H2-WHOA! Australian town bans bottled water
Residents take drastic step hoping to protect the earth and their wallets
Rob Griffith / AP
updated 2 hours, 59 minutes ago
SYDNEY - Residents of a rural Australian town hoping to protect the earth and their wallets have voted to ban the sale of bottled water, the first community in the country — and possibly the world — to take such a drastic step in the growing backlash against the industry.
Residents of Bundanoon cheered after their near-unanimous approval of the measure at a town meeting Wednesday. It was the second blow to Australia's beverage industry in one day: Hours earlier, the New South Wales state premier banned all state departments and agencies from buying bottled water, calling it a waste of money and natural resources.
"I have never seen 350 Australians in the same room all agreeing to something," said Jon Dee, who helped spearhead the "Bundy on Tap" campaign in Bundanoon, a town of 2,500 about 100 miles (160 kilometers) south of Sydney. "It's time for people to realize they're being conned by the bottled water industry."
First popularized in the 1980s as a convenient, healthy alternative to sugary drinks, bottled water today is often criticized as an environmental menace, with bottles cluttering landfills and requiring large amounts of energy to produce and transport.
America's 'Think Outside the Bottle' campaign
Over the past few years, at least 60 cities in the United States and a handful of others in Canada and the United Kingdom have agreed to stop spending taxpayer dollars on bottled water, which is often consumed during city meetings, said Deborah Lapidus, organizer of Corporate Accountability International's "Think Outside the Bottle" campaign in the U.S.
But the Boston-based nonprofit corporate watchdog has never heard of a community banning the sale of bottled water, she said.
"I think what this town is doing is taking it one step further and recognizing that there's safe drinking water coming out of our taps," she said.
Bundanoon's battle against the bottle has been brewing for years, ever since a Sydney-based beverage company announced plans to build a water extraction plant in the town. Residents were furious over the prospect of an outsider taking their water, trucking it up to Sydney for processing and then selling it back to them. The town is still fighting the company's proposal in court.
Then in March, Huw Kingston, who owns the town's combination cafe and bike shop, had a thought: If the town was so against hosting a water bottling company, why not ban the end product?
Reusable bottles proposed
To prevent lost profit in the 10-or-so town businesses that sell bottled water, Kingston suggested they instead sell reusable bottles for about the same price. Residents will be able to fill the bottles for free at public water fountains, or pay a small fee to fill them with filtered water kept in the stores.
The measure will not impose penalties on those who don't comply when it goes into effect in September. Still, all the business owners voluntarily agreed to follow it, recognizing the financial and environmental drawbacks of bottled water, Kingston said.
On Wednesday, 356 people turned up for a vote — the biggest turnout ever at a town meeting.
Only two people voted no. One said he was worried banning bottled water would encourage people to drink sugary beverages. The other was Geoff Parker, director of the Australasian Bottled Water Institute — which represents the bottled water industry.
Australians spent 500 million Australian dollars ($390 million) on bottled water in 2008 — a hefty sum for a country of just under 22 million people.
Ban criticized for removing consumer choice
On Thursday, Parker blasted the ban as unfair, misguided and ineffective.
He said the bottled water industry is a leader in researching ways to minimize bottled beverage impact on the environment. Plus, he said, the ban removes consumer choice.
"To take away someone's right to choose possibly the healthiest option in a shop fridge or a vending machine we think doesn't embrace common sense," he said.
But tap water is just as good as the stuff you find encased in plastic, said campaign organizer Dee, who also serves as director of the Australian environment group Do Something!
"We're hoping it will act as a catalyst to people's memories to remember the days when we did not have bottled water," he said. "What is 'Evian' spelled backwards? 'Naive.'"
Thursday, July 9, 2009
Women Who Cant Quite Reach the O
HealthSexual healthSexplorationSexploration
America Unzipped
BUY THE BOOK
Brian Alexander's book, "America Unzipped," goes behind closed doors to find out who's doing what — and whether they're getting satisfaction. Order it here.
Sexploration — By Brian Alexander
Yes! Yes! Oh, no! Coming oh so close to orgasm
What's a woman to do who can't quite attain the Big O? Also, a man fears his wife will leave him for a vibrator. Sexploration answers your queries.
By Brian Alexander
msnbc.com contributor
updated 2 hours, 43 minutes ago
Brian Alexander
What's a woman to do who can't quite attain the Big O? Also, a man fears his wife will leave him for a vibrator. Sexploration answers your queries. Got a question? E-mail us.
Q. I am a 55-year-old woman. I am fairly attractive and have been separated from my husband for three years after a marriage of 38 years. I seem to stay in a state of arousal all the time, but when I try to bring myself to an orgasm, it builds but I can never “go.” I did this during marriage with better results.
Q. My problem isn’t desire; my boyfriend says I’m insatiable. My issue is with achieving orgasm. I get close, but sometimes I can’t climax. I was wondering if Cialis would be effective since it increases blood flow and might help me orgasm more often.
Q. I am 43 and have three grown children. I don’t think I have ever had an orgasm. I know sex feels good, but nothing like what my friends tell me it feels like. How can I tell if I am having an orgasm?
A. In surveys, about a quarter of American women report some sort of orgasm snafu, either not being able to have one at all (called anorgasmia) or often getting close without being able to take that blissful leap over the edge. Not surprisingly, the leading figures among those who are trying to solve such riddles are all women, like Dr. Marcalee Sipski Alexander (no relation) of the University of Alabama, Cindy Meston of the University of Texas at Austin, and of course, Beverly Whipple, who helped pioneer the effort.
But even they cannot say for sure what makes an orgasm. “As of yet, no definitive explanations for what triggers orgasm have emerged,” states a review of the science authored by Meston, Alexander and others. This is because orgasm is a very complicated dance between the emotions and biology.
So a 55-year-old newly single woman may be affected both by the relationship change and by the biology of menopause. Testosterone levels drop, estrogen levels drop, body systems age, medications may interfere.
Other contributors to orgasm trouble include nicotine (smoking can kill your sex life before it kills you), some anti-depressants, obesity and cardiovascular disease. So stay in shape and lose the extra pounds.
Psychology is important, too. A younger woman may have “insatiable” desire and yet, say, have a body image problem that prevents her from “letting go.” In a study led by Meston, 21 women were shown an erotic video. Some were made more aware of their own bodies through the use of a mirror while others were not. “Results showed that subjective mental sexual arousal and perceptions of physical sexual arousal increased in response to erotica in the Body Awareness condition,” the study found.
Guilt, anxiety, depression, religion, education level, socio-economic level, can all become like bricks in a dam preventing the rush of water from releasing its energy. Behavioral therapy has shown some promise in removing some bricks. Other techniques like sensate focus — practicing intense concentration on the feel of erotic stimulation while blocking other thoughts — has also worked.
Some women have found relief through hormones like topical estrogen and testosterone (though testosterone therapy remains controversial). A suction machine called the Eros Clitoral Therapy Device, available by prescription, has helped some women regain orgasmic ability. It works by engorging the clitoris with blood. An erectile dysfunction drug like Cialis might help, too, but it hasn’t been proven to do so in women.
Sometimes difficulty with orgasm can feed on itself, like insomnia. Just as after a sleepless night, you can become anxious about falling asleep the next night, after having trouble with an orgasm, your head can be full of worries about having an orgasm.
Many therapists suggest practice, practice, practice with vibrators or fingers or whatever works. Go solo at first so there is no pressure to perform. The last thing you want is for a lover to lose patience and switch on an old episode of "Green Acres."
To know if you have actually had an orgasm isn’t always easy; some are mild tremors, some are major earthquakes. Here is one definition used by experts like Meston and the World Health Organization:
“Orgasm in the human female is a variable, transient peak sensation of intense pleasure, creating an altered state of consciousness, usually with an initiation accompanied by involuntary, rhythmic contractions of the pelvic striated circumvaginal musculature, often with concomitant uterine and anal contractions, and myotonia that resolves the sexually induced vasocongestion and myotonia, generally with an induction of well-being and contentment.”
Sexy, no? The “altered state of consciousness” seems a little vague, but a female pal says that in her altered state she sees God and he looks just like Johnny Depp.
Q. I am wondering if vibrators can have an unintended side effect. It seems to me that after a woman starts using a vibrator, foreplay and intercourse will not be able to stimulate the clitoris as intensely as the vibrator does. I ask because this has happened with my wife and me. I thought it was just us, but then a few other friends have brought this up. All of the wives went to the same vibrator party, so were all introduced to vibrators at the same time. [She gets] very aroused and excited as before, but then does not orgasm very often anymore.
A. So, did you talk about this while cooking bratwurst at the neighborhood Fourth of July barbecue? We here at Sexploration are just curious how the topic came up.
Your wives, newly enamored with having a lover who won’t wear out until the AA batteries do, will find they have once again become just as sensitive as ever to your touch if they simply idle the vibrators for a few days. While a vibrator can numb a clitoris for a very short time, like minutes, the probable cause of the trouble is that they create a different sensation. This is good; it expands the menu. But if a woman comes to expect that same feeling to always be the one that pushes her over the edge, she can become frustrated. So keep the toys in the sock drawer for a little while and then slowly integrate them again
America Unzipped
BUY THE BOOK
Brian Alexander's book, "America Unzipped," goes behind closed doors to find out who's doing what — and whether they're getting satisfaction. Order it here.
Sexploration — By Brian Alexander
Yes! Yes! Oh, no! Coming oh so close to orgasm
What's a woman to do who can't quite attain the Big O? Also, a man fears his wife will leave him for a vibrator. Sexploration answers your queries.
By Brian Alexander
msnbc.com contributor
updated 2 hours, 43 minutes ago
Brian Alexander
What's a woman to do who can't quite attain the Big O? Also, a man fears his wife will leave him for a vibrator. Sexploration answers your queries. Got a question? E-mail us.
Q. I am a 55-year-old woman. I am fairly attractive and have been separated from my husband for three years after a marriage of 38 years. I seem to stay in a state of arousal all the time, but when I try to bring myself to an orgasm, it builds but I can never “go.” I did this during marriage with better results.
Q. My problem isn’t desire; my boyfriend says I’m insatiable. My issue is with achieving orgasm. I get close, but sometimes I can’t climax. I was wondering if Cialis would be effective since it increases blood flow and might help me orgasm more often.
Q. I am 43 and have three grown children. I don’t think I have ever had an orgasm. I know sex feels good, but nothing like what my friends tell me it feels like. How can I tell if I am having an orgasm?
A. In surveys, about a quarter of American women report some sort of orgasm snafu, either not being able to have one at all (called anorgasmia) or often getting close without being able to take that blissful leap over the edge. Not surprisingly, the leading figures among those who are trying to solve such riddles are all women, like Dr. Marcalee Sipski Alexander (no relation) of the University of Alabama, Cindy Meston of the University of Texas at Austin, and of course, Beverly Whipple, who helped pioneer the effort.
But even they cannot say for sure what makes an orgasm. “As of yet, no definitive explanations for what triggers orgasm have emerged,” states a review of the science authored by Meston, Alexander and others. This is because orgasm is a very complicated dance between the emotions and biology.
So a 55-year-old newly single woman may be affected both by the relationship change and by the biology of menopause. Testosterone levels drop, estrogen levels drop, body systems age, medications may interfere.
Other contributors to orgasm trouble include nicotine (smoking can kill your sex life before it kills you), some anti-depressants, obesity and cardiovascular disease. So stay in shape and lose the extra pounds.
Psychology is important, too. A younger woman may have “insatiable” desire and yet, say, have a body image problem that prevents her from “letting go.” In a study led by Meston, 21 women were shown an erotic video. Some were made more aware of their own bodies through the use of a mirror while others were not. “Results showed that subjective mental sexual arousal and perceptions of physical sexual arousal increased in response to erotica in the Body Awareness condition,” the study found.
Guilt, anxiety, depression, religion, education level, socio-economic level, can all become like bricks in a dam preventing the rush of water from releasing its energy. Behavioral therapy has shown some promise in removing some bricks. Other techniques like sensate focus — practicing intense concentration on the feel of erotic stimulation while blocking other thoughts — has also worked.
Some women have found relief through hormones like topical estrogen and testosterone (though testosterone therapy remains controversial). A suction machine called the Eros Clitoral Therapy Device, available by prescription, has helped some women regain orgasmic ability. It works by engorging the clitoris with blood. An erectile dysfunction drug like Cialis might help, too, but it hasn’t been proven to do so in women.
Sometimes difficulty with orgasm can feed on itself, like insomnia. Just as after a sleepless night, you can become anxious about falling asleep the next night, after having trouble with an orgasm, your head can be full of worries about having an orgasm.
Many therapists suggest practice, practice, practice with vibrators or fingers or whatever works. Go solo at first so there is no pressure to perform. The last thing you want is for a lover to lose patience and switch on an old episode of "Green Acres."
To know if you have actually had an orgasm isn’t always easy; some are mild tremors, some are major earthquakes. Here is one definition used by experts like Meston and the World Health Organization:
“Orgasm in the human female is a variable, transient peak sensation of intense pleasure, creating an altered state of consciousness, usually with an initiation accompanied by involuntary, rhythmic contractions of the pelvic striated circumvaginal musculature, often with concomitant uterine and anal contractions, and myotonia that resolves the sexually induced vasocongestion and myotonia, generally with an induction of well-being and contentment.”
Sexy, no? The “altered state of consciousness” seems a little vague, but a female pal says that in her altered state she sees God and he looks just like Johnny Depp.
Q. I am wondering if vibrators can have an unintended side effect. It seems to me that after a woman starts using a vibrator, foreplay and intercourse will not be able to stimulate the clitoris as intensely as the vibrator does. I ask because this has happened with my wife and me. I thought it was just us, but then a few other friends have brought this up. All of the wives went to the same vibrator party, so were all introduced to vibrators at the same time. [She gets] very aroused and excited as before, but then does not orgasm very often anymore.
A. So, did you talk about this while cooking bratwurst at the neighborhood Fourth of July barbecue? We here at Sexploration are just curious how the topic came up.
Your wives, newly enamored with having a lover who won’t wear out until the AA batteries do, will find they have once again become just as sensitive as ever to your touch if they simply idle the vibrators for a few days. While a vibrator can numb a clitoris for a very short time, like minutes, the probable cause of the trouble is that they create a different sensation. This is good; it expands the menu. But if a woman comes to expect that same feeling to always be the one that pushes her over the edge, she can become frustrated. So keep the toys in the sock drawer for a little while and then slowly integrate them again
Grant system undercuts major cancer advances
The New York Times
Grant system undercuts major cancer advances
Exploratory research that could lead to breakthroughs doesn't make the cut
More from NYTimes.com
Cities Lose Out on Road Funds From Federal Stimulus
By Gina Kolata
updated 10:56 a.m. PT, Sun., June 28, 2009
Among the recent research grants awarded by the National Cancer Institute is one for a study asking whether people who are especially responsive to good-tasting food have the most difficulty staying on a diet. Another study will assess a Web-based program that encourages families to choose more healthful foods.
Many other grants involve biological research unlikely to break new ground. For example, one project asks whether a laboratory discovery involving colon cancer also applies to breast cancer. But even if it does apply, there is no treatment yet that exploits it.
The cancer institute has spent $105 billion since President Richard M. Nixon declared war on the disease in 1971. The American Cancer Society, the largest private financer of cancer research, has spent about $3.4 billion on research grants since 1946.
Yet the fight against cancer is going slower than most had hoped, with only small changes in the death rate in the almost 40 years since it began.
One major impediment, scientists agree, is the grant system itself. It has become a sort of jobs program, a way to keep research laboratories going year after year with the understanding that the focus will be on small projects unlikely to take significant steps toward curing cancer.
“These grants are not silly, but they are only likely to produce incremental progress,” said Dr. Robert C. Young, chancellor at Fox Chase Cancer Center in Philadelphia and chairman of the Board of Scientific Advisors, an independent group that makes recommendations to the cancer institute.
The institute’s reviewers choose such projects because, with too little money to finance most proposals, they are timid about taking chances on ones that might not succeed. The problem, Dr. Young and others say, is that projects that could make a major difference in cancer prevention and treatment are all too often crowded out because they are too uncertain. In fact, it has become lore among cancer researchers that some game-changing discoveries involved projects deemed too unlikely to succeed and were therefore denied federal grants, forcing researchers to struggle mightily to continue.
Take one transformative drug, for breast cancer. It was based on a discovery by Dr. Dennis Slamon of the University of California, Los Angeles, that very aggressive breast cancers often have multiple copies of a particular protein, HER-2. That led to the development of herceptin, which blocks HER-2.
More health news from NYTimes.com
Pick to Lead Health Agency Draws Praise and Some Concern
Months to Live: Sisters Face Death With Dignity and Reverence
Now women with excess HER-2 proteins, who once had the worst breast cancer prognoses, have prognoses that are among the best. But when Dr. Slamon wanted to start this research, his grant was turned down. He succeeded only after the grateful wife of a patient helped him get money from Revlon, the cosmetics company.
Yet studies like the one on tasty food are financed. That study, which received a grant of $200,000 over two years, is based on the idea that since obesity is associated with an increased risk of cancer, understanding why people have trouble losing weight could lead to better weight control methods, which could lead to less obesity, which could lead to less cancer.
“It was the first grant I ever submitted, and it was funded on the first try,” said the principal investigator, Bradley M. Appelhans, an assistant professor of basic medical sciences and psychology at the University of Arizona. Dr. Appelhans said he realized it would hardly cure cancer, but hoped that “it will provide knowledge that will incrementally contribute to more effective cancer prevention strategies.”
Even top federal cancer officials say the system needs to be changed.
“We have a system that works over all pretty well, and is very good at ruling out bad things — we don’t fund bad research,” said Dr. Raynard S. Kington, acting director of the National Institutes of Health, which includes the cancer institute. “But given that, we also recognize that the system probably provides disincentives to funding really transformative research.”
The private American Cancer Society follows a similarly cautious path. Last year, it awarded $124 million in new research grants, with some money coming from large donors but most from events like walkathons and memorial donations.
Dr. Otis W. Brawley, chief medical officer at the cancer society, said the whole cancer research effort remained too cautious.
“The problem in science is that the way you get ahead is by staying within narrow parameters and doing what other people are doing,” Dr. Brawley said. “No one wants to fund wild new ideas.”
