Current Events in December 2008

"The often stressful and frustrating task of parallel parking soon will be as easy as pressing a button for owners of the Lincoln MKS flagship sedan and all-new Lincoln MKT seven-passenger luxury crossover, thanks to an exclusive new technology from Ford Motor Company called Active Park Assist," Ford said in a press release.

Available in mid-2009 as an option on the 2010 Lincoln MKS sedan and new Lincoln MKT crossover, Ford says Active Park Assist uses an ultrasonic-based sensing system and Electric Power Assisted Steering to position the vehicle for parallel parking, calculate the optimal steering angle and quickly steer the vehicle into a parking spot.

"With the touch of a button, Lincoln MKS and MKT drivers can parallel park quickly, easily and safely without ever touching the steering wheel," said Derrick Kuzak, Ford's group vice president of Global Product Development. "This is another example of exclusive Ford smart technology, such as Ford SYNC, that makes the driving experience easier and more enjoyable for our customers."

Ford said the new technology uses sensors on the front and rear of the vehicle to guide the vehicle into a parking space. It says the technology is "a major leap forward" in speed and ease of use compared with the camera-reliant systems offered by competitors, including a video camera-based system offered by Lexus. Ford says its system requires less driver interface and reduces the risk of selecting a parking spot that is too tight. Ford's Active Park Assist also works in downhill parking situations, unlike competing systems, the automaker said.

Active Park Assist begins when the driver activates the system by pressing an instrument panel button, which activates the ultrasonic sensors to measure and identify a feasible parallel parking space. The system then prompts the driver to accept the system assistance to park.

The steering system then takes over and steers the car into the parking space hands-free. The driver still shifts the transmission and operates the gas and brake pedals. A visual and/or audible driver interface advises the driver about the proximity of other cars, objects and people and provides instructions.

While the steering is all done automatically, the driver remains responsible for safe parking and can interrupt the system by grasping the steering wheel.

Ford said the technology also improves fuel economy up to five percent, while reducing CO2 emissions, and enhancing steering performance compared with traditional hydraulic powered-assisted steering systems.

Since the introduction of the birth control pill, it has been available only with a doctor's prescription. Though there has been an effort in recent years to make it available over the counter, British medical researchers suggest doing so will not reduce unwanted pregnancies.

Their research is published online at bmj.com, the Web service of the British Medical Journal.

Sarah Jarvis from the Royal College of Physicians argues that it is a lack of daily compliance with taking oral contraceptives that is partly responsible for the high rates of unintended teenage pregnancies in the UK.

Studies have shown that nearly half of all women taking the oral contraceptive pill miss one or more pills in each cycle, and nearly a quarter missed two or more. These women are three times more likely to get pregnant unintentionally than those who take the pill consistently.

She points out that the availability of emergency contraception without prescription has done little to change the rate of teenage pregnancies.

Jarvis believes that the solution lies in long acting reversible contraceptives such as the coil, or those that can be placed under the skin or injected. They last between three months and three years, and because they are not dependent on patients taking them correctly, are much more reliable than oral contraceptives, she adds.

"Increased uptake of reliable, non user-dependent methods, rather than making a potentially unreliable method of contraception more easily available, has to be the key," she concludes.

But Dr. Daniel Grossman of Ibis Reproductive Health argues that the requirement for a prescription is a barrier to oral contraceptive use in some women.

He says if governments are committed to reducing rates of unintended pregnancies and maternal deaths in the developing world, increased access to safe oral contraceptives for all women at low or no cost is vital.

Home loan modifications are designed to save homeownership, but they've also created another mortgage maze pitted with "buyer bewares."

Both government-sanctioned counseling agencies and local community service agencies concede they have been swamped by demand for loan modifications. The demand has opened the floodgates of loan modification services now offered by real estate agents, mortgage brokers, attorneys, government agencies, lenders, and other professionals.

The demand stems from a proliferation of federal, state and local foreclosure relief and bailout efforts from both government and the lending industry. Mortgage modifications have been around for years, but those recent efforts have raised the profile of the mortgage workouts as an alternative to foreclosures, short sales, auctions, and bankruptcy.

However, homeowners seeking mortgage modifications are at the mercy of lenders, because the workouts are voluntary and often without regulatory standards.

Caught in the lurch, homeowners are finding it tough to know when a modification will work and how to best obtain one.

What is a mortgage modification?

A home loan modification, granted only upon the existing lender's approval, permanently reworks some of the terms of an existing mortgage in order to make the loan more affordable to the homeowner.

The strategy is typically designed for homeowners struggling to pay their mortgage, not for those who can pay their mortgage or are eligible for a refinanced loan.

Modifications are generally lender fee-free and involve the lender or loan holder lowering the interest rate and or changing an adjustable-rate mortgage (ARM) to a fixed rate mortgage (FRM) with a 30-year term. Some form of mandated homeownership counseling generally comes with the deal.

Less common loan modifications include adding missed payments to the loan balance and extending the term of the loan. Least common is getting the lender to reduce the principal or wipe out any second mortgages.

A mortgage modification is not a refinanced mortgage — a brand new loan written to pay off the old home loan.

"A mortgage is one of the most complex transactions there is. A loan modification is also a gray area for a lot of people. So of course people need someone to walk them through the process to tell them this is what you need and this is what you don't need," said Ginna Green, spokeswoman for the California office of the Center for Responsible Lending in Oakland.

Is a loan modification for you?

Greg Pennington, a San Francisco-based mortgage banking consultant and counselor with Parker-Pennington Enterprises, says a loan modification isn't for everyone.

A loan modification may not be viable if:

• The modified loan comes with payments you still can't afford.

• Your current interest rate is already low and there's no room for the lender to lower it further.

• You can make the new payments, but the mortgage balance is greater than the value of your home and you don't plan on staying put long enough to reverse the loan-to-value imbalance.

• You have not already missed payments on your mortgage or can't show financial hardship due, say, to job loss, pay decrease, illness or interest rate increase.

• You have other properties, investments or assets that could be liquidated to cover your mortgage debt.

• A short sale (The lender forgives a portion of the debt owed if you can find a buyer), bankruptcy, auction sale, refinance or other approach, short of a foreclosure, is a better option.

"You can do a loan modification and not be aware of where you stand. You can get a loan modification for a home you don't want to be in," said Pennington.

