In the current housing market, it has been hard to find any sort of silver lining, but we do see a little positive news today, as existing home sales in July jumped more than expected, mainly due to lower home prices.

During July, sales of existing homes rose by 3.1%. This was well above the 1.6% that Wall Street was hoping to see, but analysts caution against assuming that this is a sign that the market has finally bottomed out. Despite beating Wall Street estimates, we still have to consider the fact that home sales were over 13% lower than the same period a year ago.

While we can view the July sales figures as promising, we must also take a minute to look at home inventories, and here the picture is not so rosy. Here we see that the number of unsold single family homes is running at all time highs. Currently the market is trying to deal with a total of 4.67 million unsold homes. This is the highest level that we have seen since 1968 when the National Association of Realtors started monitoring the data.

Donald Trump, the Clown Prince of Capitalism and Chairman of Trump Entertainment Resorts (NASDAQ: TRMP), is back in the news. The Associated Press reports that he'll be bailing out Ed McMahon, the former Johnny Carson sidekick who defaulted on $4.8 million in loans on his Beverly Hills home.

Trump told The Los Angeles Times that he didn't know McMahon personally and is motivated by "compassion. . . When I was at the Wharton School of Business I'd watch him every night. How could this happen?"

Holy cow! When I read this story, I thought "Finally! I'll have a chance to do a nice piece on Donald Trump." Wrong. I am actually going to make history here and bash someone for helping an old man keep his house. First, why Ed McMahon? There are hundreds of thousands of people facing problems with their homes and, rather than quietly helping average Joe's with mortgage payments, Trump goes and spends millions of dollars to help one old rich guy keep his palace -- and then calls The Los Angeles Times to brag about it. Oh, and he had to remind everyone that he went to Wharton.

This act of charity, like everything Donald does, seems to be motivated by narcissism, grandiosity, and a thirst for publicity.

I'm caving into his desire to have his name all over the place, but I'm also calling BS on this billionaire bailout.

This post is part of a series where personal finance expert Dan Solin looks at money moves that may seem smart in tough economic times, but are actually quite dumb. See all 12.

Is there a silver lining in the horrific number of home foreclosures we read about every day?

While having a home foreclosed must be traumatic for the homeowner, does it present an opportunity for investors and potential home buyers to pick up a bargain?

The answer may depend on the nature of the sale.

The classic scenario is the auction, where a home is literally auctioned off to the highest bidder, often right on the lawn in front of the house.

The basic problem with buying a home at auction is that you have no right to inspect the home and you have to pay the full purchase price by cash or bank check on the spot. There have been situations where buyers found serious problems with homes purchased in this manner, which would have been uncovered by a competent home inspector. Also, while not common, the homeowner may refuse to vacate the house. If so, you may be confronted with delays and significant legal fees to evict him.

In this series, we take a look at the 25 stocks on the S&P 500 Index (SPX) that have turned in the worst performance during the past decade -- what went wrong, and what happens next.

Seattle-based Washington Mutual, Inc. (NYSE: WM) was doing just fine on the charts, thank you, until the entire financial-services sector was upended in 2007 by the twin evils of caustic subprime loans and the ensuing credit crunch.

While it's an honor it would probably just as soon not claim, WaMu is a prime example of an otherwise decent stock that got slammed by a macroeconomic stealth bomb.

What went wrong? At No. 9 on our list of SPX stragglers, WM shed 83% of its value during the 10-year period that concluded on June 30, 2008. Prior to June 2007, the stock was trending higher along support from its 50-month moving average. Double-top resistance near $46 proved difficult to surmount, but WM was holding up respectably ... that is, until the first shock waves of the credit crunch hit in spring 2007.

Following news of massive subprime-related losses at hedge funds owned by Bear Stearns, Wall Street's attention was suddenly riveted to mortgage loans and the banks that carried them on their balance sheets. During WaMu's first-quarter report, chairman and CEO Kerry Killinger attempted to reassure anxious investors with the optimistic statement, "Over the past 12 months, we have taken a number of prudent actions to reduce our exposure to the subprime mortgage industry ... [which] limited our exposure to the mortgage market's downturn and position us well to expand and grow as market conditions improve."

In this series, we take a look at the 25 stocks on the S&P 500 Index (SPX) that have turned in the worst performance during the past decade -- what went wrong, and what happens next.

Is it just me, or were Ohio-based regional banks a particular target of the market's wrath during our focus decade? KeyCorp (NYSE: KEY) of Cleveland and Fifth Third Bancorp (NASDAQ: FITB) of Cincinnati have already made cameos on our list of losers -- and I'm not going to give it away, but there's at least one more Buckeye State banker further down the line-up. And, of course, how could we forget Columbus-based Huntington Bancshares (NASDAQ: HBAN)?