He added that the problem of getting money for imaginative but chancy proposals had worsened in recent years. There are more scientists seeking grants — they surged into the field in the 1990s when the National Institutes of Health budget doubled before plunging again.
That makes many researchers, who need grants not just to run their labs but also sometimes to keep their faculty positions, even more cautious in the grant proposals they submit. And grant review committees become more wary about giving scarce money to speculative proposals.
Philanthropies, which helped some researchers try outside-the-box ideas, are now having financial problems. And advances in technology have made research more expensive.
“Scientists don’t like talking about it publicly,” because they worry that their remarks will be viewed as lashing out at the health institutes, which supports them, said Dr. Richard D. Klausner, a former director of the National Cancer Institute.
But, Dr. Klausner added: “There is no conversation that I have ever had about the grant system that doesn’t have an incredible sense of consensus that it is not working. That is a terrible wasted opportunity for the scientists, patients, the nation and the world.”
A Big Idea Without a Backer
For 25 years, Eileen K. Jaffe received federal grants to run her lab. As a senior scientist at the Fox Chase Cancer Center, with a long list of published papers in prestigious journals, she is a respected, established researcher.
Then Dr. Jaffe stumbled upon results that went against textbook explanations, suggesting that it might be possible to find an entirely new class of drugs that could disable proteins that fuel cancer cells. Now she wants to find chemicals that might be developed into such drugs.
But her grant proposal was rejected out of hand by the institutes of health, not even discussed by a review panel. She had no preliminary data showing that the idea was likely to work, something reviewers always want to see, and the idea was just too unprecedented.
Dr. Jaffe epitomizes the scientist who realizes that if she were to single-mindedly pursue her unorthodox idea, her “career may be ruined in the process,” in the words of Dr. Brawley of the American Cancer Society.
Dr. Jaffe is just conceiving her project; it is much to soon to know whether it will result in a revolutionary drug. And even if she does find potential new drugs, it is not clear that they will be effective. Most new ideas are difficult to prove, and most potential new drugs fail.
So Dr. Jaffe was not entirely surprised when her grant application to look for such cancer drugs was summarily rejected.
“They said I don’t have preliminary results,” she said. “Of course I don’t. I need the grant money to get them.”
Dr. Young, chancellor at Fox Chase, said Dr. Jaffe’s situation showed why people with bold new ideas often just give up.
“You can’t prove it will work in advance,” he said. “If you could, it wouldn’t be a high-risk idea.”
It is a long haul, Dr. Jaffe knows. And she has already had to downsize her lab. But, she said, she will persist.
Angels Outside Government
At the Dana-Farber Cancer Institute in Boston, Dr. Ewa T. Sicinska knew she would have a similar problem with her research. She wanted to grow human cancers in mice. Unlike Dr. Jaffe, though, Dr. Sicinska did not even apply for government money.
It is not that the project was unimportant.
“Rather than have to start a human clinical trial to test new drugs, we want to test them first in mice with real human tumors,” said Dr. George D. Demetri, who leads the research group supporting Dr. Sicinska.
Researchers have studied mouse cancers but, they acknowledge, they are just not the same as human cancers — they are much easier to treat, and drugs that cure mice often do nothing in people. So, over the years, scientists have tried to implant human cancer cells in mice, but with little success.
“Everyone told us that if you take tumors out of patients and put them in mice, they don’t grow,” Dr. Demetri said. The tumor cells usually were put in a plastic dish before being implanted in mice. “We said — wait a minute. The cells are not growing in the plastic dish. They probably are dying. What if we bypass the dish?’”
With that idea in mind, Dr. Demetri, convinced it was too speculative to get federal money, tapped an unusual source, the Ludwig Fund. Endowed by Daniel K. Ludwig, one of the world’s richest men in the 1960s and 1970s, the fund supports unfettered cancer research at six medical centers in the United States, including Dana-Farber, to be used at the institutes’ discretion. That put Dr. Sicinska in a very different position from that of Dr. Jaffe. She could try something chancy without a grant.
Dr. Sicinska used a quarter of a million dollars of Ludwig money for this project, buying mice without immune systems, which meant they could not reject human tumors, and housing them in a germ-free basement lab. She spent months learning to implant tumors in the mice and enlisted geneticists to study the implanted tumors, making sure they did not mutate beyond recognition.
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She spends her days in the lab, using a miniature ultrasound machine to scan the mice, hairless creatures with prominent ears. Four types of sarcomas — cancers of fat, muscle or bone — are growing in them and look genetically identical to the tumors removed from patients.
Dr. Elias A. Zerhouni, former director of the National Institutes of Health, said he was not sure that a grant for the project would have been turned down. The N.I.H., he said, does finance research on mouse models for human cancer.
But Dr. Demetri said he did not apply “because we have lots of experience in what’s fundable.” His mouse work, he said, is exploratory, and he cannot predict what he will find or when. He certainly could not lay out a road map of what he would do and promise results in a few years.
Grant system undercuts major cancer advances
Exploratory research that could lead to breakthroughs doesn't make the cut
More from NYTimes.com
Cities Lose Out on Road Funds From Federal Stimulus
By Gina Kolata
updated 10:56 a.m. PT, Sun., June 28, 2009
Among the recent research grants awarded by the National Cancer Institute is one for a study asking whether people who are especially responsive to good-tasting food have the most difficulty staying on a diet. Another study will assess a Web-based program that encourages families to choose more healthful foods.
Many other grants involve biological research unlikely to break new ground. For example, one project asks whether a laboratory discovery involving colon cancer also applies to breast cancer. But even if it does apply, there is no treatment yet that exploits it.
The cancer institute has spent $105 billion since President Richard M. Nixon declared war on the disease in 1971. The American Cancer Society, the largest private financer of cancer research, has spent about $3.4 billion on research grants since 1946.
Yet the fight against cancer is going slower than most had hoped, with only small changes in the death rate in the almost 40 years since it began.
One major impediment, scientists agree, is the grant system itself. It has become a sort of jobs program, a way to keep research laboratories going year after year with the understanding that the focus will be on small projects unlikely to take significant steps toward curing cancer.
“These grants are not silly, but they are only likely to produce incremental progress,” said Dr. Robert C. Young, chancellor at Fox Chase Cancer Center in Philadelphia and chairman of the Board of Scientific Advisors, an independent group that makes recommendations to the cancer institute.
The institute’s reviewers choose such projects because, with too little money to finance most proposals, they are timid about taking chances on ones that might not succeed. The problem, Dr. Young and others say, is that projects that could make a major difference in cancer prevention and treatment are all too often crowded out because they are too uncertain. In fact, it has become lore among cancer researchers that some game-changing discoveries involved projects deemed too unlikely to succeed and were therefore denied federal grants, forcing researchers to struggle mightily to continue.
Take one transformative drug, for breast cancer. It was based on a discovery by Dr. Dennis Slamon of the University of California, Los Angeles, that very aggressive breast cancers often have multiple copies of a particular protein, HER-2. That led to the development of herceptin, which blocks HER-2.
More health news from NYTimes.com
Pick to Lead Health Agency Draws Praise and Some Concern
Months to Live: Sisters Face Death With Dignity and Reverence
Now women with excess HER-2 proteins, who once had the worst breast cancer prognoses, have prognoses that are among the best. But when Dr. Slamon wanted to start this research, his grant was turned down. He succeeded only after the grateful wife of a patient helped him get money from Revlon, the cosmetics company.
Yet studies like the one on tasty food are financed. That study, which received a grant of $200,000 over two years, is based on the idea that since obesity is associated with an increased risk of cancer, understanding why people have trouble losing weight could lead to better weight control methods, which could lead to less obesity, which could lead to less cancer.
“It was the first grant I ever submitted, and it was funded on the first try,” said the principal investigator, Bradley M. Appelhans, an assistant professor of basic medical sciences and psychology at the University of Arizona. Dr. Appelhans said he realized it would hardly cure cancer, but hoped that “it will provide knowledge that will incrementally contribute to more effective cancer prevention strategies.”
Even top federal cancer officials say the system needs to be changed.
“We have a system that works over all pretty well, and is very good at ruling out bad things — we don’t fund bad research,” said Dr. Raynard S. Kington, acting director of the National Institutes of Health, which includes the cancer institute. “But given that, we also recognize that the system probably provides disincentives to funding really transformative research.”
The private American Cancer Society follows a similarly cautious path. Last year, it awarded $124 million in new research grants, with some money coming from large donors but most from events like walkathons and memorial donations.
Dr. Otis W. Brawley, chief medical officer at the cancer society, said the whole cancer research effort remained too cautious.
“The problem in science is that the way you get ahead is by staying within narrow parameters and doing what other people are doing,” Dr. Brawley said. “No one wants to fund wild new ideas.”
He added that the problem of getting money for imaginative but chancy proposals had worsened in recent years. There are more scientists seeking grants — they surged into the field in the 1990s when the National Institutes of Health budget doubled before plunging again.
That makes many researchers, who need grants not just to run their labs but also sometimes to keep their faculty positions, even more cautious in the grant proposals they submit. And grant review committees become more wary about giving scarce money to speculative proposals.
Philanthropies, which helped some researchers try outside-the-box ideas, are now having financial problems. And advances in technology have made research more expensive.
“Scientists don’t like talking about it publicly,” because they worry that their remarks will be viewed as lashing out at the health institutes, which supports them, said Dr. Richard D. Klausner, a former director of the National Cancer Institute.
But, Dr. Klausner added: “There is no conversation that I have ever had about the grant system that doesn’t have an incredible sense of consensus that it is not working. That is a terrible wasted opportunity for the scientists, patients, the nation and the world.”
A Big Idea Without a Backer
For 25 years, Eileen K. Jaffe received federal grants to run her lab. As a senior scientist at the Fox Chase Cancer Center, with a long list of published papers in prestigious journals, she is a respected, established researcher.
Then Dr. Jaffe stumbled upon results that went against textbook explanations, suggesting that it might be possible to find an entirely new class of drugs that could disable proteins that fuel cancer cells. Now she wants to find chemicals that might be developed into such drugs.
But her grant proposal was rejected out of hand by the institutes of health, not even discussed by a review panel. She had no preliminary data showing that the idea was likely to work, something reviewers always want to see, and the idea was just too unprecedented.
Dr. Jaffe epitomizes the scientist who realizes that if she were to single-mindedly pursue her unorthodox idea, her “career may be ruined in the process,” in the words of Dr. Brawley of the American Cancer Society.
Dr. Jaffe is just conceiving her project; it is much to soon to know whether it will result in a revolutionary drug. And even if she does find potential new drugs, it is not clear that they will be effective. Most new ideas are difficult to prove, and most potential new drugs fail.
So Dr. Jaffe was not entirely surprised when her grant application to look for such cancer drugs was summarily rejected.
“They said I don’t have preliminary results,” she said. “Of course I don’t. I need the grant money to get them.”
Dr. Young, chancellor at Fox Chase, said Dr. Jaffe’s situation showed why people with bold new ideas often just give up.
“You can’t prove it will work in advance,” he said. “If you could, it wouldn’t be a high-risk idea.”
It is a long haul, Dr. Jaffe knows. And she has already had to downsize her lab. But, she said, she will persist.
Angels Outside Government
At the Dana-Farber Cancer Institute in Boston, Dr. Ewa T. Sicinska knew she would have a similar problem with her research. She wanted to grow human cancers in mice. Unlike Dr. Jaffe, though, Dr. Sicinska did not even apply for government money.
It is not that the project was unimportant.
“Rather than have to start a human clinical trial to test new drugs, we want to test them first in mice with real human tumors,” said Dr. George D. Demetri, who leads the research group supporting Dr. Sicinska.
Researchers have studied mouse cancers but, they acknowledge, they are just not the same as human cancers — they are much easier to treat, and drugs that cure mice often do nothing in people. So, over the years, scientists have tried to implant human cancer cells in mice, but with little success.
“Everyone told us that if you take tumors out of patients and put them in mice, they don’t grow,” Dr. Demetri said. The tumor cells usually were put in a plastic dish before being implanted in mice. “We said — wait a minute. The cells are not growing in the plastic dish. They probably are dying. What if we bypass the dish?’”
With that idea in mind, Dr. Demetri, convinced it was too speculative to get federal money, tapped an unusual source, the Ludwig Fund. Endowed by Daniel K. Ludwig, one of the world’s richest men in the 1960s and 1970s, the fund supports unfettered cancer research at six medical centers in the United States, including Dana-Farber, to be used at the institutes’ discretion. That put Dr. Sicinska in a very different position from that of Dr. Jaffe. She could try something chancy without a grant.
Dr. Sicinska used a quarter of a million dollars of Ludwig money for this project, buying mice without immune systems, which meant they could not reject human tumors, and housing them in a germ-free basement lab. She spent months learning to implant tumors in the mice and enlisted geneticists to study the implanted tumors, making sure they did not mutate beyond recognition.
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She spends her days in the lab, using a miniature ultrasound machine to scan the mice, hairless creatures with prominent ears. Four types of sarcomas — cancers of fat, muscle or bone — are growing in them and look genetically identical to the tumors removed from patients.
Dr. Elias A. Zerhouni, former director of the National Institutes of Health, said he was not sure that a grant for the project would have been turned down. The N.I.H., he said, does finance research on mouse models for human cancer.
But Dr. Demetri said he did not apply “because we have lots of experience in what’s fundable.” His mouse work, he said, is exploratory, and he cannot predict what he will find or when. He certainly could not lay out a road map of what he would do and promise results in a few years.
Uncle Sam to pond scum: I want you!
Uncle Sam to pond scum: I want you!
Algae-based biofuel could one day power gas guzzlers of the U.S. military
Innovation
Learn more about RSS
By Mike Stark
updated 7:49 a.m. PT, Mon., July 6, 2009
LOGAN, Utah - Somewhere among the beakers and the bubbling green-tinged tanks in this Utah State University lab, Jeff Muhs is searching for champion pond scum for Uncle Sam.
If he and others like him around the country are successful, algae-based biofuel could one day power one of the world's biggest gas guzzlers: the U.S. military.
Heady stuff for a simple sun-sucking organism. But algae's ability to grow fast and churn out fatty oils makes it an alluring prospect for a military looking to lessen its dependence on foreign oil.
"It inherently makes sense to start there," said Muhs, who runs Utah State's energy lab.
Work at the lab is part of a Pentagon project aimed at fast-tracking research to eventually produce algae-based biofuel that costs less than $3 per gallon, can be produced at a rate of 50 million gallons per year and meets strict military standards.
"We believe it's possible. We wouldn't invest in it if we didn't," said Jan Walker, a spokeswoman for the Defense Advance Research Projects Agency, the Defense Department's main research arm.
In December, DARPA awarded a $20 million contract to General Atomics and a $15 million contract to Science Applications International Corporation (SAIC), two San Diego-based research companies. The contracts ask the companies to find a biofuel surrogate for JP-8 — the petroleum-based fuel for military jets, planes and other vehicles.
Lab tests and smaller-scale experiments over several decades have shown that algae oil can be turned into fuel. But the military, which spent more than $12 billion on fuel in 2007, wants something large-scale and cheap.
"We view that as the primary challenge of the job, to get it where it will serve as a source of affordable JP-8," said Bill Davison, vice president for the Advanced Process Systems division at General Atomics.
The workload is being spread among subcontractors from universities and private research firms across the country.
Part of the trick is finding the right algae for the job.
There are about 40,000 species to choose from. Many are efficient at converting nutrients and carbon dioxide into the organic matter that provides oils that can later be refined and used as a base for biofuels.
The problem is certain algae grow fast — some can double their mass several times a day — but produce little oil. Others produce gobs of oil but are slow growers.
"You have to find a happy medium," said Muhs, whose lab is examining about 300 kinds of algae.
His researchers are running experiments on the effects of temperature, sunlight and other factors on productivity. Some like freshwater, others thrive in salt water. Tweak their living conditions — nutrients, carbon dioxide, flow of water — and their ability to produce oil changes along with it.
"There's so many variables to look at," Muhs said. "You can begin to see why there's a need for research. It's a daunting task."
At Arizona State University, scientists are testing about 500 strains, searching for the most robust specimens in flasks and beakers that could make the transition to larger outdoor ponds and growing facilities.
"We call them the athletes. If they perform well in the lab they get to play on the big field outside," said Milton Sommerfeld, a professor and researcher at the university.
He was part of a federally funded project that started in the 1970s to look at the viability of algae-based fuel. It's still too early to say what kind of growing systems will work the best and exactly how laboratory successes will be scaled-up for commercial use, he said.
Intensified interest in recent years, he said, will move the process along more quickly.
"But it's going to require tens of millions of dollars," he said.
Part of what makes algae attractive is that it doesn't compete with food sources in the same way ethanol does and it has the potential to produce far more biofuel per acre than corn or soybeans.
There are still plenty of unknowns, including how much energy it will require to produce fuel from algae at a large scale and whether it's better to grow algae in pools or in enclosed tanks called photobioreactors.
Researchers are also trying to determine the most economical way to extract oils from the algae and put it through the refining process.
The rough cost estimates for producing algae fuel vary right now from $10 a gallon to $40, said Al Darzins, who manages the national bioenergy center at the National Renewable Energy Laboratory in Golden, Colo.
"Obviously, that's not cost effective," Darzins said. "So we have our work cut out for us."
NREL has ramped up its own research into algae-based biofuels a decade after a similar program was scrapped because the fuels were considered too expensive to compete with petroleum.
Today, he said, there are hundreds of companies studying algae fuels. A few high-profile tests — including commercial jet flights using a blend of algae- and petroleum-based fuels — are intriguing but nowhere close to showing that commercialized algae fuel could replace the 100 million gallons of petroleum diesel and jet fuel burned each year, he said.
But research from this Pentagon-funded project could help spur use of algae-based fuels in the commercial aviation market, according to Paul Bollinger, a vice president with SAIC.
"The military has the potential of serving as a market initiator and the airlines as a market maker," Bollinger said.
Back at the Utah State lab — where algae are shaken, stirred and stressed in the name of science — Muhs tempers his excitement over the potential of the green slime with a dose of reality. Algae fuels could be a transition-type fuel in the coming years but aren't the singular savior to weaning modern society from petroleum.
"It's not a silver bullet," he said.
Algae-based biofuel could one day power gas guzzlers of the U.S. military
Innovation
Learn more about RSS
By Mike Stark
updated 7:49 a.m. PT, Mon., July 6, 2009
LOGAN, Utah - Somewhere among the beakers and the bubbling green-tinged tanks in this Utah State University lab, Jeff Muhs is searching for champion pond scum for Uncle Sam.