A financial, housing or credit counselor can help you determine your best option. Just be prepared to hold down the fort for the 60 to 90 days or more it could take to complete the modification, due to potential complications and document processing times.

There are three basic ways to approach a mortgage modification, according to advice from consumer advocates.

The HUD-approved counseling method

Consumer advocates widely advise homeowners to contact the lender at the first sign of mortgage trouble, and that remains true. However, when it comes to specifically seeking a loan modification, they further advise getting to a U.S. Department of Housing and Urban Development (HUD) non-profit counseling agency before approaching a lender about a modification.

Counseling agencies are generally hardwired to lenders and know what documents you'll need to both determine the viability of a loan modification and to be in sync with a given lender's underwriting requirements. They can also help you prepare your loan modification appeal so it reveals you are in financial trouble and can't afford the current mortgage, but can afford the terms of a modified loan that fits.

"We have direct links to lenders, can save them hours on the phone with the lender, and protect borrower information from unscrupulous people. And nonprofits receiving money from Congress must provide the work free. Others generally charge a fee," said Marcia Griffin, president of the non-profit HUD-approved HomeFree-USA.

The private loan modification route

Because both nonprofits and lenders have been inundated with calls for aid, it may be prudent to hire a private loan modification service to get a foot in the lender's door. Consider the following useful tips if you hire a private loan modifier:

• Shop around. A growing number of real estate agents, mortgage brokers, real estate attorneys and other real estate professionals are offering loan services. Comparison shop for the best deal and the most competent service. Get referrals to private or for-profit loan modification services from family members, friends, co-workers, professionals and others you trust.

• Make sure your choice has a clean record. Consider legal and real estate professionals offering loan modification services only if they have current, unblemished licenses. Also check their record with the Better Business Bureau and their respective trade or professional group.

• Avoid paying advance fees. Get performance-related service instead. Never pay an advance fee if your lender has already recorded a notice of default. You could be throwing good money after bad. It's illegal in California for "foreclosure consultants" or any real estate licensee to collect a fee after a notice of default has been recorded.

• Check your state for similar regulations. Make sure to familiarize yourself with any other rules governing private loan modification services and state rules specific to lenders granting modifications. You won't know if the modification service is adhering to the law if you don't know the law.

• Carefully examine any contract or terms of service before proceeding. If you don't understand the terms or aren't satisfied with what's promised, don't sign. Get help. That could mean reconsidering waiting for a HUD-certified counselor.

"Work with a local company that isn't outsourcing work that you'll never see to Florida, Los Angeles, Texas or Mexico," says Robert Aldana, a San Jose real estate agent who is also president of San Jose-based Home Resolution & Credit Services Inc.

The do-it-yourself way

A do-it-yourself loan modification is not for most homeowners. Attempt it only if you have a sufficient mortgage or consumer financing background, or if you understand that only the lender can give final approval, and if you exercise great caution in choosing the educational materials.

"Can you do it yourself? Sure you can. You can also sell your own home, fix your own roof or replace the engine in your car. But should you?" asks Aldana.

If you choose to go the do-it-yourself route, the following resources may help.

The FDIC offers for free its IndyMac program "FDIC Loan Modification Program Guide — 'Mod in a Box'." The program information specifically targets lenders, but contains a homeowner sample agreement, instructions, frequently asked consumer questions and other useful materials.

The PMI Group, Inc. recently launched an the free Mortgage Options Assessment Tool on its HomeSafePMI web site. According to PMI, the tool "enables homeowners to organize, calculate, and produce reports on their current financial situations prior to meeting their lenders or counselors to discuss solutions to foreclosure."

Otherwise, a plethora of good, bad and ugly do-it-yourself loan modification kits, manuals, guides and courses have cropped up, often with Internet marketing. They represent an unregulated, untested and unstandardized compendium of loan modification information and advice.

Some of it is free for the asking, some requires payment for books, manuals, software and other materials. Many services request your personal information. Whenever any offer requires you to provide personal or private information, be aware of the offer's privacy policy and any terms of service.

Pay particular attention to what the service will or won't do with your information, especially when it comes to sharing it with third parties. When information is shared with affiliates and third parties it's also crucial to learn those affiliates' privacy policies and terms of service.

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Broderick Perkins parlayed 30 years of old-school journalism into a digital real estate news service, the DeadlineNews Group, offering "News that really hits home!"™. The Silicon Valley bootstrap includes the Web site DeadlineNews.Com and the back shop Deadline Newsroom. Contact him at news@deadlinenews.com.

The Food and Drug Administration (FDA) has warned the Coca-Cola Company that its label for Diet Coke Plus is misleading. At issue, the agency says, are the label's nutritional claims.

In a warning letter to Coke's CEO Muhtar Kent, the FDA said it has reviewed the label and has concluded the product is in violation of the Federal Food, Drug and Cosmetic Act. It has further found the product is "misbranded," because it makes a nutrient content claim but does not meet the criteria to make the claim.

The FDA says Diet Coke Plus bears the term "Plus" as part of its name, and the principal display panel of the product label also includes the language, "Diet Coke with Vitamins & Minerals." The ingredient list includes the following added vitamins and minerals: magnesium sulfate (declared at 10% of the Daily Value (DV) for magnesium in the Nutrition Facts panel), zinc gluconate (declared at 10% of the DV for zinc), niacinamide (declared at 15% of the DV for niacin), pyridoxine hydrochloride (declared at 15% of the DV for vitamin B6), and cyanocobalamine (declared at 15% of the DV for vitamin B12).

"The term 'plus' in Diet Coke Plus, read in conjunction with the language Diet Coke with Vitamins & Minerals, meets the definition of a nutrient content claim because it characterizes the product's level of vitamins and minerals, which are nutrients of the type required to be in nutrition labeling," the FDA said. "Based on our review, we have concluded that this product is in violation of the Federal Food, Drug, and Cosmetic Act."

The FDA said it does not consider it appropriate to fortify snack foods such as carbonated beverages, with vitamins and minerals, and then to try and promote the snack food's nutritional value.

"It is your responsibility to ensure that all of your products are in compliance with the laws and regulations enforced by FDA," the agency warned. "You should take prompt action to correct the violations. Failure to promptly correct these violations may result in regulatory actions without further notice, such as seizure and/or injunction."

A slow, chronic starvation of the brain as we age appears to be one of the major triggers of a biochemical process that causes some forms of Alzheimer's disease.

