There were nearly 650, 000 foreclosure filings -- which include notices of default, auction sales and bank repossessions -- issued during the first quarter of 2008.

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Massive bets against a firm with credit default swaps along with short sales, especially naked short sales, can logically become a self-fulfilling activity, which may or may not have done Bear Stearns in.

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Clearing houses enable the trading of shares between two parties, charging a fee to guarantee the sales should one side default.

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Mr. Van Dyk said local officials would have to make clear to bondholders their willingness to default if cost overruns or low ticket sales diminished returns from sports events.

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Besides smaller discounts, short sales represent win-win scenarios for all parties affected by default.

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Banks will seize such virtual assets in case of a default, or renegotiate the terms of a loan if a company misses a launch date, a sales target or an expected follow-on round of venture capital.

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