If he and others like him around the country are successful, algae-based biofuel could one day power one of the world's biggest gas guzzlers: the U.S. military.
Heady stuff for a simple sun-sucking organism. But algae's ability to grow fast and churn out fatty oils makes it an alluring prospect for a military looking to lessen its dependence on foreign oil.
"It inherently makes sense to start there," said Muhs, who runs Utah State's energy lab.
Work at the lab is part of a Pentagon project aimed at fast-tracking research to eventually produce algae-based biofuel that costs less than $3 per gallon, can be produced at a rate of 50 million gallons per year and meets strict military standards.
"We believe it's possible. We wouldn't invest in it if we didn't," said Jan Walker, a spokeswoman for the Defense Advance Research Projects Agency, the Defense Department's main research arm.
In December, DARPA awarded a $20 million contract to General Atomics and a $15 million contract to Science Applications International Corporation (SAIC), two San Diego-based research companies. The contracts ask the companies to find a biofuel surrogate for JP-8 — the petroleum-based fuel for military jets, planes and other vehicles.
Lab tests and smaller-scale experiments over several decades have shown that algae oil can be turned into fuel. But the military, which spent more than $12 billion on fuel in 2007, wants something large-scale and cheap.
"We view that as the primary challenge of the job, to get it where it will serve as a source of affordable JP-8," said Bill Davison, vice president for the Advanced Process Systems division at General Atomics.
The workload is being spread among subcontractors from universities and private research firms across the country.
Part of the trick is finding the right algae for the job.
There are about 40,000 species to choose from. Many are efficient at converting nutrients and carbon dioxide into the organic matter that provides oils that can later be refined and used as a base for biofuels.
The problem is certain algae grow fast — some can double their mass several times a day — but produce little oil. Others produce gobs of oil but are slow growers.
"You have to find a happy medium," said Muhs, whose lab is examining about 300 kinds of algae.
His researchers are running experiments on the effects of temperature, sunlight and other factors on productivity. Some like freshwater, others thrive in salt water. Tweak their living conditions — nutrients, carbon dioxide, flow of water — and their ability to produce oil changes along with it.
"There's so many variables to look at," Muhs said. "You can begin to see why there's a need for research. It's a daunting task."
At Arizona State University, scientists are testing about 500 strains, searching for the most robust specimens in flasks and beakers that could make the transition to larger outdoor ponds and growing facilities.
"We call them the athletes. If they perform well in the lab they get to play on the big field outside," said Milton Sommerfeld, a professor and researcher at the university.
He was part of a federally funded project that started in the 1970s to look at the viability of algae-based fuel. It's still too early to say what kind of growing systems will work the best and exactly how laboratory successes will be scaled-up for commercial use, he said.
Intensified interest in recent years, he said, will move the process along more quickly.
"But it's going to require tens of millions of dollars," he said.
Part of what makes algae attractive is that it doesn't compete with food sources in the same way ethanol does and it has the potential to produce far more biofuel per acre than corn or soybeans.
There are still plenty of unknowns, including how much energy it will require to produce fuel from algae at a large scale and whether it's better to grow algae in pools or in enclosed tanks called photobioreactors.
Researchers are also trying to determine the most economical way to extract oils from the algae and put it through the refining process.
The rough cost estimates for producing algae fuel vary right now from $10 a gallon to $40, said Al Darzins, who manages the national bioenergy center at the National Renewable Energy Laboratory in Golden, Colo.
"Obviously, that's not cost effective," Darzins said. "So we have our work cut out for us."
NREL has ramped up its own research into algae-based biofuels a decade after a similar program was scrapped because the fuels were considered too expensive to compete with petroleum.
Today, he said, there are hundreds of companies studying algae fuels. A few high-profile tests — including commercial jet flights using a blend of algae- and petroleum-based fuels — are intriguing but nowhere close to showing that commercialized algae fuel could replace the 100 million gallons of petroleum diesel and jet fuel burned each year, he said.
But research from this Pentagon-funded project could help spur use of algae-based fuels in the commercial aviation market, according to Paul Bollinger, a vice president with SAIC.
"The military has the potential of serving as a market initiator and the airlines as a market maker," Bollinger said.
Back at the Utah State lab — where algae are shaken, stirred and stressed in the name of science — Muhs tempers his excitement over the potential of the green slime with a dose of reality. Algae fuels could be a transition-type fuel in the coming years but aren't the singular savior to weaning modern society from petroleum.
"It's not a silver bullet," he said.
Forget gas, batteries — pee is new power source
scienceInnovation
Forget gas, batteries — pee is new power source
Scientists can create cheap hydrogen from urine for use in fuel cells
Innovation
By Eric Bland
updated 2:34 p.m. PT, Wed., July 8, 2009
Urine-powered cars, homes and personal electronic devices could be available in six months with new technology developed by scientists from Ohio University.
Using a nickel-based electrode, the scientists can create large amounts of cheap hydrogen from urine that could be burned or used in fuel cells. "One cow can provide enough energy to supply hot water for 19 houses," said Gerardine Botte, a professor at Ohio University developing the technology. "Soldiers in the field could carry their own fuel."
Pee power is based on hydrogen, the most common element in the universe but one that has resisted efforts to produce, store, transport and use economically.
Storing pure hydrogen gas requires high pressure and low temperature. New nanomaterials with high surface areas can adsorb hydrogen, but have yet to be produced on a commercial scale.
Chemically binding hydrogen to other elements, like oxygen to create water, makes it easier to store and transport, but releasing the hydrogen when it's needed usually requires financially prohibitive amounts of electricity.
By attaching hydrogen to another element, nitrogen, Botte and her colleagues realized that they can store hydrogen without the exotic environmental conditions, and then release it with less electricity, 0.037 Volts instead of the 1.23 Volts needed for water.
One molecule of urea, a major component of urine, contains four atoms of hydrogen bonded to two atoms of nitrogen. Stick a special nickel electrode into a pool of urine, apply an electrical current, and hydrogen gas is released.
Botte's current prototype measures 3x3x1 inch and can produce up to 500 milliwatts of power. However, Botte and her colleagues are actively trying to commercialize several larger versions of the technology.
A fuel cell, urine-powered vehicle could theoretically travel 90 miles per gallon. A refrigerator-sized unit could produce one kilowatt of energy for about $5,000, although this price is a rough estimate, says Botte.
"The waste products from say a chicken farm could be used to produce the energy needed to run the farm," said John Stickney, a chemist and professor at the University of Georgia.
For livestock farmers who are required by law to pool their animals' waste, large scale prototypes could turn that urine into power within six months.
Smaller versions likely won't be available until after that, so the average consumer probably shouldn't start saving their pee just yet.
"It is not a solution for all our cars," said Stickney, "but it is the kind of process which will find many applications and will make for a greener world."
Forget gas, batteries — pee is new power source
Scientists can create cheap hydrogen from urine for use in fuel cells
Innovation
By Eric Bland
updated 2:34 p.m. PT, Wed., July 8, 2009
Urine-powered cars, homes and personal electronic devices could be available in six months with new technology developed by scientists from Ohio University.
Using a nickel-based electrode, the scientists can create large amounts of cheap hydrogen from urine that could be burned or used in fuel cells. "One cow can provide enough energy to supply hot water for 19 houses," said Gerardine Botte, a professor at Ohio University developing the technology. "Soldiers in the field could carry their own fuel."
Pee power is based on hydrogen, the most common element in the universe but one that has resisted efforts to produce, store, transport and use economically.
Storing pure hydrogen gas requires high pressure and low temperature. New nanomaterials with high surface areas can adsorb hydrogen, but have yet to be produced on a commercial scale.
Chemically binding hydrogen to other elements, like oxygen to create water, makes it easier to store and transport, but releasing the hydrogen when it's needed usually requires financially prohibitive amounts of electricity.
By attaching hydrogen to another element, nitrogen, Botte and her colleagues realized that they can store hydrogen without the exotic environmental conditions, and then release it with less electricity, 0.037 Volts instead of the 1.23 Volts needed for water.
One molecule of urea, a major component of urine, contains four atoms of hydrogen bonded to two atoms of nitrogen. Stick a special nickel electrode into a pool of urine, apply an electrical current, and hydrogen gas is released.
Botte's current prototype measures 3x3x1 inch and can produce up to 500 milliwatts of power. However, Botte and her colleagues are actively trying to commercialize several larger versions of the technology.
A fuel cell, urine-powered vehicle could theoretically travel 90 miles per gallon. A refrigerator-sized unit could produce one kilowatt of energy for about $5,000, although this price is a rough estimate, says Botte.
"The waste products from say a chicken farm could be used to produce the energy needed to run the farm," said John Stickney, a chemist and professor at the University of Georgia.
For livestock farmers who are required by law to pool their animals' waste, large scale prototypes could turn that urine into power within six months.
Smaller versions likely won't be available until after that, so the average consumer probably shouldn't start saving their pee just yet.
"It is not a solution for all our cars," said Stickney, "but it is the kind of process which will find many applications and will make for a greener world."
Iconic skyscrapers find new luster in green tech
Iconic skyscrapers find new luster in green tech
Environmental retrofits have begun to pay off for owners and tenants
Empire State Building, center, is illuminated by sunlight against a cloud-darkened sky in New York. When owners of the Empire State Building decided to give it a $120 million environmental makeover, in 2009, they were only partly interested in saving energy.
By Chris Kahn
updated 2:53 p.m. PT, Mon., July. 6, 2009
—
When owners of the Empire State Building decided to blanket its towering facade this year with thousands of insulating windows, they were only partly interested in saving energy.
They also needed tenants.
After 78 years, Manhattan's signature office building had lost its sheen as one of the city's most desirable places to work. To get it back, the owners did what an increasing number of property owners have done — they went green, shelling out $120 million on a variety of environmental improvements, a move would have been considered a huge gamble a few years ago.
Buildings that define city skylines across the country, some national icons, are catching up to the sleek, new structures designed with efficiency in mind, as property owners and managers become convinced that a greener building now makes financial sense.
That's because in recent years environmental retrofits have begun to pay off for owners and tenants alike. Higher-profile companies are seeking out more efficient office space, and new technology at older buildings has started to translate into higher property values, leases and occupancy rates.
"In a good market, we're going to get the best rents for the best tenants," said Anthony E. Malkin, who leads a real estate group that owns the Empire State Building. "In a bad market like we have now, we're going to get tenants when other buildings won't."
Renovation specialists around the country have been plugging porous walls in numerous old buildings, adding high tech water systems and using recycled material in carpets and tile.
One of them is the Christman Building in Lansing, Mich., an 81-year-old Elizabethan Revival office that's listed on the National Register of Historic Places. While repairing the limestone exterior and preserving unique details like the mica light fixtures, the building owners spent $8.5 million to add water-efficient plumbing and increased the amount of natural light. They also capped the building with a reflective "cool" roof.
Chicago's Sears Tower announced late last month that it will embark on a five-year, $350 million green renovation. The 110-story, staggered skyscraper, which turned 36 this year, will crown its rooftops with solar panels, wind turbines and up to 35,000 square feet of sunlight-absorbing gardens.
When complete, the improvements will cut the tower's annual electricity use by 80 percent and save 24 million gallons of water, property managers say.
Building owners trumpet their environmental commitment when extensive modifications are made, yet in many cases those changes are being pushed by tenants.
Many high-profile tenants won't even consider moving into a property without the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) certification, said Allan Skodowski with Transwestern management group. They may not even know what the certification means, he said, but they demand it nonetheless.
"They say 'We want LEED,"' Skodowski said, "and that's it."
Nine of Transwestern's properties received certification this year. A combination of energy efficient light bulbs and other green equipment helped those buildings slash energy consumption. On average, they've seen a 2 percent drop in energy costs, even as electricity rates jumped between 10 percent and 40 percent, Skodowski said.
Leasing rates have not risen as a result of the changes, Skodowski said, yet at the same time occupancy rates have not fallen. That's a victory for an industry hit hard by the recession. Vacancy rates at office buildings nationwide have gone from 10.9 percent at the end of 2007 to 12.4 percent in the first quarter of this year.
"If one extra tenant comes and looks at the building, if the owner gets an extra penny or so a foot, then at the end of the day it's paying for itself," Skodowski said.
A recent analysis by real estate researcher CoStar Group, Inc. found that green-certified buildings had fewer vacancies than other buildings with similar age, size and location.
The CoStar study, which included about 3,000 green-certified offices, found that buildings with the council's certification enjoyed higher occupancy rates (90.3 percent) than their peers (84.7 percent) in the first three months of 2009.
Certified buildings have fetched higher lease rates for several years. The CoStar report said the buildings rented at an average of $38.86 per square foot in the first quarter of 2009 compared with $29.80 per square foot for their peers.
"This isn't just a 'We are doing the right thing' movement," said Marc Heisterkamp, U.S. Green Building Council's director of commercial real estate. "In the end, the numbers pencil out."
At the Empire State Building, Malkin proposed a top-to-bottom renovation that included a $13.2 million investment in new green technologies. The goal was to sufficiently reduce greenhouse gases without spending more than he could justify to his investors.
What the owners settled on was a series of upgrades that include retrofitting all 6,500 windows. Under every window, radiators will be padded with extra insulation. The building's lighting, cold water and ventilation systems also will be upgraded.
The renovation should take 18 months. Afterward, the owners expect an annual energy savings of $4.4 million, enough to pay off the new technologies in about three years.
Already, the renovation has lured upscale, energy-conscious companies like Swedish construction firm Skanska, said Ray Quartararo with Jones Lang Lasalle, which is managing the renovation.
Skanska wanted its U.S. headquarters to have a LEED "platinum" certification — reserved for only the most efficient of buildings — and it found a willing partner in the Empire State Building. Skanska officials said the building's management helped them install bike racks and add other energy-saving details on the 32nd floor.
"We had looked at several downtown spaces, but the Empire State Building made the most sense," a company spokeswoman said.
Jacques Catafago, an attorney who works 16 floors above Skanska's new office, is also happy with the changes. Catafago has fought the building management before on other fees, but he said he wouldn't mind paying more rent if it goes toward renovations that cut his electric bill.
Besides, Catafago said, he's already checked out the rent for similar buildings in the city and realizes he has a pretty good deal at the Empire State Building.
"We'd be paying twice as much" uptown, he said.
Environmental retrofits have begun to pay off for owners and tenants
Empire State Building, center, is illuminated by sunlight against a cloud-darkened sky in New York. When owners of the Empire State Building decided to give it a $120 million environmental makeover, in 2009, they were only partly interested in saving energy.
By Chris Kahn
updated 2:53 p.m. PT, Mon., July. 6, 2009
—
When owners of the Empire State Building decided to blanket its towering facade this year with thousands of insulating windows, they were only partly interested in saving energy.
They also needed tenants.
After 78 years, Manhattan's signature office building had lost its sheen as one of the city's most desirable places to work. To get it back, the owners did what an increasing number of property owners have done — they went green, shelling out $120 million on a variety of environmental improvements, a move would have been considered a huge gamble a few years ago.
Buildings that define city skylines across the country, some national icons, are catching up to the sleek, new structures designed with efficiency in mind, as property owners and managers become convinced that a greener building now makes financial sense.
That's because in recent years environmental retrofits have begun to pay off for owners and tenants alike. Higher-profile companies are seeking out more efficient office space, and new technology at older buildings has started to translate into higher property values, leases and occupancy rates.
"In a good market, we're going to get the best rents for the best tenants," said Anthony E. Malkin, who leads a real estate group that owns the Empire State Building. "In a bad market like we have now, we're going to get tenants when other buildings won't."
Renovation specialists around the country have been plugging porous walls in numerous old buildings, adding high tech water systems and using recycled material in carpets and tile.
One of them is the Christman Building in Lansing, Mich., an 81-year-old Elizabethan Revival office that's listed on the National Register of Historic Places. While repairing the limestone exterior and preserving unique details like the mica light fixtures, the building owners spent $8.5 million to add water-efficient plumbing and increased the amount of natural light. They also capped the building with a reflective "cool" roof.
Chicago's Sears Tower announced late last month that it will embark on a five-year, $350 million green renovation. The 110-story, staggered skyscraper, which turned 36 this year, will crown its rooftops with solar panels, wind turbines and up to 35,000 square feet of sunlight-absorbing gardens.
When complete, the improvements will cut the tower's annual electricity use by 80 percent and save 24 million gallons of water, property managers say.
Building owners trumpet their environmental commitment when extensive modifications are made, yet in many cases those changes are being pushed by tenants.
Many high-profile tenants won't even consider moving into a property without the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) certification, said Allan Skodowski with Transwestern management group. They may not even know what the certification means, he said, but they demand it nonetheless.
"They say 'We want LEED,"' Skodowski said, "and that's it."
Nine of Transwestern's properties received certification this year. A combination of energy efficient light bulbs and other green equipment helped those buildings slash energy consumption. On average, they've seen a 2 percent drop in energy costs, even as electricity rates jumped between 10 percent and 40 percent, Skodowski said.
Leasing rates have not risen as a result of the changes, Skodowski said, yet at the same time occupancy rates have not fallen. That's a victory for an industry hit hard by the recession. Vacancy rates at office buildings nationwide have gone from 10.9 percent at the end of 2007 to 12.4 percent in the first quarter of this year.
"If one extra tenant comes and looks at the building, if the owner gets an extra penny or so a foot, then at the end of the day it's paying for itself," Skodowski said.
A recent analysis by real estate researcher CoStar Group, Inc. found that green-certified buildings had fewer vacancies than other buildings with similar age, size and location.
The CoStar study, which included about 3,000 green-certified offices, found that buildings with the council's certification enjoyed higher occupancy rates (90.3 percent) than their peers (84.7 percent) in the first three months of 2009.
Certified buildings have fetched higher lease rates for several years. The CoStar report said the buildings rented at an average of $38.86 per square foot in the first quarter of 2009 compared with $29.80 per square foot for their peers.
"This isn't just a 'We are doing the right thing' movement," said Marc Heisterkamp, U.S. Green Building Council's director of commercial real estate. "In the end, the numbers pencil out."
At the Empire State Building, Malkin proposed a top-to-bottom renovation that included a $13.2 million investment in new green technologies. The goal was to sufficiently reduce greenhouse gases without spending more than he could justify to his investors.