A new study from Northwestern University's Feinberg School of Medicine, published in the December 26 issue of the journal Neuron, has found when the brain doesn't get enough sugar glucose — as might occur when cardiovascular disease restricts blood flow in arteries to the brain — a process is launched that ultimately produces the sticky clumps of protein that appear to be a cause of Alzheimer's.

Robert Vassar, lead author, discovered a key brain protein is altered when the brain has a deficient supply of energy. The altered protein, called elF2alpha, increases the production of an enzyme that, in turn, flips a switch to produce the sticky protein clumps. Vassar worked with human and mice brains in his research.

"This finding is significant because it suggests that improving blood flow to the brain might be an effective therapeutic approach to prevent or treat Alzheimer's," said Vassar, a professor of cell and molecular biology at the Feinberg School.

A simple preventive strategy people can follow to improve blood flow to the brain is getting exercise, reducing cholesterol and managing hypertension.

"If people start early enough, maybe they can dodge the bullet," Vassar said. For people who already have symptoms, vasodilators, which increase blood flow, may help the delivery of oxygen and glucose to the brain, he added.

Vassar said it also is possible that drugs could be designed to block the elF2alpha protein that begins the formation of the protein clumps, known as amyloid plaques.

An estimated 10 million baby boomers will develop Alzheimer's in their lifetime, according to the Alzheimer's Association. The disease usually begins after age 60, and risk rises with age. The direct and indirect cost of Alzheimer's and other dementias is about $148 billion a year.

The initial trigger of Alzheimer's has long been a mystery.

Ten years ago, it was Vassar who discovered the enzyme, BACE1, which was responsible for making the sticky, fiber-like clumps of protein that form outside neurons and disrupt their ability to send messages.

But the cause of the high levels of the protein in people with the disease has been unknown. Vassar's study now shows that energy deprivation in the brain might be the trigger starting the process that forms plaques in Alzheimer's.

Vassar said his work suggests that Alzheimer's disease may result from a less severe type of energy deprivation than occurs in a stroke. Rather than dying, the brain cells react by increasing BACE1, which may be a protective response in the short term, but harmful in the long term.

"A stroke is a blockage that prevents blood flow and produces cell death in an acute, dramatic event," Vassar said. "What we are talking about here is a slow, insidious process over many years where people have a low level of cardiovascular disease or atherosclerosis in the brain. It's so mild, they don't even notice it, but it has an effect over time because it's producing a chronic reduction in the blood flow."

Vassar said when people reach a certain age, some may get increased levels of the enzymes that cause a build-up of the plaques. "Then they start falling off the cliff," he said.

A key question facing millions of baby boomers who turned 62 this year and became eligible for Social Security benefits is: "Should they take a reduced Social Security monthly payment now, or wait a few more years when that monthly payout could be more than double, depending on how long they wait?"

In these difficult financial times, especially for a large number of pre-retirees who have seen their life savings sliced in half by a hungry bear market, receiving a monthly check from the government could be a necessity.

Even in good times, deciding when to apply for Social Security benefits is one of the most important decisions facing anyone over the age of 62. This supposedly is guaranteed lifetime inflation-adjusted income, that when totaled, could become one of your most significant assets. For many, if all the checks over ones life span were added together, it might match or even exceed the amount they've put away in their 401(k) plans or individual retirement accounts (IRAs).

A new survey has found that many baby boomers plan to sign up for their Social Security checks as soon as they're eligible. The Fidelity Investment Survey shows that 45 percent of a group of 300 people who were 61-years-old expected to begin receiving Social Security when they turn 62. The first reason cited was "financial necessity." They need the money now to pay for basic living expenses such as food, utilities and mortgage payments.

Other reasons include health and worries about longevity, as well as a desire to collect as much as possible from a system that some believe may run out of money, and that the government will then not be able to pay anything to those who were once promised lifetime benefits.

The Fidelity Investment Survey also found that only 10 percent of those surveyed plan to wait until their full retirement age to claim their benefits. Nine percent said they'll file claims between the ages 67 and 70.

Three choices

Basically, we have three primary choices when it comes to applying for Social Security:

• Applying at age 62 and receiving a reduced benefit for life, about 25 percent less than full benefits

• Applying at full retirement age, around 66, and receiving full benefits for life

• Applying at age 70 and receiving additional credits for life, which could be as much as 76 percent more a month than what you would have received if you began getting payments at age 62.

The optimum age for when you should dip into the Social Security well is different for everyone and is determined by a number of factors such as health, life expectancy, your financial situation, your marital status, and taxes.

Financial advisors are typically divided on this subject. Some recommend waiting until age 70 because you will receive a bigger payment each month. But you will have also given up eight years of monthly smaller payments.

Others say that you should take the benefits as soon as possible. Even if you don't need it,so you can invest that money and possibly earn returns on that investment that beat what the government would give you in the future. But to do that, you would have to get a nine to 10 percent return on your investment just to match the annual cost of living adjustments and tax preferences you get from Social Security.

With the market nearly 40 percent off its high from a year ago, and still testing its bottom, that isn't likely to happen any time soon.

Break-even age

Social Security has actually determined a break-even age that you can calculate to help you decide what to do. The break-even age is that age where taking a smaller payment for a longer period of time matches the amount you would have received by taking the larger payment for a shorter span of time.

To put it another way, this is the age you have to live beyond in order for delayed benefits to provide a higher lifetime income. For example, if you take payments at 62 instead of 66, your break-even age is 76 years and 5 months. If you wait until you're 70 years old, the break-even age is 79. If you want to compare benefits of ages 66 versus 70, you have to live beyond 80 years and 9 months to make it more beneficial to wait until you're 70 to claim Social Security benefits.

For married couples, the timing gets even more complicated. When the spouse earning the most dies, the surviving spouse can get a benefit based on the deceased's work history. The larger that is, the more money the widow or widower will get in his or her remaining years. Therefore, the spouse earning the larger pay check should delay taking benefits as long as possible, leaving the other to take an early payout.

Cost of living adjustments

Most break-even analyses ignore the impact of cost of living adjustments (COLAs). COLAs are designed to help retirees keep up with inflation. When COLAs are applied to the higher benefit available at age 70, the breakeven age gets younger. The longer a retiree lives, the higher the lifetime benefit will be due to the impact of COLAs on the higher starting amount. Next year, COLA jumps from 2.3 percent in 2008 to 5.8 percent for 2009, which is the largest percent increase since 1982. With the magic of annual compounding, COLAs add up over your retirement years.

