TheStreet.com's Jim Cramer says 30%-40% discounts have a way of bringing out the buyers.

Home prices in Stockton, CA are down 40%. In Daytona, FL, houses are priced at 30% discounts with amenities. The Inland Empire of California -- you name your price. That's how the madness ends: with huge price cuts, the way it ended in Bradenton, FL.

And believe me, we get more Fannie Mae (NYSE: FNM) (Cramer's Take) money -- forget these darned covered bonds, let's just solve the problem. You get buyers after a year and a half that buyers went on strike.

Remember, while we can't live in stocks, we know they trade like houses, and when the first stocks to go down bottom, the others are not far behind.

With the new housing bill, the rate of foreclosures will go down and the bargains will be quite evident for those who want to take them. Either a new administration will remove the fear of the illegal immigrants from buying homes -- they were a huge part of the hard hit Arizona, Florida and California markets. Or the dramatic decline in inventory at the homebuilding level has given us breathing room.

TheStreet.com's Jim Cramer says as long as there are other buyers of the paper, look for other similar deals.

Merrill's (NYSE: MER) (Cramer's Take) deal with Lone Star gives the first real stab of the private market value of this paper, 22 cents on the dollar. But when you add in the financing you can argue that it is about half that.

Why so low? Because even after a year and a half of stress, we still can't publicly value this stuff.

Remember the deal with Lone Star is a private one, where the investors have to wait five years for the paper to mature. We don't really know what a CDO is worth, you just know what they may have paid.

This is despite the fact that for years now, this stuff has existed, no one has come out and said "this CDO has a lot of Florida, so it is bad," or "this piece of paper has a 90% default rate," or "this debt is hindered by bad HELOC."

Without that info, we can't price it. Lone Star knows more than most, but basically had to put up very little. In this deal, Merrill said "here, we will pay you to take these off our hands."

Bausch & Lomb (NYSE: BOL) -- volatility of 11 at low end of Range. BOL closed at $62.54. BOL announced it would be purchased by Warburg Pincus for $65 in cash on 5/16/07. Advanced Medical Optics Inc. (NYSE: EYE) announced yesterday it withdrew its offer to purchase BOL for $75. BOL over all option implied volatility is at 11 according to Track Data, suggests decreasing risk.

CheckFree (NASDAQ: CKFR) -- volatility Elevated prior to Fiserve Inc. (NYSE: FISV) paying $4.4 billion for CKFR. CKFR, an online banking, electronic payments, and financials infrastructure and services company, will be purchased by FISV for $48 a share in cash. CKFR will report EPS on August 9th. CKFR over all option implied volatility of 41 was above its 26-week average of 33 according to Track Data, suggesting larger risk.

Accredited Home Lenders (NASDAQ: LEND) -- volatility Spikes higher on Credit concerns. LEND, a mortgage company originating, financing, securitizing, servicing and selling non-prime mortgages, is recently down $2.14 to $6.07. Dow Jones said, "LEND on Thursday filed its delayed 2006 annual report, and raised concerns about its ability to continue to operate as a going concern." Lone Star announced on 6/4/07 it would acquire all of LEND's common stock for roughly $15 per share in cash. LEND September option implied volatility is above 225 according to Track Data, suggesting larger risk.

Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

MOST NOTEWORTHY: Openwave Systems Inc (NASDAQ: OPWV), Trump Entertainment Resorts Inc (NASDAQ: TRMP) and Accredited Home Lenders Holding Co (NASDAQ: LEND) were today's noteworthy downgrades:

• Openwave Systems Inc (NASDAQ: OPWV) was downgraded to Underperform from Buy at Needham, as the firm no longer believes the company's assets and balance sheet are worth $11/share and expects the franchise to be again disrupted due to layoffs and asset sales. Openwave was also downgraded to Neutral from Overweight at JP Morgan, to Hold from Buy at Wedbush after no superior bid emerged to Harbinger's, and to Sector Underperformer from Outperformer at CIBC World Markets, which cited reduced prospects of a buyout.

• Trump Entertainment Resorts Inc (NASDAQ: TRMP) was downgraded to Underperform from Peer Perform at Bear Stearns citing valuation as upside from a takeout at current levels is remote.

• Accredited Home Lenders Holding Co (NASDAQ: LEND) was downgraded to Market Perform from Outperform at Keefe Bruyette & Woods following its acquisition by Lone Star for $400M.

OTHER DOWNGRADES:

• Bebe Stores Inc (NASDAQ: BEBE) was downgraded to Market Perform from Outperform at Friedman Billings citing new merchandise that lacks a significant casual component to drive business, tough comps, aggressively planned inventory levels for 2H, and the potential for sustained negative comps during the next few quarters.

• Friedman Billings also downgraded Aladdin Knowledge Systems Limited (NASDAQ: ALDN) to Market Perform from Outperform based on valuation and challenges in the U.S. market.

• General Mills Inc (NYSE: GIS) was downgraded to Peer Perform from outperform at Bear Stearns on valuation and concerns with the turnaround plan for Big G cereal division.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).