What the owners settled on was a series of upgrades that include retrofitting all 6,500 windows. Under every window, radiators will be padded with extra insulation. The building's lighting, cold water and ventilation systems also will be upgraded.
The renovation should take 18 months. Afterward, the owners expect an annual energy savings of $4.4 million, enough to pay off the new technologies in about three years.
Already, the renovation has lured upscale, energy-conscious companies like Swedish construction firm Skanska, said Ray Quartararo with Jones Lang Lasalle, which is managing the renovation.
Skanska wanted its U.S. headquarters to have a LEED "platinum" certification — reserved for only the most efficient of buildings — and it found a willing partner in the Empire State Building. Skanska officials said the building's management helped them install bike racks and add other energy-saving details on the 32nd floor.
"We had looked at several downtown spaces, but the Empire State Building made the most sense," a company spokeswoman said.
Jacques Catafago, an attorney who works 16 floors above Skanska's new office, is also happy with the changes. Catafago has fought the building management before on other fees, but he said he wouldn't mind paying more rent if it goes toward renovations that cut his electric bill.
Besides, Catafago said, he's already checked out the rent for similar buildings in the city and realizes he has a pretty good deal at the Empire State Building.
"We'd be paying twice as much" uptown, he said.
Wednesday, July 8, 2009
TreeHugger article
Electric Mini: 0-60 in 4 Seconds: It Has Motors In Its Wheels
by Justin Thomas, Virginia on 08.30.06
A British engineering firm has put together a high-performance hybrid version of BMW's Mini Cooper. The PML Mini QED has a top speed of 150 mph, a 0-60 mph time of 4.5 seconds. The car uses a small gasoline engine with four 160 horsepower electric motors — one on each wheel. The car has been designed to run for four hours of combined urban/extra urban driving, powered only by a battery and bank of ultra capacitors. The QED supports an all-electric range of 200-250 miles and has a total range of about 932 miles (1,500 km). For longer journeys at higher speeds, a small conventional internal combustion engine (ICE) is used to re-charge the battery. In this hybrid mode, fuel economies of up to 80mpg can be achieved.
Explains Martin Boughtwood, PML’s MD: “Until now, most electric vehicles have been little more than souped-up milk floats, limited by range and speed, with compromised performance. For those with a green conscience who also value an enhanced motoring experience, there is still something missing.
“Working in partnership with our customer, Synergy Innovations, we set out to demonstrate what our electric wheel technology is capable of. We simply took a standard BMW Mini One, discarded the engine, the disc brakes, the wheels, and the gearbox. These components were replaced by four of our electric wheels, a lithium polymer battery, a large ultra capacitor, a very small ICE with generator (so small it almost fits alongside the spare wheel), an energy management system and a sexy in-car display module.”
The benefits of PML in-wheel drive technology are;
* It is adaptable to other vehicle chassis
* It eliminates the need for gearing and mechanical drive train
* It allows more space inside the car
The vehicle has three driver-selectable modes of operation:
* Eco mode for town/city frequent start-stop driving;
* Normal mode for daily commuting and ICE- equivalent operation, and
* Sport mode for super car performance.
Other notable features include:
* No (mechanical) brakes means returned energy!
All braking is performed by the wheel motors acting as very efficient electrical generators which return almost all of the energy back to the battery system. The beauty of this dual-circuit, ultra safe system is that your green conscience can be quite content even when accelerating hard, since you are assured of collecting most of the expended energy when it is time to slow down rapidly.
ABS as standard – even when accelerating
Because the wheels are high performance motors, ABS comes as a standard function built into each wheel’s software. Now anti-skid can also be applied to acceleration since the motor can smoothly control torque delivery to/from the road in both cases. Flooring the brake or accelerator hard merely results in controlled maximum torque, giving the shortest possible stopping or acceleration time.
Clever wheels
The technology eliminates the need for crude differential gears to share power between left and right sides. The wheels are in constant communication with each other deciding 1000 times each second how much torque share is optimum for the current driving conditions. Should one wheel detect a slippery surface and take appropriate anti-skid actions, the other wheels are aware of this instantly and adopt an appropriate compensating strategy to keep the vehicle as stable as possible.
640 brake horsepower – for life!
Each wheel develops 160bhp - 640bhp in total. The original Mini One develops less than 100bhp with an engine that weighs nearly double the weight of the four electric wheels! Apart from wheel bearings there are no wearing parts in the electric wheels; this means the horsepower stays for the life of the vehicle - and beyond.
As the battery level reduces, the rear mounted ICE/generator starts to automatically top up the battery. So when you arrive at your destination you can simply park the vehicle knowing that when you return the battery will be replenished. Alternatively you can take advantage of lower cost mains electricity and plug in to recharge. So you never need to worry about battery capacity or how to recharge. During operation, as the battery level falls the generator cuts in, enabling an average speed of 60 – 70mph to be sustained with no further battery depletion
by Justin Thomas, Virginia on 08.30.06
A British engineering firm has put together a high-performance hybrid version of BMW's Mini Cooper. The PML Mini QED has a top speed of 150 mph, a 0-60 mph time of 4.5 seconds. The car uses a small gasoline engine with four 160 horsepower electric motors — one on each wheel. The car has been designed to run for four hours of combined urban/extra urban driving, powered only by a battery and bank of ultra capacitors. The QED supports an all-electric range of 200-250 miles and has a total range of about 932 miles (1,500 km). For longer journeys at higher speeds, a small conventional internal combustion engine (ICE) is used to re-charge the battery. In this hybrid mode, fuel economies of up to 80mpg can be achieved.
Explains Martin Boughtwood, PML’s MD: “Until now, most electric vehicles have been little more than souped-up milk floats, limited by range and speed, with compromised performance. For those with a green conscience who also value an enhanced motoring experience, there is still something missing.
“Working in partnership with our customer, Synergy Innovations, we set out to demonstrate what our electric wheel technology is capable of. We simply took a standard BMW Mini One, discarded the engine, the disc brakes, the wheels, and the gearbox. These components were replaced by four of our electric wheels, a lithium polymer battery, a large ultra capacitor, a very small ICE with generator (so small it almost fits alongside the spare wheel), an energy management system and a sexy in-car display module.”
The benefits of PML in-wheel drive technology are;
* It is adaptable to other vehicle chassis
* It eliminates the need for gearing and mechanical drive train
* It allows more space inside the car
The vehicle has three driver-selectable modes of operation:
* Eco mode for town/city frequent start-stop driving;
* Normal mode for daily commuting and ICE- equivalent operation, and
* Sport mode for super car performance.
Other notable features include:
* No (mechanical) brakes means returned energy!
All braking is performed by the wheel motors acting as very efficient electrical generators which return almost all of the energy back to the battery system. The beauty of this dual-circuit, ultra safe system is that your green conscience can be quite content even when accelerating hard, since you are assured of collecting most of the expended energy when it is time to slow down rapidly.
ABS as standard – even when accelerating
Because the wheels are high performance motors, ABS comes as a standard function built into each wheel’s software. Now anti-skid can also be applied to acceleration since the motor can smoothly control torque delivery to/from the road in both cases. Flooring the brake or accelerator hard merely results in controlled maximum torque, giving the shortest possible stopping or acceleration time.
Clever wheels
The technology eliminates the need for crude differential gears to share power between left and right sides. The wheels are in constant communication with each other deciding 1000 times each second how much torque share is optimum for the current driving conditions. Should one wheel detect a slippery surface and take appropriate anti-skid actions, the other wheels are aware of this instantly and adopt an appropriate compensating strategy to keep the vehicle as stable as possible.
640 brake horsepower – for life!
Each wheel develops 160bhp - 640bhp in total. The original Mini One develops less than 100bhp with an engine that weighs nearly double the weight of the four electric wheels! Apart from wheel bearings there are no wearing parts in the electric wheels; this means the horsepower stays for the life of the vehicle - and beyond.
As the battery level reduces, the rear mounted ICE/generator starts to automatically top up the battery. So when you arrive at your destination you can simply park the vehicle knowing that when you return the battery will be replenished. Alternatively you can take advantage of lower cost mains electricity and plug in to recharge. So you never need to worry about battery capacity or how to recharge. During operation, as the battery level falls the generator cuts in, enabling an average speed of 60 – 70mph to be sustained with no further battery depletion
The Motley Fool - Delaying the Inevitable
Dangerously Delaying the Inevitable
By Morgan Housel
July 2, 2009 | Comments (44) Comments are as valuable and interesting as the article
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The Obama administration relaxed the requirements for government-backed mortgage modifications yesterday. The program, a $75 billion assistance plan announced earlier this year, originally allowed homeowners with loan-to-value ratios up to 105%qualify for refinancing, provided the loan is backed by Fannie Mae (NYSE: FNM) or Freddie Mac (NYSE: FRE). That limit has now been upped to 125%.
The rationale here is simple: As home prices keep nosediving, more and more homeowners are grossly underwater (they owe more than their home is worth). The original mortgage modification program was failing to help as many people as Washington wanted.
And focusing on housing makes sense from a recovery standpoint. This mess started in housing, and it'll surely end there. The root pain of everyone from Citigroup (NYSE: C) to Best Buy (NYSE: BBY) to Home Depot (NYSE: HD) is all linked back to housing in one way or another. As Warren Buffett recently noted, fix housing and "the world will change in a big way."
But -- and this is a very significant but -- past evidence of the effectiveness of mortgage modifications is really, really atrocious. A recent report by the Office of Thrift Supervision and the Comptroller of the Currency detailing the amount of redefaults, or troubled loans that find their way back into default after modification, shows just what I'm talkin' about.
Of the modified loans 30 or more days delinquent, here's what it found:
Modification Date (2008)
Three Months After Modification
Six Months After Modification
Nine Months After Modification
12 Months After Modification
Q1
40.4%
53.0%
59.9%
63.3%
Q2
46.6%
58.8%
61.1%
--
Q3
50.4%
59.5%
--
--
Q4
45.9%
--
--
--
Source: Comptroller of the Currency, Office of Thrift Supervision, June 2009.
One year out, over 60% of modified mortgages end up where they started … in default. What's really amazing is how quickly things reverted: Just 90 days after modification, almost half of mortgages were back in default. That's utterly pathetic.
Rising joblessness is the most obvious answer to why so many modifications fail. But that alone hardly accounts for the ungodly redefault rate. When unemployment goes up a few percentage points while redefaults hit 60%, something else is surely at play.
And it is
One of the big factors fueling redefaults is just what the Obama administration seems to be pooh-poohing: underwater homeowners.
When your house is worth less than your mortgage, there's a huge incentive to give up and walk away even if you can make your monthly payments. The logic here is simple: The beauty of homeownership is based on a saying that goes something like "with every mortgage payment, you'll own a little bit more of your house." But when you're underwater, the only thing you "own" is the liability. Monthly payments decrease your debt, but you still don't own one inch of the house. The bank does.
Taking away this fundamental sense of ownership zaps the incentive to keep making payments. The sensible thing to do, many find, is to stop paying and walk away. This is suicide on your credit rating and a nightmare for housing-heavy banks like Wells Fargo (NYSE: WFC) and Bank of America (NYSE: BAC), but the pros often outweigh the cons. When the job market is this tight, becoming mobile again is worth its weight in gold.
When it comes down to it, high monthly payments aren't what are pushing many homeowners into default. It's the fact that their mortgage balances are so high that it doesn't make sense to keep making payments.
Moving on
Now back to our Office of Thrift Supervision report. In the first quarter, a scant 1.8% of modifications actually reduced mortgage principal -- the kind of alteration that entices underwater homeowners to keep making payments. Most were interest rate reductions, or capitalizations of missed payments and fees. The latter is literally just taking debt you owed yesterday and tacking it on to what you'll owe tomorrow. Sober people think this is an effective way to solve an excessive debt problem. Honestly.
And that's why the redefault rate is so high: Underwater homeowners are still highly incentivized to default, even with reduced monthly payments. And as home prices fall, their ranks are growing by the day. Modifications in their current form are, more often than not, just delaying the inevitable.
This all loops back to a painful reality: The only way to climb out of the housing mess is to let prices find a true bottom. Ultimately, that means those who bought homes they could never afford will have to bite the bullet and move on. There's really no way around that.
For related Foolishness:
Here's How Messed Up Our Financial System Is
Homeowners Hit the Lottery
Why It Could Take Years to Recover
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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Best Buy is a Motley Fool Stock Advisor recommendation. Best Buy and The Home Depot are Motley Fool Inside Value selections. The Fool owns shares of Best Buy and has a disclosure policy.
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Report this Comment On July 02, 2009, at 10:52 AM, boiler6764 wrote: Great article, I totally agree. I just sold my house and had to write a $40,000 check to do so. What really bothered me is that there are all these incentives for people who did the wrong thing, but no rewards for those who are trying to do the right thing, even to pursue a short sale you had to be late on your mortgage payments.
I really thing a big step toward reaching a market bottom is simply to allow people to take a capital loss on their home sales. It encourages people to take the loss on their sale instead of walking away. The bank gets full payment on their loan and a bank gets to finance the house at a market-appropriate value. Things like short sales hit people's credit, so it makes them unlikely to buy a house in the near-term, taking a buyer out of the market. On the other hand, allowing capital losses allows a home seller to recover from their losses more quickly so that they can re-enter the housing market while maintaining their good credit. It has a huge multiplier effect for the government, for example in my case where I could take a $40k capital loss, that would cost the government about $11,000 (assuming I was in the 28% tax bracket). The bank gets full payout (~$150,000) on one loan and makes another loan at market value (~$122,000), replacing a liability into a good asset.
Report this Comment On July 02, 2009, at 11:15 AM, negrodamus wrote: Amen. The points you make seem to be lost on everybody - that a lot of people sunk a huge portion of their income into real estate *as an investment*. Now that real estate isn't turning out to be the money-making machine that everyone hoped it would be, people want out. They'd gladly live in a cheaper place and invest a portion of their money elsewhere. Even if the house prices were magically reset to their peak from a couple of years ago, as long as the expectations that they will keep rising is not there, the prices would naturally come down. Not much different than a stock with an astronomical P/E ratio where the management predicts flat earnings for years to come...
Sadly we'll have to double-dip here soon, but hopefully in a less panicky manner.
Report this Comment On July 02, 2009, at 11:20 AM, MKArch wrote: Totally disagree on the "current" value of the house being the problem with loan modifications. The problem with re-defaults is trying to work with borrowers who have a history of not repaying their debt and never should have received a loan in the first place. They aren't making their payments because that's what they do borrow money with no intention of paying it back. If the government is willing to help them not pay their bills a little longer all the better. The flippers and speculators that would be worried about the re-sale value of the house are long gone the current crop of re-defaults are deadbeats or someone who lost their job and can't pay. Joe Six Pack doesn't even know what the "current" value of his house is and the vast majority of responsible home owners bought their house to live in it not as an investment. They are not reading the real estate section every day trying to figure out when to walk. Where are they going to go anyway?
Report this Comment On July 02, 2009, at 1:27 PM, Seattleguy527 wrote: This is a complex problem, and unfortunately it's true that a lot of people are walking away from the mortgages lately. However, I don't know that just letting everything collapse is the right answer. What a lot of people don't realize is that there are tons of adjustable rate mortgages scheduled to reset this year. If you think the housing market is flooded with short-sales and foreclosures now, just wait until these ARMs reset later in the year. The obvious answer is that these borrowers need to refinance before their ARMs reset, but if you're "underwater" there aren't many, if any, banks that will refi your loan. I understand the resentment towards people not paying their mortgage, but how does a housing market that is inundated with short-sales and foreclosures help matters? That will only result in home prices dropping further, which will result in more underwater borrowers, which will result in more short-sales and foreclosures.
As for investing in real estate? I think it's a fantastic investment. While it's true the housing market has been crushed the last few years, that doesn't change the fact that investing in real estate is one of the best ways to build wealth. To say that investing in real estate is a bad idea because of the recent housing problems, would be like saying investing in the stock market is a bad idea because of the recent slide in the last year or two. Both markets are highly cyclical, and both markets provide a great way to build wealth, in the long-term.
Just my .02.
Report this Comment On July 02, 2009, at 1:52 PM, mistermiranga wrote: "To say that investing in real estate is a bad idea because of the recent housing problems, would be like saying investing in the stock market is a bad idea because of the recent slide in the last year or two."
-I don't think anyone is saying that...real estate is a fine investment if you can afford to make the payments without relying on appreciation. at least in stocks you can only leverage with collateral...when you go under water you immediately recognize the loss.
The article brings up outstanding points. The government is probably just throwing more good money after bad.
Report this Comment On July 02, 2009, at 2:22 PM, outoffocus wrote: I just commented in another blog yesterday that until the administration figures out that the only people who will bring us out of this housing slump, we will have a long, slow, painful housing recovery.
While they are trying to keep people in homes they can't afford, they are not allowing houses to fall far enough for renters to afford.
Report this Comment On July 02, 2009, at 2:37 PM, clanza875 wrote: Its fairly simple, wages have not kept up with house prices so something has to give. Either houses keep coming down or wages have to increase. Amazing enough there are some areas where your money will do better in us treasuries than to buy real estate and rent it out.
Report this Comment On July 02, 2009, at 3:35 PM, MKArch wrote: Just some food for thought about simple legislation that could have prevented a good part of the crisis to begin with and could help prevent another one in the future. Foreclosures get divided into two camps: Chose to walk and Financial distress. Chose to walk remains on your credit reports for life. Financial distress gets expunged in 4-7 years.
I still think chose to walk did so long ago as the writing has been on the wall for a couple of years and there would have been no sense hanging in this long if walking was merely an investment decision.
IMHO the bulk of the re-defaults are irresponsible borrowers that were probably life long renters used to staying current for a little while on their rent then falling behind milking the system to stay put as long as possible before ultimately moving on to the next rental. Getting a mortgage they never deserved in the first place is just like the next rental to them. Make your payment for a little while then stop payments and milk the system before moving on.
The one thing I agree with Morgan about is the government is just delaying the inevitable and costing everyone money by trying to keep people you know are irresponsible in the house. Where I think he is going with this and I disagree is people with good credit that hung in this long but are underwater are going to be walking. IMHO the looming ARM resets have by and large already walked or have re-financed and this worry is going to turn out to be greatly exaggerated. The vast majority of new defaults will be due to financial distress and will dry up when job losses dry up.