What went wrong? At number 14 on our list of SPX laggards, HBAN shed 77% of its value from June 30, 1998 through June 30, 2008. At the end of June 1998, the shares were perched just narrowly atop $25 -- a region that would later switch roles to provide impenetrable resistance from July 2004 through the end of 2006. Now, in the wake of a precipitous price plunge, HBAN is wallowing some 72% below this formerly critical level.

Unlike some other regional banks, HBAN started to feel the pain of subprime-gone-wrong as soon as July 2007. At the time, the bank warned that its second-quarter earnings would fall 11 cents short of analysts' expectations. CEO Thomas Hoaglin admitted, "These results were below our expectations and resulted primarily from difficult and deteriorating residential real estate markets." This admission paved the way for an all-out plunge; from its July 2007 peak to its July 2008 low, the stock shed 81%.

Bloomberg News reports that the 8,500 banks and S&Ls in the U.S. hold $8.56 billion worth of foreclosed homes on their balance sheets. And most of those $6.9 billion, are held by two companies -- Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). They hold 81% of the foreclosed properties but 50% of the mortgages -- more evidence that Fannie and Freddie financed far more bad loans than their standards should have permitted.

This inventory of foreclosed homes weighs down the entire housing market. Generally, such homes sell for a 20% discount -- and that's not good for the prices in the neighborhood. Bloomberg reports that the prices received for foreclosed properties have declined -- from 93% in 2005 to 74% of the unpaid mortgage principal. Moreover, unless the bank pays to cut the grass and otherwise maintain the foreclosed home, its poor curb appeal taints the neighborhood a bit for potential buyers.

The Chapter 13 bankruptcy trustee in Pittsburgh accused Countrywide Financial, the poster child for lending practices that were disastrous for both investors and consumers (but worked out quite well for Angelo Mozilo), of losing or destroying more than $500,000 in checks between December 2005 and April 2007, and then charging already downtrodden borrowers for illegitimate late fees and legal costs.

Countrywide recently settled those allegations, and will pay $325,000. That's it. Is that a deterrent? Now that Countrywide is owned by Bank of America (NYSE: BAC), it's barely a rounding error, and certainly not something that will discourage Countrywide or other lenders from ripping people off.

Crime might not pay, but apparently it doesn't cost much either. Given the continuing flow of hugely negative publicity for Countrywide, it's hard to imagine that Bank of America isn't rethinking its plan to keep the Countrywide brand. Why would someone go a company synonymous with foreclosures, bait and switch, and corporate greed when they want a home loan?

With Jose Canseco firmly established as the least likable foreclosure victim, Ed McMahon might be the most sympathetic of the celebrity foreclosure candidates. The Wall Street Journal reports (subscription required) that long-time Johnny Carson straight man Ed McMahon "faces the possible loss of his Beverly Hills home to a foreclosure action initiated by a unit of Countrywide Financial Corp. (NYSE: CFC)."

As of February 28th, McMahon was $644,000 in arrears on a $4.8 million loan backed by the home. The six-bedroom house has been on the market for 2 years but the recent price reduction hasn't attracted a buyer.

Just when you thought Countrywide couldn't sully its reputation any further, the company might take Ed McMahon's house. And it gets worse. According to his spokesman, the 85-year old hasn't been able to work because he broke his neck in a fall 18 months ago.

What's next? CEO Angelo Mozilo accidentally sending a rude emai to a borrower who had the nerve to contact him in search of help? Oh wait, he already did that.

U.S. Federal Reserve Chairman Ben Bernanke is urging both mortgage lenders and government officials to step-up efforts to help homeowners avoid foreclosure, Bloomberg News reported Monday.

Bernanke, in a speech in New York on Monday night, also underscored his preference to have lenders forgive a portions of mortgages for selected struggling homeowners, Bloomberg News reported. Bernanke qualified his remarks by stating that the proposal should be tightly targeted to avoid providing an incentive for default.

Bernanke's speech came about one week after the Bank of America (NYSE: BAC), a major mortgage lender, announced it will modify at least $40 billion in troubled mortgage during the next two years to keep customers in their homes, Bloomberg News reported Monday. The action could help as many as 265,000 homeowners, the bank said.

The real estate meltdown has claimed big-time financial institutions, such as Bear Stearns Cos. (NYSE: BSC) and Countrywide (NYSE: CFC). Other mega firms – like Merrill Lynch (NYSE: MER) and Citigroup (NYSE: C) – have had to raise billions from sovereign wealth funds to deal with the implosion.

Of course, there are millions of Americans in pain, as the foreclosure rates have skyrocketed. True, the federal government is taking some action – but such things will take time.

So what to do? Well, David Petrovich has published Fight Foreclosure!. He has more than 20 years in the real estate business and is the executive director of the Society for the Preservation of Continued Homeownership (which provides preforeclosure counseling).

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Federal Judge Lawrence Karlton has ruled that the Bush Administration must reassess its plan to outlaw a down payment assistance program that is used by more than 100 thousand low and middle-income borrowers. He ruled that the Department of Housing and Urban Development failed to complete a "reasoned analysis" and that agency head Alphonso R. Jackson may not take part in that analysis.