Taxes

There are also some tax considerations that could influence your timing. If you retire at age 62, you have a choice of applying for early Social Security benefits, or delaying them and taking income from your IRA rollover during the "bridge period" (the years between retirement and age 70). Some advisors recommend leaving the IRA rollover alone so it can continue to grow tax-deferred, and take the reduced Social Security benefits to meet current spending needs.

When to apply

If, like many baby boomers burned by the bear market, you have no choice, start collecting Social Security as soon as you can. That means if you are laid off, and are forced into early retirement, or have health problems, and your nest egg isn't enough to live on, a monthly Social Security check may be your only option.

On the other hand, if you are in good shape, financially and health-wise, putting off applying for Social Security could boost and even more double the amount of your monthly check, plus you could pass on a larger payment to your spouse, if he or she receives a survivor benefit based on your work record.

A company that lured consumers with false claims for credit repair services and required advance payment ranging from $500 to as much as $2,500 has agreed to settle Federal Trade Commission charges that it violated federal law.

The agency filed the charges in July as part of "Operation Clean Sweep," a crackdown on credit repair operations.

The proposed settlement bars Payneless Credit Repair, LLC, and its owner, Lesley L. Payne, both located in Richardson, Texas, from making deceptive claims when marketing any product or service, including credit repair services.

It also prohibits them from violating the Credit Repair Organizations Act and specifically prohibits the defendants from:

• Claiming that a credit repair organization can permanently remove negative information from consumers' credit reports, even when the information is accurate and not obsolete;

• Requiring advance payment for credit repair services;

• Failing to provide a written statement of "Consumer Credit File Rights Under State and Federal Law" before any agreement is signed;

• Failing to include in their contract conspicuous statements about the consumer's right to cancel without penalty or obligation within three business days; and

• Failing to provide a written "Notice of Cancellation" for consumers to use when exercising their cancellation rights.

In addition, the settlement bars the defendants from collecting money from consumers who purchased services before July 10, 2008, and from disclosing or benefiting from customers' personally identifiable or financial information.

They also are prohibited from violating the Fair Credit Practices Act and the FTC's Disposal Rule by failing to take reasonable measures to protect consumers' personally identifiable information during its disposal.

The settlement imposes a judgment for consumer redress of $210,000, which is suspended due to the defendants' inability to pay.

The FTC advises that only time, effort, and a personal debt repayment plan can improve your credit report. The first step is to learn what information is in your credit report. If you find errors or mistakes, federal law gives you the right to have them corrected — free of charge.

Federal law requires that the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — provide you with a free copy of your credit report once every 12 months, if you ask for it.

To order your free report, visit annualcreditreport.com, or call 1-877-322-8228.

December 23, 2008
Teknion is recalling about 60,000 Contessa office chairs. The bolts holding the seat to the frame can loosen and separate, posing a fall hazard to consumers.

The company has received two reports of separation of the chairs seat from the frame. No injuries have been reported.

This recall involves all Contessa chairs shipped prior to June 30, 2008. Each Contessa chair has a label indicating the date of shipment which is located on the bottom of the chair seat.

The chairs, made in Japan, were sold by authorized Teknion dealers nationwide from January 2004 through June 2008 for between $1,470 and $1,625.

Consumers should inspect the chair by checking the four bolts that attach the seat bottom to the chair frame. If any of the four bolts are loose or missing, consumers should stop using the chair immediately and contact a Teknion dealer for a free repair.

For more information, contact Teknion toll-free at (866) 943-8550 between 9 a.m. and 5 p.m. ET Monday through Friday or email Contessainquiries@teknion.com.

The recall is being conducted in cooperation with the U.S. Consumer Product Safety Commission (CPSC).

Loan modifications aren't reaching struggling homeowners in need of creative financing and foreclosure prevention. And in many cases, the mortgage bailouts backfire on homeowners they do reach.

In a scathing indictment of loan modifications efforts, the National Association of Consumer Bankruptcy Attorneys (NACBA) says:

• When loan modifications are written, fewer than one in 10 of them result in a reduced principal loan balance.

• More than half of loan modifications roll unpaid interest and fees into larger, more drawn-out debt on the back end of the mortgage.

• Only 35 percent of mortgage modifications reduce monthly payment burdens for homeowners.

• A full 45 percent of loan modifications are packaged with increased payments.

The NACBA says that given the failure of loan modifications to put a dent in the number of foreclosures, nothing short of legal intervention will reverse a trend that recently prompted Credit Suisse to forecast 8.1 million U.S. mortgage foreclosures in the next four years. That forecast was up sharply from the 2 to 6 million foreclosures previously forecast by a variety of industry experts.

"Court-supervised loan modification is urgently needed to deal with this problem. Despite a proliferation of voluntary programs, we are not seeing evidence of a meaningful number of sustainable loan modifications," said Henry Sommer, NACBA president.

In its first report in February, the State Foreclosure Prevention Working Group, comprised of attorneys general and state banking departments, reported that the vast majority, 70 percent of seriously delinquent borrowers were not on track for any loss mitigation option. By September that had risen to 80 percent.

"The number of homeowners working toward a loan modification has declined by 28 percent between January and May, falling to a level not seen since late in 2007," the group reported.

What it is

A home loan modification, granted only upon the existing lender's approval, permanently reworks some of the terms of an existing mortgage in order to lower monthly payments and make the loan more affordable to the homeowner.

The strategy is typically designed for homeowners struggling to pay their mortgage, not for those who can pay their mortgage or are eligible for a refinanced loan.

The mortgage modification method of relief is at the top of the list of weapons used in the fight to stop foreclosures because struggling homeowners typically can't qualify for a refinanced mortgage — a brand new loan written to pay off the old home loan. Other options — a short sale (the lender forgives a portion of the debt owed if the owner can find a buyer), bankruptcy or auction sale — all cost consumers their home.

Modifications are generally lender fee-free and involve the lender or loan holder lowering the interest rate and or changing an adjustable rate mortgage (ARM) to a fixed rate mortgage (FRM) with a 30-year term. Some form of mandated homeownership counseling generally comes with the deal.

Complex transaction

"A mortgage is one of the most complex transactions there is. A loan modification is also a gray area for a lot of people. So of course people need someone to walk them through the process to tell them this is what you need and this is what you don't need," said Ginna Green, spokeswoman for the California office of the Center for Responsible Lending in Oakland.

