling of new shares would have the potential to avoid a full-blown government rescue for Freddie Mac and Fannie Mae, twin keystones of the U.S. housing market. The publicly traded, government-sponsored companies own or guarantee about $5.2 trillion of home mortgages, or nearly half the total outstanding, and are at the center of government efforts to prop up the sagging housing market.

Nicolas Cage could be leaving Las Vegas.

Marin County, Calif., estate Locksley Hall

The "National Treasure" star is asking $9.95 million for a 14,000-square-foot home there with garage parking for 16 cars, real-estate records and listing information show. The home has been on the market since late fall, but Mr. Cage's ownership wasn't disclosed.

The hottest trend this decade in shopping-center development has gone cold.

Known as lifestyle centers, the open-air shopping venues offer small parks, fountains and cafés amid name-brand retailers selling fashion apparel, housewares and other discretionary fare. Developers raced to add new ones as they became popular with shoppers, especially women between 20 and 50 years old, a coveted category. Meantime, construction of traditional enclosed malls all but stopped.

BEIJING -- Predictions that half-a-million overseas visitors would attend the Olympics accelerated a surge of hotel construction here. Now, with the Games less than a month away, all that building may have produced a glut of rooms in one of the world's prized hotel markets.

Las Vegas

Illustration by Sean McCabe; Photo by Robert Gallagher/Wonderful Machine for The Wall Street Journal Sam Nazarian

A black Maybach 57 rolls down the Strip ferrying another big dreamer. The luxury sedan passes the glittering gambling palaces and heads north to the Sahara Hotel & Casino, an aging, down-on-its-luck landmark that hardly seems fit for this well-heeled passenger. Except that he's the owner.

WASHINGTON -- The Bush administration's hastily arranged strategy to stabilize Fannie Mae and Freddie Mac came under siege on Capitol Hill, as Republicans tried to slow it down and Democrats moved to marry it with a program the White House has threatened to veto.

In most markets, home buyers have the upper hand these days. That often means they have greater negotiating power when it comes to price or the ability to squeeze out extra perks from sellers.

But on occasion, they will ask a seller for even more, a request that will help get to know the home better. They will ask to sleep over.

As reality programs such as TLC's "Date My House" and HGTV's "Sleep On It" show buyers spending a considerable amount of time -- and sometimes an entire night -- in homes they are considering, some buyers in the real world are getting the chance to do the same.

NEW DELHI -- Amid the debris of a battered Indian real-estate sector, some analysts say investment bargains may be emerging. Their favorites: blue-chip property companies DLF and Unitech.

This has been a miserable year for Indian property stocks. Rising inflation and interest rates have delivered a double whammy: Capital is more expensive, and consumers are scaling back spending.

"The real-estate sector has been witnessing a cash crunch," says Shaleen Silori, a real-estate associate at ICICI Securities in Mumbai.

(See Corrections and Amplifications item below.)

Mortgage insurers have been dramatically tightening their standards throughout the U.S., further squeezing potential home buyers.

Stung by growing defaults, lenders are offering borrowers fewer ways to avoid purchasing private mortgage insurance. Mortgage insurance, required for buyers who are unable to make a full down payment or who have insufficient credit histories, reimburses lenders in the event of a borrower default. But over the past few months, mortgage insurers have been declaring more and more of the U.S. a "declining market," raising the requirements and making such insurance harder to obtain. The result: another hurdle for home buyers, and yet another wrenching change for the struggling housing market.

After months of struggling with a life-threatening glut of debt, shopping-center giant Centro Properties Group agreed to sell 29 U.S. properties for $714 million in a deal being closely scrutinized as a measure of how far commercial real-estate values have fallen.

WASHINGTON -- Treasury Secretary Henry Paulson took the lead in crafting a rescue plan for ailing mortgage giants Fannie Mae and Freddie Mac, a move that appears to have staved off an imminent crisis but one that draws the federal government into an ever bigger role managing the American economy.

