Wednesday morning headlines

Socal fires: This should be the turnaround day, as winds die down and temperatures (slowly) begin to moderate. In San Diego, thousands of evacuees began returning to their homes, the vast majority of which were unscathed. In Malibu, most sections of Pacific Coast Highway have reopened - as have the schools. Still, there are anywhere from 1,200 to 1,600 homes and buildings destroyed (the number keeps changing) and plenty of fires that remain out of control. There's also the gunky air that all of us will be breathing for many more days (Long Beach is an especially bad place to be). (LAT)

Kudos for new developments: Kind of a counterintuitive story in the LAT about how master-planned communities, so often derided for being built too close to fire-prone areas, might have helped save a bunch of homes. The use of fire-resistant materials and special plantings that ring the properties are among the factors cited. (Of course, had these homes not been built, there would be no fire danger at all. But that’s for a different story.) From the LAT:

Many fire-safe features in practice there are borne out of planning and building code changes enacted in the aftermath of devastating 1993 fires, said Ron Coleman, a former California state fire marshal and forestry and fire protection chief. Higher standards will soon be required of all new building statewide, at least in the zones where fire risk is highest. The California Building Standards Commission last month approved standards recommended by the state fire marshal for buildings in fire hazard zones. Those requirements are to go into effect in January 2008 in areas under state control, and after that date, any new permits issued in such zones will require that the new standards be met.

Cell phone disconnects: Dozens of antenna towers were destroyed, resulting in spotty service in many areas - not what you want in an emergency. Another problem: overwhelmed circuits from so many of those evacuees using wireless service. That jammed the lines. T-Mobile seems to have been especially hard hit, though all the carriers reported problems. (LAT)

Stocks getting whacked: Well, what do you expect after Merrill Lynch reports a massive writedown of nearly $8 billion to cover problems in the subprime mortgage market and in the value of collateralized debt obligations. The result was Merrill's first quarterly loss in almost six years. Also not helping Wall Street was a steep drop in September home sales. At last check, the Dow was down 150 points. (AP)

More Countrywide troubles?: It's not only subprime loans that are giving the Calabasas mortgage giant such a bad time. The WSJ reports that loans classified as prime when they were originated are now going bad at a rapid pace. They are option adjustable-rate mortgages, which have low introductory rates and allow minimal payments early on. If the minimum payment is chosen, those loan balances grow. You can see where this is going. CEO Angelo Mozilo told investors last year he was "shocked" so many people were making the minimum payment. After calling a sampling of borrowers to find out why, "I realized I was talking to a group...that had never seen in their adult life real-estate values go down."

Countrywide first offered these loans in 2003 and quickly became a leader in this profitable and growing part of the mortgage market. Mortgage brokers liked the higher commissions and borrowers were drawn to low payments. As lending standards loosened, more of these loans included less-than-full documentation. An analysis prepared for The Wall Street Journal by UBS AG shows that 3.55% of option ARMs originated by Countrywide in 2006 and packaged into securities sold to investors are at least 60 days past due. That compares with an average option-ARM delinquency rate of 2.56% for the industry as a whole and is the highest of six companies analyzed by UBS. The increase in overdue payments partly reflects a decline in home prices in much of the U.S., which has made it more difficult for borrowers to refinance or sell their homes. In addition, at Countrywide, "they were giving these loans to riskier and riskier borrowers," says UBS analyst Shumin Li.

WGA pulls reality plug: The effort to get reality shows under union jurisdiction had been one of the bigger issues this summer, but Variety reports that the Writers Guild is changing course. The general view is that it would be facing an uphill - and likely futile - fight. The softening of the WGA's position on reality appears to be the only area in which the guild is relenting. Meanwhile, Nikki Finke is reporting that Nick Counter, president of the Alliance of Motion Picture & Television Producers, wants all of the negotiating committee members at Thursday's 10 a.m. session, leading to speculation on the guild side that something's up. Here's more:

I hear the Hollywood moguls' negotiating team is indeed working overtime to devise that new combination of alternatives and options to present to the WGA, as I reported on Monday. So they want as many from the other side as possible, not just the usual militants but also the bigtime writers/hyphenates, to hear the producers' POV in person.

Nursing home inquiry: Two Congressional committees will investigate business practices of private investment groups, the subject of a NYT expose some time back. The Senate is also looking into the matter. The Times story said that investment firms had bought thousands of nursing homes and often cut expenses and staff, sometimes below minimum legal requirements, to increase their profit. One center of the investigation is likely to be Carlyle Group’s $6.3 billion acquisition of the nation’s largest nursing home chain, HCR Manor Care. (NYT)