In addition to lowering and locking in the interest rate, less common loan modifications include adding missed payments to the loan balance and extending the term of the loan. The least common, but most sought-after feature, is a reduction in the principal, whereby the lender actually lowers the mortgage balance, to further enhance affordability.

Reduced principal, along with deep interest cuts is, however, at the core of the Federal Deposit Insurance Corporation's (FDIC) more liberal loan modification program "Loan Modification Program Guide -- 'Mod in a Box' " modeled after the agency's mortgage adjusting efforts used on the home loans of IndyMac Bank of Pasadena. FDIC took control of the failed bank earlier this year.

"If they (lenders) reduce the first or wipe out the second, let me know. I haven't heard of lenders doing this. They are staying away from this," said Glenda Queensbury, a mortgage adviser and real estate agent at Referral Realty in San Jose, CA.

No relief in sight

Little relief is expected from the recently announced Federal Housing Finance Agency's "Streamlined Modification Program" designed for loans held by Fannie Mae and Freddie Mac.

The program is the first major effort to help set standards for loan modification programs. It creates a three-month mortgage modification trial period that includes the modification terms that will take effect if the borrower makes the new payments as prescribed during the trial period.

However, the SMP continues some of the ills NACBA says has prevented loan modification from becoming more widespread and successful. SMP loans are voluntary, they allow tacking on accrued interest, they can come with ARM rate-like terms with both rising and balloon payments, they only apply to the first mortgage, not second loans, and borrowers must have loan-to-value ratio of 90 percent or more.

Consumers seeking loan modifications have also been thwarted by the fear of fraud from a largely unregulated cottage industry of private loan modification services that can charge thousands of dollars in upfront fees.

California's Department of Real Estate has issued several "desist-and-refrain" orders against companies offering loan modification services. California Attorney General Edmund G. Brown Jr. recently announced arrests of suspects in a fraud ring preying on struggling Southern California homeowners. Modesto, CA-based Federal Bureau of Investigation (FBI) agents recently announced a task force to zero in on mortgage-related frauds.

"A racket"

"It's become a racket," says Greg Pennington, a San Francisco-based mortgage banking consultant and counselor with Parker-Pennington Enterprises.

The NACBA blamed a host of factors for the failure of mortgage modifications to catch on.

• Borrowers and servicers are often unable to locate multiple mortgage holders all of whom have to agree to the modification.

"The loans have been sliced and diced so many times that all of the owners cannot be found and brought into the process," the NACBA reports.

• Loan servicers fear investor lawsuits. Servicers have a fiduciary responsibility to investors who purchased mortgage-backed securities comprised, in part, of loans up for modification. Servicers are hesitant to modify numerous loans if it will cause the security to lose income and the investors to sue.

• Voluntary modifications typically don't include second mortgages. Second mortgages were heavily in vogue during the housing boom as equity gains allowed homeowners to buy larger homes than they could truly afford and use their home like an ATM.

NACBA also says in 2006, a third to a half of all 2006 subprime borrowers took out piggyback second mortgages on their homes at the same time they took out their first mortgages.

Unfortunately, first mortgage holders don't have any incentive to write modifications to give borrowers money to make payments on second mortgages. Just as risk-averse as first mortgage holders, second mortgage holders, rather than waive their rights in a loan modification that could cost them a 100 percent loss, they'd rather take their chances on collecting a few more payments before the borrower goes into foreclosure.

• NACBA also says overwhelmed servicers are not set up for the case-by-case negotiation process necessary for modifications, but more practiced in the automated foreclosure process -- which comes with financial incentives.

"Many also have monetary incentives to foreclose rather than modify," NACBA reports.

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Broderick Perkins parlayed 30 years of old-school journalism into a digital real estate news service, the DeadlineNews Group, offering "News that really hits home!"™. The Silicon Valley bootstrap includes the Web site DeadlineNews.Com and the back shop Deadline Newsroom. Contact him at news@deadlinenews.com.

The Food and Drug Administration (FDA) on Monday warned consumers not to buy more than 25 products marketed for weight loss because they pose serious health risks.

The agency said it is trying to recall the products, which contain ingredients not approved for use in the United States or pose such health risks as high blood pressure, seizures, or strokes.

The weight loss products — tainted with what the FDA calls "undeclared active pharmaceutical ingredients" — are: Fatloss Slimming, Japan Lingzhi 24 Hours Diet, 2 Day Diet, 3x Slimming Power, 5x Imelda Perfect Slimming, 3 Day Diet, 7 Day Herbal Slim, 8 Factor Diet, 7 Diet Day/Night Formula, 999 Fitness Essence, Extrim Plus, GMP, Imelda Perfect Slim, Lida DaiDaihua, Miaozi Slim Capsules, Perfect Slim, Perfect Slim 5x, Phyto Shape, ProSlim Plus, Royal Slimming Formula, Slim 3 in 1, Slim Express 360, Slimtech, Somotrim, Superslim, TripleSlim, Zhen de Shou, and Venom Hyperdrive 3.0.

These products are sometimes marketed as "dietary supplements," and sold on various Web sites and in retail stores. Some of the products claim to be "natural" or contain only "herbal" ingredients.

An FDA analysis found that the undeclared active pharmaceutical ingredients in some of these products include sibutramine, a controlled substance; rimonabant, a drug not approved for marketing in the United States; phenytoin, an anti-seizure medication; and phenolphthalein, a solution used in chemical experiments and a suspected cancer causing agent.

The amount of some of these ingredients far exceeds the levels recommended by the FDA — and puts consumers' health at risk.

Sibutramine, for example, can cause high blood pressure, seizures, tachycardia, palpitations, heart attack, or stroke. This drug, which was found in many of the products, can also interact with other medications and increase patients' risk of adverse drug reactions, the FDA said.

Rimbonant, which is approved in Europe, has been associated with increased risk of depression and suicidal thoughts. It is also linked to five deaths and 720 adverse reactions in Europe over the last two years, the FDA said.

The FDA warned consumers who use any of these products to immediately stop taking them and contact their physician.