Mr. Paulson ordered his staffers to draw up contingency plans at the end of June, almost two weeks before such a move became public Sunday. He quickly persuaded the Federal Reserve to participate. As recently as a Friday breakfast between Mr. Paulson and Federal Reserve Chairman Ben Bernanke, such a move had been only briefly discussed.

WASHINGTON -- The U.S. Senate passed an extensive package of housing legislation Friday, reacting to the continuing erosion of home prices and growing foreclosures by taking their most aggressive step yet to address the housing crisis.

Despite the vote, which came after weeks of political wrangling, House and Senate lawmakers will still need to overcome a number of impediments before President George W. Bush can sign the bill into law.

The U.S. Treasury and Federal Reserve, capping a weekend of high-stakes maneuvering, attempted to shore up confidence in Fannie Mae and Freddie Mac by announcing a plan that placed the federal government firmly behind the battered mortgage giants.

In a statement timed to precede the opening of Asian markets Monday, as well as a closely watched auction of debt by Freddie, the Treasury said it plans to seek approval from Congress for a temporary increase in a longstanding Treasury line of credit for the two companies.

Grubb & Ellis Co., a struggling Chicago real-estate-services company, said its chief executive, Scott D. Peters, has resigned, about seven months after taking office.

Independent Director Gary H. Hunt will be interim CEO while the company searches for a permanent successor.

Mr. Peters' resignation follows that of Anthony Thompson, who resigned as chairman in February, and Robert Osbrink, who resigned in June as executive vice-president.

In the latest in a series of ultrahigh-end Palm Beach listings and sales, a Florida car dealer is asking $72.5 million for a house -- almost three times what he paid in 2003.

The recently renovated main house, built circa 1924 and designed by veteran Palm Beach architect Addison Mizner, has nine bedrooms, 15 bathrooms, a movie theater with a ticket window and concession stand, an exercise room, a wine cellar and a private generator: all told, about 30,500 square feet. A pool, large pool house and two three-car garages, each with a second-floor guest apartment, are also included.

The Russians are coming.

As many of America's wealthy are roiled by the credit crisis and general financial gloom, a growing number of rich Russians are house-shopping -- and buying -- in costly U.S. enclaves.

Fertilizer mogul Dmitry Rybolovlev is set to pay nearly $100 million to Donald Trump for an oceanfront mansion in Palm Beach, Fla., say people familiar with the deal reached in May. Last year, Oleg Baibakov, president of GSC City, a Moscow construction-management and consulting firm, bought a condo at Manhattan's Time Warner Center for $13.5 million, according to public records.

As the crisis worsens for mortgage giants Fannie Mae and Freddie Mac, Treasury Secretary Henry Paulson is insisting that any potential government rescue plan not benefit the companies' shareholders, according to people familiar with the matter.

The two stockholder-owned, government-sponsored companies, whose operations are vital to the functioning of the U.S. housing market, faced a severe crisis of confidence after a week in which their stocks each lost nearly half their value. On Friday, Freddie Mac finished the day at $7.75 a share, and Fannie Mae at $10.25.

Even as federal officials sought to reassure investors about the financial health of Fannie Mae and Freddie Mac, pressure mounted on the giant mortgage companies to raise fresh capital to offset the tumbling values of home loans they hold.

The bottling company went bankrupt, leaving 35 real-estate investors in a bind. To come up with a solution, all 35 of them had to agree -- no dissenters. None of them could be in charge while they discussed what to do. And, for most of them, their life savings were at stake.

The 35 investors were part of a tenant-in-common real-estate venture, a structure in which multiple investors buy fractional ownership in a commercial property, in this case a Phoenix bottling plant. But the bottler -- the building's lone tenant -- was forced into bankruptcy in November 2006 amid allegations of accounting fraud. Then, the investors found themselves in largely uncharted waters.

Pasadena, Calif.

First, Countrywide Financial Corp. went down, as the nation's biggest mortgage lender was acquired in a rescue operation July 1 by Bank of America Corp. Now Countrywide's offspring, IndyMac Bancorp Inc., is on the ropes.