Default

LONDON - The alarm over potential bank runs in Greece and Spain this week has highlighted an often-overlooked fact: Europe's debt crisis is also, in many ways, a major banking crisis. In capitals such as Athens, Madrid and Rome, large portions of the sovereign debt racked up by spendthrift governments are owed to the countries' own banks, locking governments and the banks in an embrace so tight that disaster for one would almost certainly spell doom for the other. International bailouts for Greece, Ireland and Portugal have helped to keep not just their governments but also their banks afloat, as well as financial institutions in other parts of Europe with large exposure to those nations' debts.

The 17 nations of the Eurozone agreed Friday to increase their bailout resources in an attempt to keep a lid on the debt crisis that has hobbled the region's economy and raised doubt about the future of the euro. But the new total of about $1 trillion in rescue funds still falls short of what many analysts and investors have suggested is necessary to insure major economies such as Spain and Italy against a possible default. Also, more than a third of the money is already committed to rescue packages for Greece, Ireland and Portugal, meaning that the actual amount available is considerably less.

First of three parts Tiffany Lee wanted a car. She was weary of the two-hour bus ride to her job at a UCLA Health System clinic. She hated having to ask friends to drive her 7-year-old son to his asthma treatments. But as a single mother with three children, bad credit and a $27,000-a-year salary, she couldn't find a bank or dealership willing to give her a loan. Then a friend steered her to Repossess Auto Sales in Hawthorne. Another buyer might have balked at the deal she was offered.

Greece has successfully pushed through a deal to lower its debt burden and avoid defaulting on its outstanding bonds in the near future. Holders of Greek bonds had until Thursday to agree to trade in their old Greek bonds for new ones with a lower face value. After tabulating all the responses, Greece said overnight that over two thirds of its bondholders agreed to the exchange -- the threshold necessary for the deal to go forward. If Greece was unable to secure agreement from enough of its creditors it was expected to default on bond payments due later this month, which would likely have set off some amount of economic panic.

A newly streamlined government plan to reward homeowners who diligently pay their underwater mortgages is proving a bonanza for banks, which by one estimate may pocket $12 billion in extra revenue by refinancing loans. The revisions to the Obama administration's 3-year-old Home Affordable Refinance Program have yielded mixed results for homeowners, analysts and mortgage professionals say. Some responsible homeowners are indeed getting lower-interest loans despite owing far more than their homes are worth.

Tasha Younger has been one of the hidden statistics in the growing number of graduates and former students overburdened with education loans. The 38-year-old mother of two — still trying to pay off her loans a decade after quitting nursing school — has been delinquent on her monthly payments but never in default. Statistics typically show how many students simply fail to make payments. But a recent survey has found that for every person who defaults on student loans, at least two more are like Younger: late or short on payments.

Rosscomp Corp. said it has suspended operations while executives negotiate with creditors and prospective buyers to determine whether the company will survive. The ailing Santa Ana computer parts maker said it received from creditors a second notice of default for non-payment of more than $100,000 in interest and principal on $938,000, two-year convertible subordinated notes.

One question: If the federal government can shut down for a day and default on a $4.9-trillion debt, can I take an afternoon nap and default on my $30,000 student loans? MICHAEL BEATRICE Venice

Maguire Properties Inc., one of the region's largest commercial landlords, posted widening losses Monday and said it was about to default on seven prime office buildings in Los Angeles and Orange counties. The real estate investment trust lost $375.7 million, or $7.95 a share, during the second quarter, more than twice the $105.9 million lost during the same period in 2008. It is defaulting on loans worth more than $1 billion. Maguire Properties hopes that by giving back the keys to properties for which it overpaid at the peak of the last boom, it can reduce debt enough to keep the company solvent, Chief Executive Nelson Rising said in an interview Monday.

Sen. Mitch McConnell, the Republican minority leader who hinted over the weekend that he had a “contingency” plan for raising the federal debt limit, rolled it out Tuesday moments before all sides convened for another round of talks at the White House. McConnell unveiled a complicated legislative strategy that would allow Congress to vote against raising the debt limit, let President Obama veto the measure, and then hold a vote to override the veto, which requires a two-thirds majority to pass.