"These tainted weight loss products pose a great risk to public health because they contain undeclared ingredients and, in some cases, contain prescription drugs in amounts that greatly exceed their maximum recommended dosages," said Janet Woodcock, M.D., director, Center for Drug Evaluation and Research, FDA. "Consumers have no way of knowing that these products contain powerful drugs that could cause serious health consequences. Therefore FDA is taking this action to protect the health of the American public."

The FDA, which has inspected several companies that sell these products, is now trying to pull them off the market.

"Based on the FDA's inspections and the companies' inadequate responses to recall requests, the FDA may take additional enforcement steps, such as issuing warning letters or initiating seizures, injunctions, or criminal charges," the FDA said.

The agency encouraged health care professionals and consumers to report any serious side effects or other problems associated with these products to the FDA's MedWatch Adverse Event Reporting program.

They can also call the FDA at (800) FDA-1088 or send a letter to MedWatch, 5600 Fishers Lane, Rockville, MD 20852-9787. The agency offers a postage-paid form for contact by mail.

As the year comes to a close, many consumers look ahead and make "resolutions" for the new year. As 2008 ends, with its economic devastation, consumers can be expected to make even more dramatic changes in the months ahead, and people who haven't been serious about health and weight control may be more serious now.

"With the continued rise in obesity, weight gain prevention has become just as important as weight loss," said Beth Hubrich, MS, RD, of the Calorie Control Council. "This, coupled with a decline in the economy, has many consumers searching for quality nutrition on a budget."

As the economy continues to slow, consumers will be looking for more nutrition for their buck, which means they will be expecting foods providing added benefits. There will also be a greater reliance on tools already at their fingertips, such as online dieting and nutrition sites.

With increased workplace tensions, greater workloads and perhaps the need for an additional job, people will look for fitness activities that can be done in the workplace.

The Calorie Control Council, an international association representing the low-calorie and reduced-fat food and beverage industry, predicts the following five trends when it comes to dieting, weight loss and physical activity in 2009:

1. Consumers will "budget" calories in the strapped economy. Although times are tough, consumers seem to understand that "calories still count." In a nationally projectable Calorie Control Council survey, respondents stated some of the primary reasons for using low and reduced calorie products are, "to stay in better overall health," "to eat and drink healthier foods and beverages" and "to reduce calories." By incorporating low-calorie foods such as diet sodas, light juices, and light yogurts, consumers can control calories while still enjoying their favorite foods on a reasonable budget. According to the Council's survey, 194 million Americans reported consuming low and reduced calorie products in 2007, an increase from 180 million in 2004.

2. Increased consumption of foods and beverages with added benefits. Heightened consumer awareness of the relationship between diet and health has increased the demand for "functional" foods. Leading health organizations have defined functional foods as foods or dietary components that can provide health benefits beyond basic nutrition. Sales of foods and beverages with added benefits and health claims that also fit into a reasonable budget are becoming more popular as consumers spend more time "weighing" food and beverage options for both price and nutrition. As consumers have driven the food and beverage market toward preventive health and wellness, there will likely be an increased demand for these "functional" foods and beverages in the coming year.

3. Greater reliance on personalized online dieting tools for weight management. A recent study by Kaiser Permanente found that recording food and beverage intake can double a person's weight loss, so having access to online options that allow people to record their calories is important. With the trend away from fad diets and toward science based nutrition, consumers will find solace in recording food and beverage intake in their laptop, PDA, or blackberry, or traditional excel file.

4. Emergence of "functional fitness" programs that simulate real life activities. Traditional weight lifting has taken a back seat to these, "fitness that functions like you do," programs. The focus of these programs is building a body capable of doing real-life activities in real-life positions. Functional fitness is designed to ease activities of daily living using workouts tailored to actual activities, such as a new mom repeatedly lifting a stroller instead of a weight set or a flight attendant bench pressing their luggage. Coupled with the aging population and the flailing economy, functional fitness will also serve as a means to maintain daily activities such as stair climbing and carrying grocery bags for aging baby boomers who may have limited funds for a traditional exercise program.

5. Natural nutrition. Although there is no clear definition of "natural," some consumers prefer foods and beverages they perceive as natural. New products with natural claims such as stevia sweeteners have been hitting the marketplace fast and furiously. For consumers looking for natural options, there are more choices now than ever to choose from.

The trends for 2009 will focus on foods with "added value" while consumers look for ways to budget calories and dollars, the group says.

Melamine contamination continues to trigger recalls of food products. In the latest melamine scare, National Brands Inc. has recalled all its 4.76-ounce and 12.3-ounce cans of Topaz Wafer Rolls.

The wafer rolls involved in this action were sold in four flavors and distributed at retail stores nationwide. The Spring Valley, New York, company said it has not received any reports of illnesses linked to the products. Customers with questions about this action can call the company at 866-238-5201.

This is the second melamine-contamination issue the company has faced in recent weeks.

In late November, the Connecticut Department of Consumer Protection warned consumers not to eat National Brand's Topaz Wafer Rolls with Hazlenut Chocolate-Flavored Cream Filling because of melamine contamination.

A sample of those products — tested by the Connecticut Agriculture Experiment Station Laboratory — revealed the wafer contained 5 parts per million (ppm) of melamine and the cream filling had more than 7 ppm.

That is well above the 2.5 ppm standard for melamine set by the Food and Drug Administration,

The Chinese-made wafers were sold at Ocean State Job Lot stores in Connecticut and identified as Lot # L821 99D.

Melamine is a chemical used to make plastic and fertilizers. It is not approved for use in human or animal food marketed in the United States — and manufacturers are not allowed to deliberately add it to any food for U.S. consumers.

Concerns about melamine — and its intentional adulteration in imported foods — have repeatedly surfaced in the past year.

In September, Chinese officials discovered melamine in powered infant formula made in that country. Officials learned some dairy plants purposely added the chemical to milk products to make them appear to have higher protein levels.

That contamination is blamed for the deaths of at least six babies in China and the illnesses of thousands of other infants.

Doctors say melamine can cause kidney stones and lead to kidney failure.

China's melamine-tainted milk scandal has since spread from infant formula to dozens of other food products sold around the world, including candy, coffee, and pretzels.

Melamine is also blamed for the deaths and illnesses of thousands of dogs and cats in the United States in 2007.

FDA officials discovered the chemical in imported wheat gluten from China used to make dog and cat food. Those findings triggered the largest pet food recall in U.S. history.

Although melamine is not supposed to be in animal or human food, the FDA recently concluded that levels below 2.5 parts per million (ppm) do not raise health concerns.

