Update: the Bear Stearns Hedge Fund Mess

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We promised to follow up on that Bear Stearns hedge fund mess, and now we feel a bit like a teenager who promised to clean up his room every day: It’s really messy, and sorting it out is a chore (Back story: a collapse and liquidation of the hedge funds could spell big trouble for the mortgage industry).

Update: CNBC reports the two troubled hedge funds have averted collapse, for now:
‘JPMorgan was able to reach an agreement with Bear Stearns on Tuesday that limited its exposure to the troubled funds, heading off an auction of assets held as collateral against loans made by the bank. However, it is still unclear how ongoing negotiations will proceed with other lenders such as Deutsche Bank.’

More from CNBC: ‘According to Dow Jones Newswires, Merrill Lynch on Thursday sold a fraction of its $850 million of Bear Stearns assets in order to cover its positions. Sources told Dow Jones that Merrill sold about $100 million worth of securities, mostly collateralized debt.’

More: CNN Money takes a slightly more pessimistic view in a report from London: ‘The fallout from problems at two Bear Stearns hedge funds that may be on the verge of collapse could roil the bond market and lead to a tightening of credit, analysts said Thursday.’

More from CNN Money: ‘The unraveling of the Leverage Fund is at best an embarrassment for BSC, and at worst, it threatens to have a ripple effect on valuations across the subprime sector,’ Kathleen Shanley of Gimme Credi, wrote in a recent report.’