Report this Comment On July 02, 2009, at 3:38 PM, BMFPitt wrote: Just one more painful reminder that failure will continue to be rewarded in the name of keeping house prices unaffordable.
Report this Comment On July 02, 2009, at 4:00 PM, MKArch wrote: Sorry to drag this out but I just thought of a good analogy. The purchase of an automobile is a big investment for most people that is substantially under water the second they sign on the bottom line. Practically everyone who buys an automobile is under water from the get go, how many turn in their keys because they are under water? While everyone who buys a house or car is looking to get the best deal possible and the purchase is an investment from that perspective the decision to sell is infinitely more complex than the current market value.
Report this Comment On July 02, 2009, at 4:23 PM, Seattleguy527 wrote: MKArch,
You make some very good points. However, one thing that I think needs to be noted re: borrowers with ARMs, is that a lot of them don't even realize their mortgage will adjust. That may sound crazy, but very few borrowers educate themselves when getting a mortgage. It's a completely foreign language to them, so they put their trust in their broker/loan officer because they are the "expert." Unfortunately, there are irreputable brokers and loan officers who take advantage of people like that. Whether that means conveniently not mentioning that the rate will adjust, or just flat-out lying and telling them their rate is fixed, it's something that has happened quite a bit over the last few years. And even if they know their rate is going to adjust in a few months, if they had an LTV of 95% when they bought the house 3 years ago (which was very common back then, and many homes were bought with 100% LTVs), they simply CAN'T refinance if they owe more than the home is worth.
Granted, with the publicity and media coverage the "mortgage meltdown" has received recently, I would hope more borrowers today know the terms of their mortgage than, say, 3 years ago. I do think it's worth noting, however, that many, perhaps most borrowers, rely solely on the advice of their broker.
I hope you're right about the ARM resets not having a big impact, but I'm very skeptical. In the area I live in (Seattle), the majority of homes on the market are either short-sales or foreclosures. I would venture to guess somewhere between 70-80%. The irony of that is, at least from a national perspective, our housing market hasn't been hit that hard... yet.
Report this Comment On July 02, 2009, at 4:56 PM, MKArch wrote: Seattleguy527,
While I'm sure there are some cases of unsophisticated borrowers being duped I think the extent of it is greatly exaggerated. People are not as dumb as politicians and pundits want you to believe. It's been a few years since I did my last loan but the broker is required to explain the terms in layman's language and I think the truth in lending statement explains them as well. IMHO the reports of predatory lending are mostly political in fact the re-default rate is pretty much evidence of this. Also IMHO the anecdotal consumer complaints are mostly excuse making from irresponsible borrowers that shouldn't have received a loan to begin with or at best cherry picked examples not representing the norm.
Report this Comment On July 02, 2009, at 4:56 PM, regulatethem wrote: Real estate will always be a good investment for some people, depending on timing and locations. It's always a question of price and how much you are willing to spend. People should wait until they have stable jobs before buying properties. I don't think the 125% makes sense. It just encourages things to fester, that will be inevitable and dealt with again later.
Report this Comment On July 02, 2009, at 5:02 PM, GeoffreyLindleyS wrote: What a sorry state of affairs that purchasers of the largest acquisition most of them will ever make don't take the time or have the intellectual ability to understand what they're doing when they sign-off on a mortgage. A good bit of today's chaos in the real estate market is directly related to that level of incompetence!
Report this Comment On July 02, 2009, at 5:06 PM, rgardner101 wrote: I moved from Houston,Tx. 20 years ago following a personal bankruptcy. I managed to hang on to my house in Tx, owing more than it was valued at. I rented out for 13 years just to cover the note each month.
in the end I sold it clearing 55,000 $ .
These things just take time ,there is no quick fix.
Report this Comment On July 02, 2009, at 5:20 PM, modeltim wrote: I don't see anyone here addressing the responsibility the financial industry bears for the very large majority of the financial mess we're in. Banks that are too big to fail are too big to exist. Citi, BofA, et al are already largely owned by the taxpayers. There are virtually trillions of dollars, funny money if you will, that these effing banking geniuses don't know what to do about but they just want to be bailed out and blame it all on the little mortgagee little guy. I'm all for invoking Sherman Antitrust laws to break these mfers up and invoking something quite similar to what was done during the 80's by creating a new Resolution Trust Corp. or doing what FDR did during the depression. Geithner and Summers and all of congress are in the pockets of Wall Street. F em all!
Report this Comment On July 02, 2009, at 5:20 PM, BruinAlum77 wrote: MKArch and others have made comments about what they THINK is the make up of the homes in default. Either they are speculators, or renter dead beats, or ignorant borrowers, etc. It almost seems as if ones political views are projected on to who these default borrowers are.
The reality is the market is made up of a number of different borrower profiles, and any legislation to reduce foreclosures should take that into account.
People who bought with interest only loans knew they would have to refinance, hoping that the rise in prices would give them equity. Do they deserve to be bailed out? I don't think so, unless the numbers end up harming the economy to such a degree that we have no other choice, as we did with all the scum bag banks who caused these problems in the first place.
But what about people like my neighbor? She used the equity of her last home, about $250K, to buy a bigger house with an ARM. She's going to lose the house on a short sale. Does anyone think she would walk away from her house because she's underwater? This seems like a pretty good criterion for loan modification - anyone who lives in a house that they put their own money into.
Report this Comment On July 02, 2009, at 5:38 PM, Big50Shooter wrote: GREAT article Morgan... Nice comments from all of you above too!!! Obama should hire all of US to figure this situation out! LoL...
My take:
Major problem is allowing the government into the fray to "fix" this housing/mortgage problem in the first place. I think many above brought up the point of rewarding irresponsibility, and these mandated readjustments are doing exactly that. People and BANKS made HUGE mistakes in writing these loans, so they should be left to figure this problem out for THEMSELVES!!! Housing was WAY over inflated, everyone could see it, and we all got stupid with the basics of financial responsibility and some of us "fell for it" with the pitch that "houses ALWAYS appreciate/ homes are a great way to make & save money/ you can NEVER lose with real estate/ blah blah blah...".
NOT!!!
Another factor allowing this problem to grow is the governments willingness to change legally binding agreements (mortgages) for what is essentially emotional reasons... Boiler6764 above is a PERFECT example of why this activity should not be allowed to continue. Boiler may have fallen for the fiscal irresponsibility from the beginning, but he made it right even thought I am sure that was a VERY painlfull thing to do.. (Boiler, I personally give you HUGE kudos for following through with your responsibility!!!). The problem is that now the gov. has essentially given its' blessing to "walk" from a mortgage, so the downhill pace of home devaluation picks up speed. The people who intitiated the pain by buying what they had no business buying have no repercussions for their actions (they used to get 1099'd from the IRS for the difference in value when they walked from a note, which WAS a huge deterrent..). Now, when people walk, banks get stuck, and WE innocent taxpayers get drawn into the fray OR we risk the solvency of our banking institutions... Since much of this is their own fault anyway, by allowing banks to get the shaft, justice can be served and we all will be assured that they won't allow that to happen in the near future... Yes, people will go homeless and/or bankrupt and some banks WILL go under, but the housing prices will reach their own stability or bottom as it may at a much faster pace and the taxpayer who was RESPONSIBLE for their financial house (pun intended) won't be stuck paying for others mistakes...
The free market is a wonderful thing... It's doesn't make these recent unpleasantries any more "pleasant", but that's why they are called UNpleasantries. Until somebody (banks and homeowners) learns a lesson on WHY they should avoid the UNpleasantries by not being irresponsible, nothing will go forward...
Market "up" or not, I am still VERY bearish on our country's economic condition for at LEAST the next year or so... Housing prices will continue to drop all the while...
Personally, I think we have another 5+ years until we see any decent growth figures in our economy... It's going to be a cold-cold winter this year.....
Report this Comment On July 02, 2009, at 5:51 PM, Wyoming123 wrote: Imagine this --- work for years, save money for years and buy your house with cash. The "conventional wisdom" says not to do this but the so-called wisdom is wrong. We worked and saved for years and did not buy a house until we were 42 years old. We rented CHEAPLY until we had the money to actually BUY a house. Now we have only taxes, insurance, homeowners and maintenance - much less expensive than having a loan payment too. I know people will say that this is not the way to go because of the present/future value of money, but when you know your house is PAID FOR you have NO WORRIES. Imagine this -- the bank gets only what they can earn while you are saving the money and you do not make payments. THEN if you lose a job, become invalid, go blind or whatever, you still have your HOME and it does not matter how much it is "WORTH".
Report this Comment On July 02, 2009, at 6:51 PM, mamallamainvest wrote: Really great discussion. I so agree!
I also just sold my home. I didn't make much, but after 10 months of unemployment, I figure getting it sold in less than 40 days and still putting money in my pocket is not a horrible place to be in. Unless you consider that I bought the house in 1993 - for a third of the sale price and have been making payments ever since. I should have pocketed a ton of money or at least had to fight with my ex over what was his share, but I didn’t, I didn’t even make as much as the realtors (gosh bless them though they got it sold).
Yep, I paid off a huge debt that had been rung up over the last 10 years by a now ex-spouse who decided the increasing value was a way for him to deal with his spending problems. Since I poured over $50,000 into the place 2 years ago, in an attempt to reduce a portion of that debt, it was rather tempting to just say the heck with it, pocket the payments and walk away. However, my ethical side took over and I decided not to join the rest of “crying over the milk they deliberately spilt” crowd and took the high road by selling it and paying off the last of debt. There is also the fact that I believe we are in for a further reset on housing prices. Sorry, but I really think we are going to see, in fact need to see, another round of decreased values before we can start to heal the housing market. I would just assume not be holding a mortgage when that happens.
However, the real point here is that a lot of these homes were not just bought over valued but that homeowners worked their way up to that point chasing a pipe dream that everyone should have learned in the early 80's was the product of the mortgage and realty industries over active imaginations regarding ever growing home and property values.
Guess what, there is a ceiling, housing and land just won’t keep increasing in value forever (well maybe, if the value of the dollar just keeps dropping like a stone). We’ve been here before folks. Anyone else live through the housing nightmare of the mid 1980’s (over valued homes, ARM's from heck, 0 down payment loans)? We should have learned our lesson but didn’t and we have no one to blame but ourselves. Whether we are the over leveraged owners or the jokesters who kept giving out the money to anyone who would sign on the dotted line we bought a pipe dream and now we have to pay the price.
Report this Comment On July 02, 2009, at 6:54 PM, Seattleguy527 wrote: MKArch,
I work in the industry as well, and I can only give you my firsthand experience. I have had scores of people tell me they were duped by their brokers on their mortgage. Now, the first thing that pops into my head is "were you actually duped by your broker, or did you not do your due diligence and feel as though you need to find someone else to pin it on to save face?" Unfortunately, I think both of those scenarios happen more than people realize. Maybe not as much today since so many people have come under fire, but a few years ago I think it was fairly common.
And you're correct, every broker is supposed to lay everything out in layman's terms to their borrowers. Unfortunately, that doesn't always happen. And the initial disclosures that the broker has to include (i.e. TIL, ECOA, etc.) are oftentimes signed by the borrower after quickly scanning, or possibly not even reading the document. So again, although it may sound silly, the borrower is giving their 100% trust to the broker and just doing whatever he/she says. I have found this to be especially true in sub-prime scenarios where borrowers are desperate and just want someone, anyone to help them.
Ultimately, I don't look at these types of borrowers as being dumb. I think they are ignorant and naive. They assume that if they pay a professional to help them secure a mortgage, that person will always be looking out for their best interest. I'm not making excuses for them because I'm a strong advocate of doing your homework, especially when it comes to the biggest purchase of your life, but I don't think all borrowers who go into default are doing it maliciously.
Just my thoughts...
Report this Comment On July 02, 2009, at 7:19 PM, fallwater wrote: If gov. guarrenteed loans are lowering monthly payments and these are comperable to rentals, why would anyone choose to walk, unless there shacking up with family and not pay a cent for rent.??? The situation is complex.I like the senario to hit bottom so as the economy can than rise/recover from there.
Report this Comment On July 02, 2009, at 8:32 PM, ds10 wrote: IF you can purchase a home with cash, your own savings, then do it. Don't take out a loan.
The decision is basic: take a loan ONLY if the money
earned monthly on the cash you would have used to buy the house is greater than the total monthly loan
repayment. And this situation is rarely, if ever, possible. Sure, you will have to delay home-ownership
but this financial security is well worth it.
Report this Comment On July 02, 2009, at 10:07 PM, 1PaganLady wrote: I've found this discussion very interesting. In Dec '99 I'd cashed in stocks to purchase my home in Gig Harbor, WA outright - against the advice of my stock broker (of course), real estate broker, and on down the line. I heard "never use your own money when you can borrow from someone else" ad nauseam but my thinking was very similar to Wyoming123 & ds10. Especially now, I believe it's quite possibly the only thing I've done right! Nobody is reimbursing me for mistakes I've made in the market, and I also agree with Big50Shooter - I shouldn't have to pay for others mistakes.
Report this Comment On July 02, 2009, at 10:41 PM, booyahh wrote: The author is right: lately there has been a "prime" mortgage crisis. Two of my friends in Orange County foreclosed on their homes because their loans were significantly larger than the current market prices. The banks stubbornly refused to re-negotiate, so they just moved out. Both of these people make roughly 120k per year. After foreclosing, they now save 5k per month (after rent) and are much more optimistic about the future.
Report this Comment On July 02, 2009, at 10:42 PM, rsenor wrote: Mr. Houssei fails to point out the second report from this OCC and OTS mortgage report, and that is the percentage of borrowers re-defaulting after 90 days of delinquency. That percentage is considerably lower across the board:
http://files.ots.treas.gov/482047.pdf (page 29)
The percentage of borrowers defaulting on any credit item is very high when you look at the 30 day benchmark (day late on your payment? You fall into that first report). Even the best of us have even been there.
To me, what this shows is that banks are being forced to be smart at the outset, and determine those buyers that will likely not pay in the long run, and focus only on the ones who can. Which means Banks will need to spend more money on things like predictive analysis of the default potential of their borrowers.
If I say something and you can't hear me, is it because I didn't speak loud enough or you weren't listening carefully enough?
Regardless of whether the fault was of the bank or the buyer, we all need to be more prudent now and the original report Mr Houssei quotes is a wake-up call that banks simply need to be smarter about how they lend money.
Report this Comment On July 03, 2009, at 12:37 AM, douggieboy wrote: I've been screaming for a dozen years about the root cause of the ever-accelerating collapse of the banking infrastructure in this country, and predicted with utmost precision what would happen, how and why-- and it has come to pass. Sorry to say, the worst is yet to come.
If you click on the "discuss" link for the company, Fair Isaac, who was [and still is] the architect of economic ruin this nation is now facing, you will see two postings I made, one quite recently, and the other in early 2008, describing how corporate greed, backed by bribery,, er, I mean- "lobbying" lawmakers in Washington set the stage and drew the blue-prints of a patently defective Marxist computer models, to be given absolute control over the lending industries in the US. Detail of FICO scoring's inception, leading to its universalization as the only parameter used to determine a potential borrower's credit worthiness, is enumerated on my website, www.ficovictims.com. At the bottom of the page you'll find links leading to a few other sites, where I began posting in 1997. No one has ever listened; letters, phone calls, emailing, and even the occasional personal visit to the offices of political constituents, had rendered no results. A senator from Connecticut brought up this issue in a session of Congress, and was quickly squelched. In no uncertain terms, he was told to shut up and butt out, or he'd be out on his butt.
Read, and judge for yourself. Contact me if you have any clout or influence in high places, where someone might look at my data and make a correlation to fact.
Every last claim I make is correct, and every event I predicted, which is leading this country into ruin, and the Federal Reserve into upcoming insolvency, along with tax-payer funded bailouts for greed mongers, a rate of foreclosures and bank failures not seen since the Great Depression of 1929-1937. What's headed this way next is going to make the Dust Bowl Days look like a black tie Cotillion.
FICOVICTIMS.COM, and I welcome all feedback....
Report this Comment On July 03, 2009, at 1:41 AM, bigalf123 wrote: I agree 100 % . People that walk every chance they get tend to worry a lot more about money than they do about personal carractor. Even our largest companies will tell you that corporate ethics are differant than moral ethics.I guess the new grduates of these corporate ethics classes are finally graduating and implimenting what they have learned . The good news is that if you are from the old school and pay your bills,live with in your means,and respect and honor your commitments,you probably did not get to far into this mess we are in and you can sit it out.Who knows , maybe we can pick up a house cheap, o ya I forgot we are supposed to make up the differance in price so the rich don't loose any money and the looser's can walk away.
Report this Comment On July 03, 2009, at 4:08 AM, mottyhall wrote: As a Brit, we now have our last coin of the realm being minted with the Brittania symbol on it.
We once ruled the waves and the world but were taken over by one of our uncles whos name i believe is Sam but he now has cancer and is dieing. He to was a big man but we all end up six feet under no matter how big we are
Report this Comment On July 03, 2009, at 12:14 PM, rsenor wrote: There are actually companies out there that make much smarter and sophisticated analytic models that take not only credit score but also hundreds of other criteria into account, not just a simple score.
My point is that this article shows a completely limited and subjective view of this issue and that is this: Foreclosure proceedings can occur at 90 days delinquent. Not 30. This same report shows 90 days delinquent at 43% defaulting/57% cured: a full 20% points lower than what Houssei quotes here!!
While statistical models might not be perfect, they are getting smarter all the time, and they can likely tell a bank what that 57% will be so they can focus on them and cure them.
Also, Mr Houssei gives no evidence of his theory of why homeowner just walk away: not one interview, not one shred of evidence. So- these two points are the crux of Houssei's entire article: both are simple speculation- just like this market itself.
This article points more to the downfall of true investigative journalism than anything.
Report this Comment On July 03, 2009, at 12:51 PM, TMFHousel wrote: rsenor,
Thanks for the comments.
True, the report I sourced shows 90-day redefault rates of 44.5% after one year. If you'd like to take this 44.5% redefault rate as disproving my claim that 60% redefault rate is a failure, please do. I think most would agree that a 44.5% redefault rate is a total failure as well.
As for proving negative equity is a factor in foreclosures, here's a nice piece of analytical evidence form the Wall Street Journal that sums it up:
"The analysis indicates that, by far, the most important factor related to foreclosures is the extent to which the homeowner now has or ever had positive equity in a home. The accompanying figure shows how important negative equity or a low Loan-To-Value ratio is in explaining foreclosures. A simple statistic can help make the point: although only 12% of homes had negative equity, they comprised 47% of all foreclosures."