The only exception is infant formula. The FDA now says melamine levels of 1 ppm in infant formula are safe. That is a reversal of the zero tolerance policy for melamine the agency adopted in October.

At that time, the FDA said it was "unable to establish any level of melamine and melamine-related compounds in infant formula that does not raise public health concerns."

That's why FDA officials again cautioned consumers to be wary of feeding their dogs these products, which include chicken tenders, strips, or treats.

This warning comes less than two weeks after an Australian company recalled some of its Chinese-made chicken strips because the treats may cause illnesses in small dogs.

And those illnesses sound similar to the ones dogs and cats have experienced after eating Nutro food, according to a regular ConsumerAffairs.com reader.

15 cases

Earlier this month, The KraMar Pet Company of Australia said it had received 15 reported cases of illnesses since it launched its Supa Naturals chicken breast strips 15 months ago. Those cases triggered the company's recall.

KraMar acknowledged a possible linked between the treats and instances of Fanconi-Like Syndrome in small dogs. Symptoms of that illness include:

• Decreased food consumption, although some may continue to consume the treats to the exclusion of other foods
• Decreased activity or lethargy
• Vomiting
• Diarrhea, sometimes with blood
• Increased water consumption and/or increased urination

In severe cases, blood tests may indicate kidney failure and glucose in the urine may indicate Fanconi-Like Syndrome, the company said.

A veterinarian at the University of Sydney is now investigating the recent illnesses in the dogs that ate the chicken treats, Australian news organizations have reported. KraMar officials, however, say there is no scientific evidence linking its chicken strips to Fanconi-Like Syndrome.

The company's recall came a little more than a year after the FDA warned pet owners to be leery of feeding their dogs chicken jerky products.

"There is a potential association between illness in dogs and these products," the FDA warned last September. "(The) FDA has received over 70 complaints involving more than 95 dogs experiencing illness that their owners associated with eating chicken jerky products."

On Friday, the FDA echoed that warning and said it continues to receive complaints about chicken jerky products.

Limit consumption

"FDA believes the continued trend of consumer complaints, coupled with the information obtained from Australia, warrants an additional reminder and animal health notification," the agency said in a written statement. "Chicken jerky products should not be substituted for a balanced diet and are intended to be used occasionally and in small quantities. Owners of small dogs must be especially careful to limit the amount of these products."

The FDA said it is working with several veterinary diagnostic laboratories to see if there is a link between the products and illnesses in dogs.

"To date, scientists have not been able to determine a definitive cause for the reported illnesses," the FDA said. "FDA has conducted extensive chemical and microbial testing, but has not identified any contaminant."

The FDA said consumers who feed their dogs chicken jerky products should watch for such symptoms as decreased appetite — although some dogs may continue to eat the treats instead of other foods — lethargy, vomiting, diarrhea, sometimes with blood, and increased water consumption and/ or urination.

Pet owners who notice any of these symptoms should immediately stop feeding their dogs the chicken jerky products. They should also contact their veterinarians if the problems are severe or persist for more than 24 hours, the FDA said.

"Blood tests may indicate kidney failure (increased urea nitrogen and creatinine)," the FDA said. "Urine tests may indicate Fanconi syndrome (increased glucose). Although most dogs appear to recover, some reports to the FDA have involved dogs that have died."

The FDA said it would continue to "actively investigate" this problem.

The agency encouraged pet owners and veterinarians to report any illnesses possibly linked to these products — or any pet foods — to the the agency's Consumer Complaint Coordinator in their state.

Sounds familiar

Meanwhile, a regular ConsumerAffairs.com reader noticed the illnesses among the dogs that have eaten the chicken jerky products sounded eerily familiar.

"I can't help but wonder if this is related to the dogs in the US with these types of symptoms (unrelated to the Menu Foods incident)," Carol V. of Rhode Island told us when KraMar recalled the chicken treats.

She was referring to the growing number of dogs and cats that have experienced similar digestive problems after eating Nutro pet food.

Some pet owners, like Ashley H. of Manteca, California, told us their dogs even died after eating that brand of food.

"Our chocolate lab, Lucy, has been eating Nutro food since she was a puppy," Ashley said. "About two months ago, we switched her to Nutro large breed Weight Management because she started getting too heavy. On December 14 she had loose stools and was throwing up. She was very lethargic and wouldn't eat. The next day she seemed to be getting better and started eating, so we canceled the appointment with the vet."

Three days later, Lucy's health took a turn for the worse.

"We took her to the vet to find that she had something wrong with her liver," Ashley said. "We had an appointment for December 18th to have the excess fluid removed and see what else needed to be done. She didn't make it through the night."

Nutro has repeatedly defended its products, saying its food is 100 percent safe and meets standards set by the FDA, the United States Department of Agriculture, and the Association of American Feed Control Officials.

More about pets ...

Yet another company has recalled some food products because of possible melamine contamination. This time it's gourmet cocoa products imported from Canada and distributed nationwide to Big Lots and Shopko stores.

On Friday, Dorsey Marketing Inc. (DMI) of Ville St. Laurent, Quebec, Canada, recalled three G&J Gourmet Market cocoa products because they may contain melamine.

One of the potentially tainted products was even marketed as a stocking stuffer.

Specifically, the products involved in this action are:

• G&J Hot Cocoa Stuffer Item 120144 (UPC 061361201444). This product was sold in small green and blue boxes with a backer card, candy cane, and marshmallows;
• G&J French Vanilla Cocoa (UPC 061361201260). This product was sold in a small green bag with a whisk attached;
• G&J Double Chocolate Cocoa (UPC 061361201260). This product was sold in a small pink bag with a whisk attached.

The products were distributed nationwide to Big Lots during the weeks of September 22, 2008 and September 29, 2008 and to Shopko during the week of October 10, 2008, according to the www.fda.gov Food and Drug Administration (FDA).

Dorsey Marketing, which manufacturers candy and confectionery products, said it had not received any reports of illnesses linked to the products. The company said only a few samples tested positive for melamine, a chemical used to make plastic and fertilizers.

The FDA, however, said the company recalled the cocoa "in the interest of public health and safety of American consumers."

Consumers who purchased these products should return them to the store for a full refund. For more information, customers can contact Tim Acheson of DMI Monday through Friday, excluding holidays, at 1-888-645-1053 or at recall@dmi-global.com.

