The real estate market is collapsing fast. Why? People borrowed more money than they could repay so they could "buy" houses they could otherwise not afford. And the banks that pushed those loans now find themselves the miserable owners of those death support systems for debt. The banks don't want these economic death traps -- so they'll dump them at a fraction of the price at which they were sold. (The Wall Street Journal reports that in June 2008, Credit Suisse sold a 1,230-square-foot home in Corona, CA for $198,000 that went for $450,000 in December 2006).

Bloomberg News reports some stunning statistics about how quickly banks are taking possession of those houses. U.S. foreclosure filings spiked 55% while bank seizures -- when a bank takes ownership of a house also known as real estate-owned (REO) -- skyrocketed 184%. Bloomberg says that "more than 272,000 properties, or one in 464 U.S. households, got a default notice, was warned of a pending auction or were foreclosed on."

This transfer of titles to banks is contributing to a massive loss of wealth. Bloomberg reports that home prices fell "15.8% in May, the most since at least 2001, according to the S&P/Case-Shiller home-price index." And Bloomberg indicates that 33% of home sellers in the second quarter lost money. Moreover, according to SeekingAlpha, 33% of houses bought in the last five years are worth less than the amount of their mortgages.

The Wall Street Journal [subscription required] adds a new wrinkle to the story of efforts by subprime mortgage lender Ameriquest to use campaign cash to curry favor with the government. Ameriquest's parent, ACC Capital Holdings, has paid $325 million to settle regulators' claims that it charged excessively high mortgage rates and didn't adequately disclose loan risks. The Journal's story today highlights the $20.5 million Ameriquest spent at the state and federal government levels to block legislation that would have limited its predatory lending practices.

But as I posted in August, Ameriquest's cash helped boost the fortunes of president Bush. Bush, who used home ownership politics to get re-elected, received $7.8 million from Ameriquest for his 2004 reelection campaign, his inauguration and for Laura Bush's library foundation.

Ameriquest's most interesting pay-to-play technique was to give Rolling Stones tickets and cash to state legislators. For instance, according to the Journal, "Arnold Schwarzenegger's campaigns received at least $1.4 million, along with stacks of tickets to a Rolling Stones concert that were used to lure big donors." And Ameriquest also handed out Rolling Stones tickets to state legislators in Georgia, Maryland, Nevada, Oregon, Utah, Washington and California.

What did Ameriquest get for all its giving?