(here's the chart: http://online.wsj.com/article/SB124657539489189043.html#mod=...
As for providing an interview (though I didn't conduct it), here's what Jose Canseco (yep, the baseball player) has to say: "It didn't make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else."
Thanks again, and enjoy your July 4th weekend.
Morgan Houssei (who prefers when you use his real name, Morgan Housel)
Report this Comment On July 03, 2009, at 8:35 PM, burrowsx wrote: The problem here is that we are in a fundamentally irrational market. Instead of copycatting Bush-league tactics to support mega-banks, the Obama administration would have been better off unravelling the mortgage backed securities, and purchasing the underwater portion of selected mortgages. This would have taken toxic assets off the books of banks large and small, while giving the benefitting families incentives to stay with their homes instead of walking away. In addition, it would help put a floor on the housing market, which is still tanking.
Instead, the Obama administration compromises with itself even before it has to deal with Republicans. Using a TARP in a rainstorm gives ineffective protection to the people outside the TARP, as well as those under the TARP.
Report this Comment On July 03, 2009, at 10:07 PM, Bristinwolfsong wrote: As a responsible renter who saw this coming from a mile away I very much believe that the banks need to just take this straight in the shorts and start really marking down housing. I and many others like me are standing on the sidelines with cash waiting for the good deals. People speculated and lost they need to accept those losses and move on. The stock market is great because it enforces debts to be covered nearly immeadiately. If Joe whatshisname makes a bad call on a stock and gets cleaned out well the books are usually settled within days. but for folks who speculated on housing the govenment is purposely dragging this out as long as possible. There can be no growth until the deadbush is burned and cleared.
Report this Comment On July 03, 2009, at 10:09 PM, xetn wrote: I have never read so much crap. Reading through most of the posts on this subject, is to come to the conclusion that you all think the government should thus and so to protect you from YOUR mistake of purchasing a home that you could not afford. You were all guided by your greed in believing the big lie that home ownership was the greatest investment because it always goes up. And the government's programs of Freddie and Fannie made it easy for you to purchase more than you could afford. Now that you are in over your head, you want somebody (the taxpayer) to bail you out of your mistake. As if the government knows more than you do about everything, you rely on them to fix everything from banking, real estate, the stock markets and global warming. What a lot of BS, the government does not care one iota about you or your problems, it only cares about increasing its own power,
Face facts, you, and only you are responsible for your predicament. It is your responsibility to bail yourself out of it.
Report this Comment On July 04, 2009, at 7:51 AM, joandrose wrote: I wonder how much of the housing " situation " has not come about as a result of the rash of books such as " Rich man ,Poor man " which essentially advise their readers that the road to long term wealth and riches lies in gearing up whatever wealth you have by the purchasing of a portfolio of properties - and then depend on rental incomes to pay off the mortgages whilst you enjoy the long term capital growth ! I have no doubt that many homeowners have put themselves into that category purely because home ownership has been universally espoused as the easiest way to long term wealth for Mr Average !
Report this Comment On July 04, 2009, at 10:39 AM, dgmennie wrote: Interesting posts here, but all ignor the basic forces that (until now) have worked so well for driving the US economy: Get as many people into the game as possible, regardless of ingrained problems such as inflation, greed, high/unpredictable interest rates, unstable employment options, and unvarnished ignorance. Add to this a thick layer of sharp business practices (mostly legal due to the lobbying efforts of special interests) and the formula for disaster is complete.
How all this works can be readily seen from a cursory look at the US automotive business. The basic forces in play here are focused on keeping as many people as possible purchasing automobiles. This means making it (relatively) easy for even the mentally and physically unqualified to keep driving. Drunk? Accident-prone? Vehicle dangerous from lack of maintenance? Like to text-message and chat on your cell phone at 70 mph? NO WORRIES! You get to drive anyway, limited only by some eventual future encounter with serious injury or death. Instead of efficiently dealing with real problems, the whole (traffic) enforcement infrastructure is now (mostly) concerned with paperwork violations (big fines for a misplaced license or insurance card) and the politically-correct favorite: unlimited harrasment over tailpipe emissions.
Now, transfer this mindset to the much larger financial stakes involved with real estate and is it any wonder there are now huge economic problems to contend with? So long as the blame game continues (lets castigate the greedy brokers and bankers; no lets humiliate every homebuyer who bit off more than he/she could chew) the solution for reviving our depressed economy will not be at hand.
Report this Comment On July 04, 2009, at 6:43 PM, dibo528 wrote: Interesting and enlightening article. I totally agree. The government needs to push for many more mortgage modifications that lower the principal.
Report this Comment On July 04, 2009, at 7:57 PM, dibo528 wrote: People who are underwater may not care so much about the value of their home if they still have the same job they did when they purchased the house. But many people are either out of work or had to take a job that pays less. After a loan modification, they may have enough to make payments, but why do that if they will never have any equity, especially if their living expenses will be much lower by renting a small apartment?
Report this Comment On July 05, 2009, at 8:10 AM, thisislabor wrote: obama's refinancing plan, a plan to keep the housing market artificially inflated STILL?!
Did we not learn from the first bubble?! Damn just the blister pop and let the healing begin already people.
Report this Comment On July 05, 2009, at 8:40 AM, thisislabor wrote: What I don't get is why people keep thinking that housing markets are some kind of entity that needs to be "healed" or "fixed". It's as if they this thing is some kind of living creature or something, and apparently this living creature is sick? I don't get it, did it fall and break a hip or catch a cold or something?
Isn't a market a place where people buy and sell a good or service? Can people still buy freely? Can people still sell freely? How is it "broken" then?
Report this Comment On July 05, 2009, at 11:49 AM, tertertes wrote: Twist on the walk away story.
In 2006, I retired, cashed in my 403B for 45% down on a condo. Century 21 inflated the sq ft, Bank of America didn't verify, appraised it at 40% more than value, and I paid 25% more. It was filled with mold. In spite of almost doubling the price of the condo in repairs, mold will be back. The building is contaminated, plus the damp air from the dryers goes right up my wall. The new furnace, which was moved under the bedroom, has a high pitched hum and exhausts into the window. Fees include 'heat/hot water', not water, which is illegally billed per sq ft., not use. While away, I was billed $200.
Atty #1 - gee, so sorry , hope you're not mad at me, I don't do litigation.
Atty#2 - $2500, shuffled papers, wanted more money. I live on Social Security.
Bank of America - would not give me the documents needed, asked multiple times
Realty Board - we'll talk about ethics at our next meeting
Bar Assn - that's a fee dispute
Consumer protection - 2 letters, no response
Century 21 - no response
Broker - "I'll close up shop before I give you a dime"
TV Investigative Reporter - no response
Building Inspector - no mold noted. (Inexpensive meters can test for water.)
Lessons learned:
1. Hire 2 building inspectors and compare notes
2. Visit 3 different Realtors for opinions.
3. If you are allergic, hire an environmentalist to test for mold, not someone just 'trained'.
4. REALLY read the condo docs, underline questions, and have you attorney explain. Don't rely on the attorney, regardless of how much you pay him.
5. Verify square footage and tax valuation with the town assessor's office
6. Talk to the town's building inspector.
7. Don't waste your time talking to the neighbors.
8. I was taught that the experts are there to help you. Forget it. A very hard lesson.
Report this Comment On July 06, 2009, at 2:41 AM, Alanmulvey wrote: Check out http://obamamortgage2009.blogspot.com or obamamortgage2009.blogspot.com There needs to be a program for the elderly but not quite to retirement age for mortgage modification when the have lost their job during this particular recession. I made a decent wage because I put my time into a company and now have no job. I am looking at $10 - to $12 hr jobs after working all my life. You can't make a mortgage payment on that kind of money. I will eventually lose my home.
Report this Comment On July 06, 2009, at 6:53 AM, allenbarela wrote: Mr. President why are the banking,and loan company not making loans as you promised they would do for the american people we are all hurting and not getting any help. Time for them to answer to you for not helping us the little people that keep them in business, maybe we should boycott their business. Check http://obamamortgage2009.blogspot.com/2009/03/obamas-mortgag...
Report this Comment On July 07, 2009, at 1:06 PM, Melaschasm wrote: The various bailouts could have given every American $14,000 as a payment on their first mortgage. That would have actually done some good towards fixing this problem, even if it is a redistribution of wealth.
Neither TARP nor this mortgage refinance program was designed to actually help people, it is just a way for the government to expand its power further into the daily lives of the people
By Morgan Housel
July 2, 2009 | Comments (44) Comments are as valuable and interesting as the article
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The Obama administration relaxed the requirements for government-backed mortgage modifications yesterday. The program, a $75 billion assistance plan announced earlier this year, originally allowed homeowners with loan-to-value ratios up to 105%qualify for refinancing, provided the loan is backed by Fannie Mae (NYSE: FNM) or Freddie Mac (NYSE: FRE). That limit has now been upped to 125%.
The rationale here is simple: As home prices keep nosediving, more and more homeowners are grossly underwater (they owe more than their home is worth). The original mortgage modification program was failing to help as many people as Washington wanted.
And focusing on housing makes sense from a recovery standpoint. This mess started in housing, and it'll surely end there. The root pain of everyone from Citigroup (NYSE: C) to Best Buy (NYSE: BBY) to Home Depot (NYSE: HD) is all linked back to housing in one way or another. As Warren Buffett recently noted, fix housing and "the world will change in a big way."
But -- and this is a very significant but -- past evidence of the effectiveness of mortgage modifications is really, really atrocious. A recent report by the Office of Thrift Supervision and the Comptroller of the Currency detailing the amount of redefaults, or troubled loans that find their way back into default after modification, shows just what I'm talkin' about.
Of the modified loans 30 or more days delinquent, here's what it found:
Modification Date (2008)
Three Months After Modification
Six Months After Modification
Nine Months After Modification
12 Months After Modification
Q1
40.4%
53.0%
59.9%
63.3%
Q2
46.6%
58.8%
61.1%
--
Q3
50.4%
59.5%
--
--
Q4
45.9%
--
--
--
Source: Comptroller of the Currency, Office of Thrift Supervision, June 2009.
One year out, over 60% of modified mortgages end up where they started … in default. What's really amazing is how quickly things reverted: Just 90 days after modification, almost half of mortgages were back in default. That's utterly pathetic.
Rising joblessness is the most obvious answer to why so many modifications fail. But that alone hardly accounts for the ungodly redefault rate. When unemployment goes up a few percentage points while redefaults hit 60%, something else is surely at play.
And it is
One of the big factors fueling redefaults is just what the Obama administration seems to be pooh-poohing: underwater homeowners.
When your house is worth less than your mortgage, there's a huge incentive to give up and walk away even if you can make your monthly payments. The logic here is simple: The beauty of homeownership is based on a saying that goes something like "with every mortgage payment, you'll own a little bit more of your house." But when you're underwater, the only thing you "own" is the liability. Monthly payments decrease your debt, but you still don't own one inch of the house. The bank does.
Taking away this fundamental sense of ownership zaps the incentive to keep making payments. The sensible thing to do, many find, is to stop paying and walk away. This is suicide on your credit rating and a nightmare for housing-heavy banks like Wells Fargo (NYSE: WFC) and Bank of America (NYSE: BAC), but the pros often outweigh the cons. When the job market is this tight, becoming mobile again is worth its weight in gold.
When it comes down to it, high monthly payments aren't what are pushing many homeowners into default. It's the fact that their mortgage balances are so high that it doesn't make sense to keep making payments.
Moving on
Now back to our Office of Thrift Supervision report. In the first quarter, a scant 1.8% of modifications actually reduced mortgage principal -- the kind of alteration that entices underwater homeowners to keep making payments. Most were interest rate reductions, or capitalizations of missed payments and fees. The latter is literally just taking debt you owed yesterday and tacking it on to what you'll owe tomorrow. Sober people think this is an effective way to solve an excessive debt problem. Honestly.
And that's why the redefault rate is so high: Underwater homeowners are still highly incentivized to default, even with reduced monthly payments. And as home prices fall, their ranks are growing by the day. Modifications in their current form are, more often than not, just delaying the inevitable.
This all loops back to a painful reality: The only way to climb out of the housing mess is to let prices find a true bottom. Ultimately, that means those who bought homes they could never afford will have to bite the bullet and move on. There's really no way around that.
For related Foolishness:
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Homeowners Hit the Lottery
Why It Could Take Years to Recover
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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Best Buy is a Motley Fool Stock Advisor recommendation. Best Buy and The Home Depot are Motley Fool Inside Value selections. The Fool owns shares of Best Buy and has a disclosure policy.
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Report this Comment On July 02, 2009, at 10:52 AM, boiler6764 wrote: Great article, I totally agree. I just sold my house and had to write a $40,000 check to do so. What really bothered me is that there are all these incentives for people who did the wrong thing, but no rewards for those who are trying to do the right thing, even to pursue a short sale you had to be late on your mortgage payments.
I really thing a big step toward reaching a market bottom is simply to allow people to take a capital loss on their home sales. It encourages people to take the loss on their sale instead of walking away. The bank gets full payment on their loan and a bank gets to finance the house at a market-appropriate value. Things like short sales hit people's credit, so it makes them unlikely to buy a house in the near-term, taking a buyer out of the market. On the other hand, allowing capital losses allows a home seller to recover from their losses more quickly so that they can re-enter the housing market while maintaining their good credit. It has a huge multiplier effect for the government, for example in my case where I could take a $40k capital loss, that would cost the government about $11,000 (assuming I was in the 28% tax bracket). The bank gets full payout (~$150,000) on one loan and makes another loan at market value (~$122,000), replacing a liability into a good asset.
Report this Comment On July 02, 2009, at 11:15 AM, negrodamus wrote: Amen. The points you make seem to be lost on everybody - that a lot of people sunk a huge portion of their income into real estate *as an investment*. Now that real estate isn't turning out to be the money-making machine that everyone hoped it would be, people want out. They'd gladly live in a cheaper place and invest a portion of their money elsewhere. Even if the house prices were magically reset to their peak from a couple of years ago, as long as the expectations that they will keep rising is not there, the prices would naturally come down. Not much different than a stock with an astronomical P/E ratio where the management predicts flat earnings for years to come...
Sadly we'll have to double-dip here soon, but hopefully in a less panicky manner.
Report this Comment On July 02, 2009, at 11:20 AM, MKArch wrote: Totally disagree on the "current" value of the house being the problem with loan modifications. The problem with re-defaults is trying to work with borrowers who have a history of not repaying their debt and never should have received a loan in the first place. They aren't making their payments because that's what they do borrow money with no intention of paying it back. If the government is willing to help them not pay their bills a little longer all the better. The flippers and speculators that would be worried about the re-sale value of the house are long gone the current crop of re-defaults are deadbeats or someone who lost their job and can't pay. Joe Six Pack doesn't even know what the "current" value of his house is and the vast majority of responsible home owners bought their house to live in it not as an investment. They are not reading the real estate section every day trying to figure out when to walk. Where are they going to go anyway?
Report this Comment On July 02, 2009, at 1:27 PM, Seattleguy527 wrote: This is a complex problem, and unfortunately it's true that a lot of people are walking away from the mortgages lately. However, I don't know that just letting everything collapse is the right answer. What a lot of people don't realize is that there are tons of adjustable rate mortgages scheduled to reset this year. If you think the housing market is flooded with short-sales and foreclosures now, just wait until these ARMs reset later in the year. The obvious answer is that these borrowers need to refinance before their ARMs reset, but if you're "underwater" there aren't many, if any, banks that will refi your loan. I understand the resentment towards people not paying their mortgage, but how does a housing market that is inundated with short-sales and foreclosures help matters? That will only result in home prices dropping further, which will result in more underwater borrowers, which will result in more short-sales and foreclosures.
As for investing in real estate? I think it's a fantastic investment. While it's true the housing market has been crushed the last few years, that doesn't change the fact that investing in real estate is one of the best ways to build wealth. To say that investing in real estate is a bad idea because of the recent housing problems, would be like saying investing in the stock market is a bad idea because of the recent slide in the last year or two. Both markets are highly cyclical, and both markets provide a great way to build wealth, in the long-term.
Just my .02.
Report this Comment On July 02, 2009, at 1:52 PM, mistermiranga wrote: "To say that investing in real estate is a bad idea because of the recent housing problems, would be like saying investing in the stock market is a bad idea because of the recent slide in the last year or two."
-I don't think anyone is saying that...real estate is a fine investment if you can afford to make the payments without relying on appreciation. at least in stocks you can only leverage with collateral...when you go under water you immediately recognize the loss.
The article brings up outstanding points. The government is probably just throwing more good money after bad.
Report this Comment On July 02, 2009, at 2:22 PM, outoffocus wrote: I just commented in another blog yesterday that until the administration figures out that the only people who will bring us out of this housing slump, we will have a long, slow, painful housing recovery.
While they are trying to keep people in homes they can't afford, they are not allowing houses to fall far enough for renters to afford.
Report this Comment On July 02, 2009, at 2:37 PM, clanza875 wrote: Its fairly simple, wages have not kept up with house prices so something has to give. Either houses keep coming down or wages have to increase. Amazing enough there are some areas where your money will do better in us treasuries than to buy real estate and rent it out.
Report this Comment On July 02, 2009, at 3:35 PM, MKArch wrote: Just some food for thought about simple legislation that could have prevented a good part of the crisis to begin with and could help prevent another one in the future. Foreclosures get divided into two camps: Chose to walk and Financial distress. Chose to walk remains on your credit reports for life. Financial distress gets expunged in 4-7 years.
I still think chose to walk did so long ago as the writing has been on the wall for a couple of years and there would have been no sense hanging in this long if walking was merely an investment decision.
IMHO the bulk of the re-defaults are irresponsible borrowers that were probably life long renters used to staying current for a little while on their rent then falling behind milking the system to stay put as long as possible before ultimately moving on to the next rental. Getting a mortgage they never deserved in the first place is just like the next rental to them. Make your payment for a little while then stop payments and milk the system before moving on.
The one thing I agree with Morgan about is the government is just delaying the inevitable and costing everyone money by trying to keep people you know are irresponsible in the house. Where I think he is going with this and I disagree is people with good credit that hung in this long but are underwater are going to be walking. IMHO the looming ARM resets have by and large already walked or have re-financed and this worry is going to turn out to be greatly exaggerated. The vast majority of new defaults will be due to financial distress and will dry up when job losses dry up.