This is the second time this week melamine contamination has triggered a recall. Just a few days ago, Interfood Shareholding Company of Vietnam recalled four varieties of Wonderfarm biscuits because they were tainted with melamine.

Melamine is not approved for use in human or animal food marketed in the United States and manufacturers are not allowed to deliberately add it to any food for U.S. consumers.

Concerns about melamine — and its intentional adulteration in imported foods — have repeatedly surfaced in the past year.

In September, Chinese officials discovered melamine in powered infant formula made in that country. Officials learned some dairy plants purposely added the chemical to milk products to make them appear to have higher protein levels.

That contamination is blamed for the deaths of at least six babies in China and the illnesses of thousands of other infants. Doctors say melamine can cause kidney stones and lead to kidney failure.

China's melamine-tainted milk scandal has since spread from infant formula to dozens of other food products sold around the world, including candy, coffee, and pretzels.

Melamine is also blamed for the deaths and illnesses of thousands of dogs and cats in the United States in 2007.

FDA officials discovered the chemical in imported wheat gluten from China used to make dog and cat food. Those findings triggered the largest pet food recall in U.S. history.

Although melamine is not supposed to be in animal or human food, the FDA recently concluded that levels below 2.5 parts per million (ppm) do not raise health concerns. The only exception is infant formula. The FDA now says melamine levels of 1 ppm in infant formula are safe. That is a reversal of the zero tolerance policy for melamine the agency adopted in October.

At that time, the FDA said it was "unable to establish any level of melamine and melamine-related compounds in infant formula that does not raise public health concerns."

The Food and Drug Administration (FDA) said the recalled biscuits are sold in red metal cans. The specific products involved in this action are:

• Wonderfarm "Successful" Assorted Biscuits (UPC:8935001262091);

• Wonderfarm "Royal Flavour" Assorted Biscuits (UPC:8935001263098);

• Wonderfarm "Lovely Melody" Assorted Biscuits (UPC: 8935001263296);

• Wonderfarm "Daily Life" Assorted Biscuits (UPC: 8935001264200)

Interfood recalled the products after learning that samples of Wonderfarm's "Successful" Assorted biscuits — collected by the Minnesota Department of Agriculture — tested positive for melamine. The company expanded its recall after the "Royal Flavour," "Lovely Melody," and "Daily Life" biscuits also tested positive for melamine.

Interfood said it distributed the biscuits to several states. Wholesale distributors then sold the products to retail stores.

No reports of illnesses are linked to the tainted biscuits, the company said.

Consumers who purchased these products can return them to the store for a full refund.

For more information about this recall, customers can contact the company at Anthony.ma@jaimporters.com, or call 323-780-3998

Melamine is a chemical used to make plastics and fertilizers. It is not approved for use in human or animal foods marketed in the United States — and manufacturers are not allowed to deliberately add it to any food for U.S. consumers.

Concerns about melamine — and its intentionally adulteration in imported foods — have repeatedly surfaced in the past year.

Just a few months ago, Chinese officials discovered melamine in powered infant formula made in that country. Officials learned some dairy plants purposely added the chemical to milk products to make them appear to have higher protein levels.

That contamination is blamed for the deaths of at least six babies in China and the illnesses of thousands of other infants.

Doctors say melamine can cause kidney stones and lead to kidney failure.

China's melamine-tainted milk scandal has since spread from infant formula to dozens of other food products sold around the world, including candy, coffee, and pretzels.

Melamine is also blamed for the deaths and illnesses of thousands of dogs and cats in the United States in 2007.

FDA officials discovered the chemical in imported wheat gluten from China used to make dog and cat food. Those findings triggered the largest pet food recall in U.S. history.

Although melamine is not supposed to be in animal or human food, the FDA recently concluded that levels below 2.5 parts per million (ppm) do not raise health concerns. The only exception is infant formula.

The FDA now says melamine levels of 1 ppm in infant formula are safe. That is a reversal of the zero tolerance policy for melamine the agency adopted in October.

At that time, the FDA said it was "unable to establish any level of melamine and melamine-related compounds in infant formula that does not raise public health concerns."

"While the vast majority of investment services providers are honest professionals, the potential for fraud should concern us all," said NASAA President and Colorado Securities Commissioner Fred Joseph.

With more people in charge of their own investment portfolios than ever before, state securities officials are warning investors of the increasing sophistication of investment professionals who steal money from unsuspecting clients.

"Anyone, regardless of income, education, or profession, can become a victim when unscrupulous individuals use the growing field of financial advice to line their own pockets," Joseph said. "The risk of fraud is magnified as investors seek higher returns in today's troubled markets."

Joseph noted that the title "investment adviser" is a legal term that describes a wide range of people who provide advice about securities. These individuals also are referred to as wealth managers, investment counsel, and asset or portfolio managers. Joseph recommended investors consider the following five tips to help protect themselves from dishonest advisers:

• Investigate the investment adviser and salesperson thoroughly.

• Make sure the investment opportunity is registered for sale in the state in which you live.

• Always stay in charge of your money.

• Insist on a full explanation of investment recommendations and don't invest in something you don't understand.

• Keep notes about conversations and meetings.

Of the 25,857 investment adviser firms in the United States as of December 1, 2008, 14,500 were registered with and regulated by the states, 11,162 with the SEC and 195 both by the SEC and the states.

There are approximately 260,350 investment adviser representatives. Adviser firms with less than $25 million of assets under management generally are regulated by state securities regulators while firms with more than $30 million under management or that do business in 30 states or more states must register with the SEC.

Firms with assets between $25 and $30 million are allowed to register with either the SEC or applicable states at their discretion.

Most states require investment adviser representatives to pass an examination, undergo background checks, renew their registration annually and report changes in their businesses or addresses promptly.

States also review an applicant's disciplinary history and financial stability prior to allowing the investment adviser to conduct business in a given jurisdiction. More than 30 states require that investment adviser representatives be licensed while the SEC does not.

States also protect investors by actively pursuing a program of on-site examinations — some unannounced — of small investment advisers and careful screening of promotional materials. A 2007 nationwide series of coordinated examinations of investment advisers by 43 state and provincial securities examiners revealed a significant number of problem areas.

These exams revealed 2,135 deficiencies in 13 compliance areas. The top five categories with the greatest number of deficiencies identified in the examinations involved registration, unethical business practices, books and records, supervisory/compliance, and privacy.