THE AIRCRAFT LOST ENGINE POWER AFTER TAKEOFF AND WAS FORCED TO LAND ON A RESIDENTIAL STREET. THE ENGINE HAD BEEN OVERHAULED BY AN FAA-CERTIFIED REPAIR STATION 5 MONTHS AND 150 FLIGHT HOURS BEFORE THE ACCIDENT. EXAMINATION OF THE ENGINE MAGNETO REVEALED INTERNAL CORROSION AND ELECTRICAL ARCING AT THE BREAKER POINTS. THE INSULATION ON THE 'P' LEAD WIRE WAS CRACKED ALONG ITS ENTIRE LENGTH EXPOSING BARE WIRE AT ONE POINT. GROUNDING OF THE 'P' LEAD AS A RESULT OF A BARE WIRE TOUCHING THE AIRFRAME WOULD HAVE THE SAME EFFECT AS THE IGNITION SWITCH IN THE OFF POSITION.