Report this Comment On July 02, 2009, at 3:38 PM, BMFPitt wrote: Just one more painful reminder that failure will continue to be rewarded in the name of keeping house prices unaffordable.
Report this Comment On July 02, 2009, at 4:00 PM, MKArch wrote: Sorry to drag this out but I just thought of a good analogy. The purchase of an automobile is a big investment for most people that is substantially under water the second they sign on the bottom line. Practically everyone who buys an automobile is under water from the get go, how many turn in their keys because they are under water? While everyone who buys a house or car is looking to get the best deal possible and the purchase is an investment from that perspective the decision to sell is infinitely more complex than the current market value.
Report this Comment On July 02, 2009, at 4:23 PM, Seattleguy527 wrote: MKArch,
You make some very good points. However, one thing that I think needs to be noted re: borrowers with ARMs, is that a lot of them don't even realize their mortgage will adjust. That may sound crazy, but very few borrowers educate themselves when getting a mortgage. It's a completely foreign language to them, so they put their trust in their broker/loan officer because they are the "expert." Unfortunately, there are irreputable brokers and loan officers who take advantage of people like that. Whether that means conveniently not mentioning that the rate will adjust, or just flat-out lying and telling them their rate is fixed, it's something that has happened quite a bit over the last few years. And even if they know their rate is going to adjust in a few months, if they had an LTV of 95% when they bought the house 3 years ago (which was very common back then, and many homes were bought with 100% LTVs), they simply CAN'T refinance if they owe more than the home is worth.
Granted, with the publicity and media coverage the "mortgage meltdown" has received recently, I would hope more borrowers today know the terms of their mortgage than, say, 3 years ago. I do think it's worth noting, however, that many, perhaps most borrowers, rely solely on the advice of their broker.
I hope you're right about the ARM resets not having a big impact, but I'm very skeptical. In the area I live in (Seattle), the majority of homes on the market are either short-sales or foreclosures. I would venture to guess somewhere between 70-80%. The irony of that is, at least from a national perspective, our housing market hasn't been hit that hard... yet.
Report this Comment On July 02, 2009, at 4:56 PM, MKArch wrote: Seattleguy527,
While I'm sure there are some cases of unsophisticated borrowers being duped I think the extent of it is greatly exaggerated. People are not as dumb as politicians and pundits want you to believe. It's been a few years since I did my last loan but the broker is required to explain the terms in layman's language and I think the truth in lending statement explains them as well. IMHO the reports of predatory lending are mostly political in fact the re-default rate is pretty much evidence of this. Also IMHO the anecdotal consumer complaints are mostly excuse making from irresponsible borrowers that shouldn't have received a loan to begin with or at best cherry picked examples not representing the norm.
Report this Comment On July 02, 2009, at 4:56 PM, regulatethem wrote: Real estate will always be a good investment for some people, depending on timing and locations. It's always a question of price and how much you are willing to spend. People should wait until they have stable jobs before buying properties. I don't think the 125% makes sense. It just encourages things to fester, that will be inevitable and dealt with again later.
Report this Comment On July 02, 2009, at 5:02 PM, GeoffreyLindleyS wrote: What a sorry state of affairs that purchasers of the largest acquisition most of them will ever make don't take the time or have the intellectual ability to understand what they're doing when they sign-off on a mortgage. A good bit of today's chaos in the real estate market is directly related to that level of incompetence!
Report this Comment On July 02, 2009, at 5:06 PM, rgardner101 wrote: I moved from Houston,Tx. 20 years ago following a personal bankruptcy. I managed to hang on to my house in Tx, owing more than it was valued at. I rented out for 13 years just to cover the note each month.
in the end I sold it clearing 55,000 $ .
These things just take time ,there is no quick fix.
Report this Comment On July 02, 2009, at 5:20 PM, modeltim wrote: I don't see anyone here addressing the responsibility the financial industry bears for the very large majority of the financial mess we're in. Banks that are too big to fail are too big to exist. Citi, BofA, et al are already largely owned by the taxpayers. There are virtually trillions of dollars, funny money if you will, that these effing banking geniuses don't know what to do about but they just want to be bailed out and blame it all on the little mortgagee little guy. I'm all for invoking Sherman Antitrust laws to break these mfers up and invoking something quite similar to what was done during the 80's by creating a new Resolution Trust Corp. or doing what FDR did during the depression. Geithner and Summers and all of congress are in the pockets of Wall Street. F em all!
Report this Comment On July 02, 2009, at 5:20 PM, BruinAlum77 wrote: MKArch and others have made comments about what they THINK is the make up of the homes in default. Either they are speculators, or renter dead beats, or ignorant borrowers, etc. It almost seems as if ones political views are projected on to who these default borrowers are.
The reality is the market is made up of a number of different borrower profiles, and any legislation to reduce foreclosures should take that into account.
People who bought with interest only loans knew they would have to refinance, hoping that the rise in prices would give them equity. Do they deserve to be bailed out? I don't think so, unless the numbers end up harming the economy to such a degree that we have no other choice, as we did with all the scum bag banks who caused these problems in the first place.
But what about people like my neighbor? She used the equity of her last home, about $250K, to buy a bigger house with an ARM. She's going to lose the house on a short sale. Does anyone think she would walk away from her house because she's underwater? This seems like a pretty good criterion for loan modification - anyone who lives in a house that they put their own money into.
Report this Comment On July 02, 2009, at 5:38 PM, Big50Shooter wrote: GREAT article Morgan... Nice comments from all of you above too!!! Obama should hire all of US to figure this situation out! LoL...
My take:
Major problem is allowing the government into the fray to "fix" this housing/mortgage problem in the first place. I think many above brought up the point of rewarding irresponsibility, and these mandated readjustments are doing exactly that. People and BANKS made HUGE mistakes in writing these loans, so they should be left to figure this problem out for THEMSELVES!!! Housing was WAY over inflated, everyone could see it, and we all got stupid with the basics of financial responsibility and some of us "fell for it" with the pitch that "houses ALWAYS appreciate/ homes are a great way to make & save money/ you can NEVER lose with real estate/ blah blah blah...".
NOT!!!
Another factor allowing this problem to grow is the governments willingness to change legally binding agreements (mortgages) for what is essentially emotional reasons... Boiler6764 above is a PERFECT example of why this activity should not be allowed to continue. Boiler may have fallen for the fiscal irresponsibility from the beginning, but he made it right even thought I am sure that was a VERY painlfull thing to do.. (Boiler, I personally give you HUGE kudos for following through with your responsibility!!!). The problem is that now the gov. has essentially given its' blessing to "walk" from a mortgage, so the downhill pace of home devaluation picks up speed. The people who intitiated the pain by buying what they had no business buying have no repercussions for their actions (they used to get 1099'd from the IRS for the difference in value when they walked from a note, which WAS a huge deterrent..). Now, when people walk, banks get stuck, and WE innocent taxpayers get drawn into the fray OR we risk the solvency of our banking institutions... Since much of this is their own fault anyway, by allowing banks to get the shaft, justice can be served and we all will be assured that they won't allow that to happen in the near future... Yes, people will go homeless and/or bankrupt and some banks WILL go under, but the housing prices will reach their own stability or bottom as it may at a much faster pace and the taxpayer who was RESPONSIBLE for their financial house (pun intended) won't be stuck paying for others mistakes...
The free market is a wonderful thing... It's doesn't make these recent unpleasantries any more "pleasant", but that's why they are called UNpleasantries. Until somebody (banks and homeowners) learns a lesson on WHY they should avoid the UNpleasantries by not being irresponsible, nothing will go forward...
Market "up" or not, I am still VERY bearish on our country's economic condition for at LEAST the next year or so... Housing prices will continue to drop all the while...
Personally, I think we have another 5+ years until we see any decent growth figures in our economy... It's going to be a cold-cold winter this year.....
Report this Comment On July 02, 2009, at 5:51 PM, Wyoming123 wrote: Imagine this --- work for years, save money for years and buy your house with cash. The "conventional wisdom" says not to do this but the so-called wisdom is wrong. We worked and saved for years and did not buy a house until we were 42 years old. We rented CHEAPLY until we had the money to actually BUY a house. Now we have only taxes, insurance, homeowners and maintenance - much less expensive than having a loan payment too. I know people will say that this is not the way to go because of the present/future value of money, but when you know your house is PAID FOR you have NO WORRIES. Imagine this -- the bank gets only what they can earn while you are saving the money and you do not make payments. THEN if you lose a job, become invalid, go blind or whatever, you still have your HOME and it does not matter how much it is "WORTH".
Report this Comment On July 02, 2009, at 6:51 PM, mamallamainvest wrote: Really great discussion. I so agree!
I also just sold my home. I didn't make much, but after 10 months of unemployment, I figure getting it sold in less than 40 days and still putting money in my pocket is not a horrible place to be in. Unless you consider that I bought the house in 1993 - for a third of the sale price and have been making payments ever since. I should have pocketed a ton of money or at least had to fight with my ex over what was his share, but I didn’t, I didn’t even make as much as the realtors (gosh bless them though they got it sold).
Yep, I paid off a huge debt that had been rung up over the last 10 years by a now ex-spouse who decided the increasing value was a way for him to deal with his spending problems. Since I poured over $50,000 into the place 2 years ago, in an attempt to reduce a portion of that debt, it was rather tempting to just say the heck with it, pocket the payments and walk away. However, my ethical side took over and I decided not to join the rest of “crying over the milk they deliberately spilt” crowd and took the high road by selling it and paying off the last of debt. There is also the fact that I believe we are in for a further reset on housing prices. Sorry, but I really think we are going to see, in fact need to see, another round of decreased values before we can start to heal the housing market. I would just assume not be holding a mortgage when that happens.
However, the real point here is that a lot of these homes were not just bought over valued but that homeowners worked their way up to that point chasing a pipe dream that everyone should have learned in the early 80's was the product of the mortgage and realty industries over active imaginations regarding ever growing home and property values.
Guess what, there is a ceiling, housing and land just won’t keep increasing in value forever (well maybe, if the value of the dollar just keeps dropping like a stone). We’ve been here before folks. Anyone else live through the housing nightmare of the mid 1980’s (over valued homes, ARM's from heck, 0 down payment loans)? We should have learned our lesson but didn’t and we have no one to blame but ourselves. Whether we are the over leveraged owners or the jokesters who kept giving out the money to anyone who would sign on the dotted line we bought a pipe dream and now we have to pay the price.
Report this Comment On July 02, 2009, at 6:54 PM, Seattleguy527 wrote: MKArch,
I work in the industry as well, and I can only give you my firsthand experience. I have had scores of people tell me they were duped by their brokers on their mortgage. Now, the first thing that pops into my head is "were you actually duped by your broker, or did you not do your due diligence and feel as though you need to find someone else to pin it on to save face?" Unfortunately, I think both of those scenarios happen more than people realize. Maybe not as much today since so many people have come under fire, but a few years ago I think it was fairly common.
And you're correct, every broker is supposed to lay everything out in layman's terms to their borrowers. Unfortunately, that doesn't always happen. And the initial disclosures that the broker has to include (i.e. TIL, ECOA, etc.) are oftentimes signed by the borrower after quickly scanning, or possibly not even reading the document. So again, although it may sound silly, the borrower is giving their 100% trust to the broker and just doing whatever he/she says. I have found this to be especially true in sub-prime scenarios where borrowers are desperate and just want someone, anyone to help them.
Ultimately, I don't look at these types of borrowers as being dumb. I think they are ignorant and naive. They assume that if they pay a professional to help them secure a mortgage, that person will always be looking out for their best interest. I'm not making excuses for them because I'm a strong advocate of doing your homework, especially when it comes to the biggest purchase of your life, but I don't think all borrowers who go into default are doing it maliciously.
Just my thoughts...
Report this Comment On July 02, 2009, at 7:19 PM, fallwater wrote: If gov. guarrenteed loans are lowering monthly payments and these are comperable to rentals, why would anyone choose to walk, unless there shacking up with family and not pay a cent for rent.??? The situation is complex.I like the senario to hit bottom so as the economy can than rise/recover from there.
Report this Comment On July 02, 2009, at 8:32 PM, ds10 wrote: IF you can purchase a home with cash, your own savings, then do it. Don't take out a loan.
The decision is basic: take a loan ONLY if the money
earned monthly on the cash you would have used to buy the house is greater than the total monthly loan
repayment. And this situation is rarely, if ever, possible. Sure, you will have to delay home-ownership
but this financial security is well worth it.
Report this Comment On July 02, 2009, at 10:07 PM, 1PaganLady wrote: I've found this discussion very interesting. In Dec '99 I'd cashed in stocks to purchase my home in Gig Harbor, WA outright - against the advice of my stock broker (of course), real estate broker, and on down the line. I heard "never use your own money when you can borrow from someone else" ad nauseam but my thinking was very similar to Wyoming123 & ds10. Especially now, I believe it's quite possibly the only thing I've done right! Nobody is reimbursing me for mistakes I've made in the market, and I also agree with Big50Shooter - I shouldn't have to pay for others mistakes.
Report this Comment On July 02, 2009, at 10:41 PM, booyahh wrote: The author is right: lately there has been a "prime" mortgage crisis. Two of my friends in Orange County foreclosed on their homes because their loans were significantly larger than the current market prices. The banks stubbornly refused to re-negotiate, so they just moved out. Both of these people make roughly 120k per year. After foreclosing, they now save 5k per month (after rent) and are much more optimistic about the future.
Report this Comment On July 02, 2009, at 10:42 PM, rsenor wrote: Mr. Houssei fails to point out the second report from this OCC and OTS mortgage report, and that is the percentage of borrowers re-defaulting after 90 days of delinquency. That percentage is considerably lower across the board:
http://files.ots.treas.gov/482047.pdf (page 29)
The percentage of borrowers defaulting on any credit item is very high when you look at the 30 day benchmark (day late on your payment? You fall into that first report). Even the best of us have even been there.
To me, what this shows is that banks are being forced to be smart at the outset, and determine those buyers that will likely not pay in the long run, and focus only on the ones who can. Which means Banks will need to spend more money on things like predictive analysis of the default potential of their borrowers.
If I say something and you can't hear me, is it because I didn't speak loud enough or you weren't listening carefully enough?
Regardless of whether the fault was of the bank or the buyer, we all need to be more prudent now and the original report Mr Houssei quotes is a wake-up call that banks simply need to be smarter about how they lend money.
Report this Comment On July 03, 2009, at 12:37 AM, douggieboy wrote: I've been screaming for a dozen years about the root cause of the ever-accelerating collapse of the banking infrastructure in this country, and predicted with utmost precision what would happen, how and why-- and it has come to pass. Sorry to say, the worst is yet to come.
If you click on the "discuss" link for the company, Fair Isaac, who was [and still is] the architect of economic ruin this nation is now facing, you will see two postings I made, one quite recently, and the other in early 2008, describing how corporate greed, backed by bribery,, er, I mean- "lobbying" lawmakers in Washington set the stage and drew the blue-prints of a patently defective Marxist computer models, to be given absolute control over the lending industries in the US. Detail of FICO scoring's inception, leading to its universalization as the only parameter used to determine a potential borrower's credit worthiness, is enumerated on my website, www.ficovictims.com. At the bottom of the page you'll find links leading to a few other sites, where I began posting in 1997. No one has ever listened; letters, phone calls, emailing, and even the occasional personal visit to the offices of political constituents, had rendered no results. A senator from Connecticut brought up this issue in a session of Congress, and was quickly squelched. In no uncertain terms, he was told to shut up and butt out, or he'd be out on his butt.
Read, and judge for yourself. Contact me if you have any clout or influence in high places, where someone might look at my data and make a correlation to fact.
Every last claim I make is correct, and every event I predicted, which is leading this country into ruin, and the Federal Reserve into upcoming insolvency, along with tax-payer funded bailouts for greed mongers, a rate of foreclosures and bank failures not seen since the Great Depression of 1929-1937. What's headed this way next is going to make the Dust Bowl Days look like a black tie Cotillion.
FICOVICTIMS.COM, and I welcome all feedback....
Report this Comment On July 03, 2009, at 1:41 AM, bigalf123 wrote: I agree 100 % . People that walk every chance they get tend to worry a lot more about money than they do about personal carractor. Even our largest companies will tell you that corporate ethics are differant than moral ethics.I guess the new grduates of these corporate ethics classes are finally graduating and implimenting what they have learned . The good news is that if you are from the old school and pay your bills,live with in your means,and respect and honor your commitments,you probably did not get to far into this mess we are in and you can sit it out.Who knows , maybe we can pick up a house cheap, o ya I forgot we are supposed to make up the differance in price so the rich don't loose any money and the looser's can walk away.
Report this Comment On July 03, 2009, at 4:08 AM, mottyhall wrote: As a Brit, we now have our last coin of the realm being minted with the Brittania symbol on it.
We once ruled the waves and the world but were taken over by one of our uncles whos name i believe is Sam but he now has cancer and is dieing. He to was a big man but we all end up six feet under no matter how big we are
Report this Comment On July 03, 2009, at 12:14 PM, rsenor wrote: There are actually companies out there that make much smarter and sophisticated analytic models that take not only credit score but also hundreds of other criteria into account, not just a simple score.
My point is that this article shows a completely limited and subjective view of this issue and that is this: Foreclosure proceedings can occur at 90 days delinquent. Not 30. This same report shows 90 days delinquent at 43% defaulting/57% cured: a full 20% points lower than what Houssei quotes here!!
While statistical models might not be perfect, they are getting smarter all the time, and they can likely tell a bank what that 57% will be so they can focus on them and cure them.
Also, Mr Houssei gives no evidence of his theory of why homeowner just walk away: not one interview, not one shred of evidence. So- these two points are the crux of Houssei's entire article: both are simple speculation- just like this market itself.
This article points more to the downfall of true investigative journalism than anything.
Report this Comment On July 03, 2009, at 12:51 PM, TMFHousel wrote: rsenor,
Thanks for the comments.
True, the report I sourced shows 90-day redefault rates of 44.5% after one year. If you'd like to take this 44.5% redefault rate as disproving my claim that 60% redefault rate is a failure, please do. I think most would agree that a 44.5% redefault rate is a total failure as well.