The New York Times reports that "The administration sought to ban the aid, contending the program leads to higher housing prices and a disproportionate number of foreclosures."

What makes this unique is that the Bush Administration was not seeking to eliminate federal assistance but rather seeking to eliminate private assistance with down payments.

Cleveland's East Side Organizing Project has an interesting way of reacting to the waves of foreclosures sweeping across that city: aggressive protesting.

Supporters of the confrontational non-profit recently showed up at the home of Countrywide Financial Corporation (NYSE: CFC) regional VP Mike Garmone and, according to the Associated Press, "deployed, ringing bells at the big homes with three-car garages, handing out accusatory fliers and lambasting Garmone and his company's loans. Before departing, they left their calling card - thousands of 2 1/2-inch plastic sharks - flung across Garmone's frozen flower beds, up into the gutters, littering the doorstep."

I certainly appreciate the group's intentions but I have to wonder -- If people can't keep up with payments that they entered into a contractual obligation to pay, what exactly is a lender supposed to do? They should -- and often do -- make efforts to restructure the debt. It isn't like Countrywide is dying to take people's homes!

Bad loans haven't exactly generated billions in profits for the industry. Look at Countrywide's 2-year chart if you don't believe me. The real victims of Countrywide's lax lending are the shareholders who lost billions while CEO Angelo Mozilo sold hundreds of millions in stock.

Of course, that doesn't make good fodder for marches and picketing.

Treasury Secretary Henry Paulson is not normally the first person I'd look to for cogent, well-reasoned analysis, but I have to say his comments on mortgage bailouts are right on.

Talking to the Wall Street Journal (subscription required), Paulson referred to many of the aid proposals making the rounds in Washington as "bailouts" for reckless lenders and borrowers: "I don't think I've seen any scenario where the American taxpayer needs to be stepping in with more taxpayer dollars."

He added that "I'm seeing a series of ideas suggested involving major government intervention in the housing market, and these things are usually presented or sold as a way of helping homeowners stay in their homes. Then when you look at them more carefully what they really amount to is a bailout for financial institutions or Wall Street."

Mr. Paulson believes that urging the lenders to cut borrowers some slack is the role the government should play, and I agree. Knock yourself out: if you can talk to the bankers and convince them to play nice, I'm all in favor of it. But don't spend our money bailing out lenders and borrowers, while artificially propping up the housing market.

And I'm still dying for an answer to my lingering question: Why is it bad if someone with no equity in their home loses the home? Is someone who "owns" a home but doesn't have any equity really a home owner?

Countrywide (NYSE: CFC) has been playing with the numbers in cases involving foreclosures and bankruptcies and bankruptcy judges are finally starting to doubt them, according to a story in today's Wall Street Journal. When caught, Countrywide always gives the excuse that it was an error, but judges are beginning to wonder why there are so many errors.

The case with the biggest error involves a home owner who questioned Countrywide's insistence that he had to pay $4,800 a month during bankruptcy. When the judge went along with the borrower in questioning the amount, Countrywide admitted it erred and then reduced its claim in half to about $2,400 a month. In a hearing in December, Bankruptcy Judge A. Jay Cristol told Countrywide had been found "with its hand in the cookie jar," according to the Journal story. He's just one of the judges the Journal discusses today.

Countrywide told the Journal that it has already paid at least $400,000 in costs associated with a Justice Department investigation into Countrywide's handling of loan payments and court claims across the country. Now that bankruptcy judges are starting to lose faith in Countrywide's numbers, I hope they also take a closer look at the numbers from other mortgage servicers as well. I first wrote about this problem in November, and I'm glad to see the courts are finally acting to protect consumers already facing financial distress.

Lita Epstein has written more than 20 books including The 250 Questions You Should Ask to Avoid Foreclosure and the Complete Idiot's Guide to Improving Your Credit Score.

Bloomberg reports this morning that Treasury Secretary Henry Paulson and President George Bush may announce as early as tomorrow that negotiations between Federal regulators and U.S. lenders will result in a five-year freeze on subprime mortgages. Paulson will brief House Republicans today on the plan, according to Bloomberg.

The deal comes down right in the middle of what the Office of Thrift Supervision wanted (3 to 5 years) and the FDIC wanted (5 to 7 years). The details about the deal are still pretty sketchy, but at least some people who have subprime mortgages will be helped. Most of the mortgages involved in this deal started at about 7% to 9% and are due to reset to 11% to 13% over the next two years, throwing many borrowers who can't afford the higher payments into foreclosure.

Analysts estimate that about 100,000 subprime loans will reset at a higher rate every month for the next two years. Credit Suisse Group estimates that right now, 30% of borrowers with subprime ARMs are behind on their mortgages, even before the reset. The FDIC puts the number at 20%. Regardless of the number, these borrowers probably won't be eligible for the freeze in rates.