Decision day for the Greek debt crisis is drawing near, and insiders are predicting that if things go awry it could cost the world economy $1.3 trillion. Holders of Greek bonds have to decide by this Thursday whether they will trade in their old Greek bonds for new bonds that are worth less. Bond holders have an interest in agreeing to the swap because if it doesn't work, Greece is likely to default on its debt when it has scheduled payments on March 20. In a confidential memo that has just surfaced, the industry group representing bond holders has said that the consequences of such a default could be $1 trillion in losses.

The financial world has spent the morning intently watching and debating about an obscure and secretive committee that voted on how to categorizeGreece'sbailout plan. The question facing the committee was whether to define the current plan to exchange bonds as an act of default by Greece on its bonds. But the committee, run by the International Swaps and Derivatives Assn., voted 15 to 0 Thursday morning that the plan was not a default. The answer is significant because if Greece does default on its bonds, it will trigger the complex financial instruments known as credit default swaps, which are designed to allow investors to bet on Greek defaulting on its bonds.

Among new Internet-based real estate ventures to pop up in recent months is one that enables house hunters to simultaneously search for just about every lifestyle criteria imaginable. Another protects would-be tenants from unwittingly renting from a struggling owner in the midst of a foreclosure. SpatialMatch.com, an overlay technology that can be embedded on an agent's website or perhaps on an entire multiple listing service, enables buyers to pursue properties using any number of lifestyle criteria.

Walkaways. Jingle mail. Strategic defaults. Those of you already experiencing nostalgia for the cliffhanger days of the housing crisis will remember those terms. They were applied to homeowners who were supposedly so distressed at the collapse of the homes' values that they were abandoning the properties to foreclosure, even though they still had the wherewithal to keep up their mortgage payments. These borrowers were just "walking away" from their homes; "jingle mail" was a fanciful way of describing the sound made when they mailed their keys back to the bank; "strategic default" was the sober, nonjudgmental way of describing the phenomenon in financial journals.

Europe's ailing currency union approved its second bailout for Greece in less than two years, signing off on a $170-billion rescue package early Tuesday after weeks of bickering and rising ill feeling between Athens and other regional capitals. The deal should help ward off the specter of an imminent Greek default, which threatened to occur as early as next month and to throw global markets into turmoil. But the price for Greece is a fresh round of punishing austerity cuts that its parliament approved last week, despite an economy already gutted by previous belt-tightening measures.

One of the country's largest office landlords has completed a $355-million recapitalization of its Universal City office building and said it intends to buy more property in Southern California. Normandy Real Estate Partners owns 10 Universal City Plaza, the tallest building in the San Fernando Valley at 36 stories, in which NBCUniversal is the largest tenant. Morristown, N.J.-based Normandy became the owner of the tower in mid-2009 when the previous owner defaulted on debt owed to Normandy.

The number of Californians entering foreclosure slid dramatically in the second quarter to a three-year low as the fallout from the worst of the housing crisis continued to abate. Default notices, the first stage of the foreclosure process initiated by banks on troubled homeowners, plummeted 43.8% in the second quarter over the same period last year to 70,051, and 13.6% from the first three months of the year, research firm MDA DataQuick of San Diego said Wednesday. Banks are pushing alternatives such as loan modification programs and short sales — in which a property is sold for less than the value of the mortgage — helping to reduce the number of people entering foreclosure.

Hit by declining oil prices, the Santa Monica-based oil producer said it was notified by Continental Illinois National Bank & Trust that it was in default for failing to pay interest on $38 million in loans outstanding under a secured revolving credit agreement. Argo said the Chicago bank didn't indicate whether it plans to seize collateral or call the notes in, but it gave the firm 30 days to avoid default on other terms of the loans. Cecil O.

The number of California hotels foreclosed on jumped 66% last year, but the bloodletting is expected to diminish in coming months as the hospitality industry gets back on its feet. Lenders foreclosed on 230 hotels in 2010, up from 138 the year before, Atlas Hospitality Group said in a report. Among them were Hampton Inn & Suites Ontario, Country Inns & Suites by Carlson in Calabasas and the Ritz-Carlton Lake Tahoe. The largest hotel to go back to the lender was the 331-room Hilton in Sacramento.

Do you have a big mortgage and good credit scores but not much equity — maybe you're even underwater? Do you see little chance that your home's market value will improve a lot during the coming three to seven years? If you answered yes to both questions — and thousands of homeowners across the country could do so — new research suggests that you are in a category that lenders need to worry about most: prime jumbo borrowers who once were thought to be among the safest bets, but who now are the most likely to opt for a strategic default and walk away from their homes.