As for proving negative equity is a factor in foreclosures, here's a nice piece of analytical evidence form the Wall Street Journal that sums it up:
"The analysis indicates that, by far, the most important factor related to foreclosures is the extent to which the homeowner now has or ever had positive equity in a home. The accompanying figure shows how important negative equity or a low Loan-To-Value ratio is in explaining foreclosures. A simple statistic can help make the point: although only 12% of homes had negative equity, they comprised 47% of all foreclosures."
(here's the chart: http://online.wsj.com/article/SB124657539489189043.html#mod=...
As for providing an interview (though I didn't conduct it), here's what Jose Canseco (yep, the baseball player) has to say: "It didn't make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else."
Thanks again, and enjoy your July 4th weekend.
Morgan Houssei (who prefers when you use his real name, Morgan Housel)
Report this Comment On July 03, 2009, at 8:35 PM, burrowsx wrote: The problem here is that we are in a fundamentally irrational market. Instead of copycatting Bush-league tactics to support mega-banks, the Obama administration would have been better off unravelling the mortgage backed securities, and purchasing the underwater portion of selected mortgages. This would have taken toxic assets off the books of banks large and small, while giving the benefitting families incentives to stay with their homes instead of walking away. In addition, it would help put a floor on the housing market, which is still tanking.
Instead, the Obama administration compromises with itself even before it has to deal with Republicans. Using a TARP in a rainstorm gives ineffective protection to the people outside the TARP, as well as those under the TARP.
Report this Comment On July 03, 2009, at 10:07 PM, Bristinwolfsong wrote: As a responsible renter who saw this coming from a mile away I very much believe that the banks need to just take this straight in the shorts and start really marking down housing. I and many others like me are standing on the sidelines with cash waiting for the good deals. People speculated and lost they need to accept those losses and move on. The stock market is great because it enforces debts to be covered nearly immeadiately. If Joe whatshisname makes a bad call on a stock and gets cleaned out well the books are usually settled within days. but for folks who speculated on housing the govenment is purposely dragging this out as long as possible. There can be no growth until the deadbush is burned and cleared.
Report this Comment On July 03, 2009, at 10:09 PM, xetn wrote: I have never read so much crap. Reading through most of the posts on this subject, is to come to the conclusion that you all think the government should thus and so to protect you from YOUR mistake of purchasing a home that you could not afford. You were all guided by your greed in believing the big lie that home ownership was the greatest investment because it always goes up. And the government's programs of Freddie and Fannie made it easy for you to purchase more than you could afford. Now that you are in over your head, you want somebody (the taxpayer) to bail you out of your mistake. As if the government knows more than you do about everything, you rely on them to fix everything from banking, real estate, the stock markets and global warming. What a lot of BS, the government does not care one iota about you or your problems, it only cares about increasing its own power,
Face facts, you, and only you are responsible for your predicament. It is your responsibility to bail yourself out of it.
Report this Comment On July 04, 2009, at 7:51 AM, joandrose wrote: I wonder how much of the housing " situation " has not come about as a result of the rash of books such as " Rich man ,Poor man " which essentially advise their readers that the road to long term wealth and riches lies in gearing up whatever wealth you have by the purchasing of a portfolio of properties - and then depend on rental incomes to pay off the mortgages whilst you enjoy the long term capital growth ! I have no doubt that many homeowners have put themselves into that category purely because home ownership has been universally espoused as the easiest way to long term wealth for Mr Average !
Report this Comment On July 04, 2009, at 10:39 AM, dgmennie wrote: Interesting posts here, but all ignor the basic forces that (until now) have worked so well for driving the US economy: Get as many people into the game as possible, regardless of ingrained problems such as inflation, greed, high/unpredictable interest rates, unstable employment options, and unvarnished ignorance. Add to this a thick layer of sharp business practices (mostly legal due to the lobbying efforts of special interests) and the formula for disaster is complete.
How all this works can be readily seen from a cursory look at the US automotive business. The basic forces in play here are focused on keeping as many people as possible purchasing automobiles. This means making it (relatively) easy for even the mentally and physically unqualified to keep driving. Drunk? Accident-prone? Vehicle dangerous from lack of maintenance? Like to text-message and chat on your cell phone at 70 mph? NO WORRIES! You get to drive anyway, limited only by some eventual future encounter with serious injury or death. Instead of efficiently dealing with real problems, the whole (traffic) enforcement infrastructure is now (mostly) concerned with paperwork violations (big fines for a misplaced license or insurance card) and the politically-correct favorite: unlimited harrasment over tailpipe emissions.
Now, transfer this mindset to the much larger financial stakes involved with real estate and is it any wonder there are now huge economic problems to contend with? So long as the blame game continues (lets castigate the greedy brokers and bankers; no lets humiliate every homebuyer who bit off more than he/she could chew) the solution for reviving our depressed economy will not be at hand.
Report this Comment On July 04, 2009, at 6:43 PM, dibo528 wrote: Interesting and enlightening article. I totally agree. The government needs to push for many more mortgage modifications that lower the principal.
Report this Comment On July 04, 2009, at 7:57 PM, dibo528 wrote: People who are underwater may not care so much about the value of their home if they still have the same job they did when they purchased the house. But many people are either out of work or had to take a job that pays less. After a loan modification, they may have enough to make payments, but why do that if they will never have any equity, especially if their living expenses will be much lower by renting a small apartment?
Report this Comment On July 05, 2009, at 8:10 AM, thisislabor wrote: obama's refinancing plan, a plan to keep the housing market artificially inflated STILL?!
Did we not learn from the first bubble?! Damn just the blister pop and let the healing begin already people.
Report this Comment On July 05, 2009, at 8:40 AM, thisislabor wrote: What I don't get is why people keep thinking that housing markets are some kind of entity that needs to be "healed" or "fixed". It's as if they this thing is some kind of living creature or something, and apparently this living creature is sick? I don't get it, did it fall and break a hip or catch a cold or something?
Isn't a market a place where people buy and sell a good or service? Can people still buy freely? Can people still sell freely? How is it "broken" then?
Report this Comment On July 05, 2009, at 11:49 AM, tertertes wrote: Twist on the walk away story.
In 2006, I retired, cashed in my 403B for 45% down on a condo. Century 21 inflated the sq ft, Bank of America didn't verify, appraised it at 40% more than value, and I paid 25% more. It was filled with mold. In spite of almost doubling the price of the condo in repairs, mold will be back. The building is contaminated, plus the damp air from the dryers goes right up my wall. The new furnace, which was moved under the bedroom, has a high pitched hum and exhausts into the window. Fees include 'heat/hot water', not water, which is illegally billed per sq ft., not use. While away, I was billed $200.
Atty #1 - gee, so sorry , hope you're not mad at me, I don't do litigation.
Atty#2 - $2500, shuffled papers, wanted more money. I live on Social Security.
Bank of America - would not give me the documents needed, asked multiple times
Realty Board - we'll talk about ethics at our next meeting
Bar Assn - that's a fee dispute
Consumer protection - 2 letters, no response
Century 21 - no response
Broker - "I'll close up shop before I give you a dime"
TV Investigative Reporter - no response
Building Inspector - no mold noted. (Inexpensive meters can test for water.)
Lessons learned:
1. Hire 2 building inspectors and compare notes
2. Visit 3 different Realtors for opinions.
3. If you are allergic, hire an environmentalist to test for mold, not someone just 'trained'.
4. REALLY read the condo docs, underline questions, and have you attorney explain. Don't rely on the attorney, regardless of how much you pay him.
5. Verify square footage and tax valuation with the town assessor's office
6. Talk to the town's building inspector.
7. Don't waste your time talking to the neighbors.
8. I was taught that the experts are there to help you. Forget it. A very hard lesson.
Report this Comment On July 06, 2009, at 2:41 AM, Alanmulvey wrote: Check out http://obamamortgage2009.blogspot.com or obamamortgage2009.blogspot.com There needs to be a program for the elderly but not quite to retirement age for mortgage modification when the have lost their job during this particular recession. I made a decent wage because I put my time into a company and now have no job. I am looking at $10 - to $12 hr jobs after working all my life. You can't make a mortgage payment on that kind of money. I will eventually lose my home.
Report this Comment On July 06, 2009, at 6:53 AM, allenbarela wrote: Mr. President why are the banking,and loan company not making loans as you promised they would do for the american people we are all hurting and not getting any help. Time for them to answer to you for not helping us the little people that keep them in business, maybe we should boycott their business. Check http://obamamortgage2009.blogspot.com/2009/03/obamas-mortgag...
Report this Comment On July 07, 2009, at 1:06 PM, Melaschasm wrote: The various bailouts could have given every American $14,000 as a payment on their first mortgage. That would have actually done some good towards fixing this problem, even if it is a redistribution of wealth.
Neither TARP nor this mortgage refinance program was designed to actually help people, it is just a way for the government to expand its power further into the daily lives of the people
The Motley Fool - Solar Energy
Home > Investing > High Growth
Sponsored By Innovation Series: Solar Energy
By Toby Shute
February 6, 2008 | Comments (0)
Over the next several years, industry analysts peg the growth of the solar market at around 50% per annum. In a market moving that fast, it's develop or die. Because of the pace of change, it's hard to imagine a more perfect match for the Fool's series on innovative business sectors.
To do justice to developments in the solar area, I'll break my overview into three parts. We'll begin with standard photovoltaics (PVs), before getting into the more exotic thin-film and concentrated solar stories.
Standard PV under the microscope
For a sense of where innovations in standard solar modules have and will come from, it's important to get a handle on the industry's economics and the stages of the production process.
Each management team in the space has its favorite cost metric, which invariably casts the company as the most competitive coal-slayer of the near future. First Solar (NYSE: FSLR) claims the industry's lowest manufacturing cost per watt. SunPower (Nasdaq: SPWR) focuses on minimizing the cost of an installed system. I'm not completely sold on either metric, but both point to the industry's motivating force: making solar power as cheap as possible. It bears repeating that solar's Holy Grail is "grid parity," or achieving costs per kilowatt-hour on par with fossil fuel-derived electricity.
There are as many opinions on how to achieve low costs as there are solar companies, but the many stages of the production process open multiple avenues for innovation. In the beginning, there is metallurgical silicon, supplied by Hemlock Semiconductor -- of which Corning (NYSE: GLW) is part-owner -- and others. That silicon is then gasified, refined, solidified, melted, crystallized, sliced, doped, coated, fitted with electrical contacts, tested, framed, and sealed. I'm sure I missed a few steps, but that gets us close to a solar panel.
With so many steps involved, leading companies have naturally found tons of ways to cut costs. REC Group uses a closed-loop process that eliminates feed gas inputs and slashes waste by-products. Q-Cells has automated its entire production process. SunPower uses monocrystalline rather than multicrystalline cells to achieve higher efficiency across the same surface area.
Fundamentally disruptive fare captures most of the venture capital dollars these days, but there are still major innovations occurring in the traditional silicon realm. To name but one, REC's fluidized bed reactor technology is poised to slash the company's polysilicon deposition costs. This would further REC's goal of slashing its 2005 per-watt module production cost nearly 50% by 2010, akin to SunPower's aim of halving its installed system cost by 2012, and a good reminder that the more traditional players aren't going down without a fight.
Thin-film throwdown
In the near-term, thin-film technology excites folks because it eschews polysilicon, which is really scarce these days. But there's a more disruptive element that makes me think thin-film might eventually dominate the solar market.
First Solar, which uses cadmium telluride, is the biggest and best-known thin-film player, but there is a veritable cornucopia of startups waiting in the wings.
CSG Solar is eschewing wafers by depositing a thin layer of amorphous silicon directly onto glass; Ascent Solar (Nasdaq: ASTI) and Miasole are attempting to commercialize thin-film solar solutions based on copper-indium-gallium-diselenide (CIGS).
Perhaps most promising, though, is Nanosolar, a company that prints CIGS nano-ink onto highly conductive foil. The company counts the Google (Nasdaq: GOOG) founders among its early investors, it's officially commercial (although their limited production run is sold out for 2008), and the panels are reportedly selling for less than $1 per watt.
Some people dismiss thin-film because of its lower efficiency. The panels are cheaper and less powerful than standard PVs, which sounds exactly like the sort of disruptive technology outlined by Motley Fool CAPS mentor Clayton Christensen in his work on innovation. This is why I can't shake the idea of these panels' eventual dominance.
Let's concentrate here, people
Another contender is arguably the hottest technology around. The terminology, yet to be standardized, is known alternately as concentrator, concentrated, or concentrating photovoltaics (CPV).
These systems use the most efficient cells there are -- the ones developed for satellite applications by EMCORE (Nasdaq: EMKR) and Boeing's (NYSE: BA) Spectrolab. When focused with low-cost lenses, the sun's rays can be magnified hundreds of times, resulting in industry-leading efficiency, and the amount of active semiconductor material is inversely related to the degree of magnification. Naturally, the super-efficient cells are super-expensive, but they're a tiny piece of the overall package.
A traditional problem has been offsetting the heat that results from this intense concentration (I told you this technology was hot). Both SolFocus and Concentrix, two leading start-ups in this field, indicate that heat sinking should not be a major issue.
But just as with the thin-film entrants, it would be premature to declare victory before these new technologies are battle-proven. Demonstrating efficiency in a lab is far different from decades of exposure to the elements, and it's fairly inevitable that some of these unproven applications will sputter out well in advance of their warranty.
SolFocus may actually best First Solar and SunPower's cost metrics with the more holistic concept of levelized cost of energy -- the lifetime value of energy produced divided by total costs. This means that any innovator will not only have to win in the realm of production and installation costs, but the product will have to perform at a high level for decades.
In other words, the race to grid parity is a marathon, not a sprint.
Sponsored By Innovation Series: Solar Energy
By Toby Shute
February 6, 2008 | Comments (0)
Over the next several years, industry analysts peg the growth of the solar market at around 50% per annum. In a market moving that fast, it's develop or die. Because of the pace of change, it's hard to imagine a more perfect match for the Fool's series on innovative business sectors.
To do justice to developments in the solar area, I'll break my overview into three parts. We'll begin with standard photovoltaics (PVs), before getting into the more exotic thin-film and concentrated solar stories.
Standard PV under the microscope
For a sense of where innovations in standard solar modules have and will come from, it's important to get a handle on the industry's economics and the stages of the production process.
Each management team in the space has its favorite cost metric, which invariably casts the company as the most competitive coal-slayer of the near future. First Solar (NYSE: FSLR) claims the industry's lowest manufacturing cost per watt. SunPower (Nasdaq: SPWR) focuses on minimizing the cost of an installed system. I'm not completely sold on either metric, but both point to the industry's motivating force: making solar power as cheap as possible. It bears repeating that solar's Holy Grail is "grid parity," or achieving costs per kilowatt-hour on par with fossil fuel-derived electricity.
There are as many opinions on how to achieve low costs as there are solar companies, but the many stages of the production process open multiple avenues for innovation. In the beginning, there is metallurgical silicon, supplied by Hemlock Semiconductor -- of which Corning (NYSE: GLW) is part-owner -- and others. That silicon is then gasified, refined, solidified, melted, crystallized, sliced, doped, coated, fitted with electrical contacts, tested, framed, and sealed. I'm sure I missed a few steps, but that gets us close to a solar panel.
With so many steps involved, leading companies have naturally found tons of ways to cut costs. REC Group uses a closed-loop process that eliminates feed gas inputs and slashes waste by-products. Q-Cells has automated its entire production process. SunPower uses monocrystalline rather than multicrystalline cells to achieve higher efficiency across the same surface area.
Fundamentally disruptive fare captures most of the venture capital dollars these days, but there are still major innovations occurring in the traditional silicon realm. To name but one, REC's fluidized bed reactor technology is poised to slash the company's polysilicon deposition costs. This would further REC's goal of slashing its 2005 per-watt module production cost nearly 50% by 2010, akin to SunPower's aim of halving its installed system cost by 2012, and a good reminder that the more traditional players aren't going down without a fight.
Thin-film throwdown
In the near-term, thin-film technology excites folks because it eschews polysilicon, which is really scarce these days. But there's a more disruptive element that makes me think thin-film might eventually dominate the solar market.
First Solar, which uses cadmium telluride, is the biggest and best-known thin-film player, but there is a veritable cornucopia of startups waiting in the wings.
CSG Solar is eschewing wafers by depositing a thin layer of amorphous silicon directly onto glass; Ascent Solar (Nasdaq: ASTI) and Miasole are attempting to commercialize thin-film solar solutions based on copper-indium-gallium-diselenide (CIGS).
Perhaps most promising, though, is Nanosolar, a company that prints CIGS nano-ink onto highly conductive foil. The company counts the Google (Nasdaq: GOOG) founders among its early investors, it's officially commercial (although their limited production run is sold out for 2008), and the panels are reportedly selling for less than $1 per watt.
Some people dismiss thin-film because of its lower efficiency. The panels are cheaper and less powerful than standard PVs, which sounds exactly like the sort of disruptive technology outlined by Motley Fool CAPS mentor Clayton Christensen in his work on innovation. This is why I can't shake the idea of these panels' eventual dominance.
Let's concentrate here, people
Another contender is arguably the hottest technology around. The terminology, yet to be standardized, is known alternately as concentrator, concentrated, or concentrating photovoltaics (CPV).
These systems use the most efficient cells there are -- the ones developed for satellite applications by EMCORE (Nasdaq: EMKR) and Boeing's (NYSE: BA) Spectrolab. When focused with low-cost lenses, the sun's rays can be magnified hundreds of times, resulting in industry-leading efficiency, and the amount of active semiconductor material is inversely related to the degree of magnification. Naturally, the super-efficient cells are super-expensive, but they're a tiny piece of the overall package.
A traditional problem has been offsetting the heat that results from this intense concentration (I told you this technology was hot). Both SolFocus and Concentrix, two leading start-ups in this field, indicate that heat sinking should not be a major issue.
But just as with the thin-film entrants, it would be premature to declare victory before these new technologies are battle-proven. Demonstrating efficiency in a lab is far different from decades of exposure to the elements, and it's fairly inevitable that some of these unproven applications will sputter out well in advance of their warranty.
SolFocus may actually best First Solar and SunPower's cost metrics with the more holistic concept of levelized cost of energy -- the lifetime value of energy produced divided by total costs. This means that any innovator will not only have to win in the realm of production and installation costs, but the product will have to perform at a high level for decades.
In other words, the race to grid parity is a marathon, not a sprint.
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