Thursday PM August 26th, 2010
by: Ed Mayberry, August 26, 2010 10:08:00 pm
One in ten American households with a mortgage was at risk of foreclosure this summer as the government's efforts to help have had little impact stemming the housing crisis. The Mortgage Bankers Association says about 9.9 percent of homeowners had missed at least one mortgage payment as of June 30th. That number, which is adjusted for seasonal factors, was down slightly from a record-high of more than ten percent as of April 30th. In a worrisome sign, the number of homeowners starting to have problems with their mortgages rose after trending downward last year. The number of homes in the foreclosure process fell slightly, the first drop in four years.
Mortgage rates fell to the lowest level in decades for the ninth time in ten weeks as concerns grow that the economy is weakening. Mortgage buyer Freddie Mac says the average rate for a 30-year fixed loan was 4.36 percent this week, down from 4.42 percent last week. That's the lowest since Freddie Mac began tracking rates in 1971. The average rate on 15-year fixed loan dropped to 3.86 percent from 3.90 percent the previous week. That's the lowest on records starting in 1991. Rates have fallen since spring as investors shifted money into the safety of treasury bonds, lowering their yield. Mortgage rates tend to track those yields.
Real estate data provider Corelogic says the number of U.S. homes with mortgages that exceed what the property is worth declined slightly in the second quarter versus the first three months of this year. The firm says there were 11 million homes with so-called underwater mortgages at the end of June. That's down from 11.2 million at the end of March. The firm attributed the decline primarily to homes being repossessed by lenders. In all, 23 percent of U.S. homes with mortgages were underwater at the end of June. Nevada had the highest rate of underwater mortgages of any state at 68 percent, followed by Arizona at 50 percent and Florida at 46 percent.
The University of Texas Medical Branch in Galveston, nearly two years since being hit by Hurricane Ike, has reduced its level of indigent care during tough economic times. The Houston Chronicle reports that UTMB last year devoted 2.6 percent of patient services to charity care, compared to 20.6 percent in 1999. UTMB officials say the legislature wants the hospital complex to make money, not lose it as was happening in the decade before Ike struck on September 13th, 2008. Senior Vice President Dr. Ben Raimer says “it is a world of accountability.” The Medical Branch has struggled to rebuild since Ike and had sought state support for reconstruction. The hospital began readmitting patients in January 2009. The emergency room reopened a year ago.
A company that operates a chemical manufacturing facility in the Houston area has agreed to pay nearly $1.5 million in civil penalties over 2006 hazardous waste violations. The Justice Department, the Environmental Protection Agency and the state announced the proposed settlement with Air Products over its Pasadena facility. The proposal is subject to a 30-day public comment period and approval by a federal court in Houston. Authorities say the settlement would resolve violations in wrongly transferring spent acid to the nearby Agrifos Fertilizer manufacturing plant. Air Products has agreed to continue to manage the spent acid on-site and not ship it to Agrifos or any other facility not authorized to accept it.
A senior BP executive is again avoiding committing the oil giant to using relief wells to seal to the Gulf of Mexico well that blew out in April. The comments by Senior Vice President Kent Wells indicated there may still be disagreement between BP and retired Coast Guard Admiral Thad Allen, the government's point man on the spill response. Even though a cap stopped the flow of oil in mid-July, Allen has long insisted the relief wells will be the final solution. Wells danced around a question posed by federal investigators probing the causes of the April 20th explosion that killed 11 people. He says there are “multiple options” to stop the flow of oil and the relief wells are “the ultimate backup if everything else fails.”
Lawyers for R. Allen Stanford say the Texas financier did not take out $1.7 billion in deposits made to his now defunct Caribbean bank and use them for loans to himself. Stanford's attorneys were trying to shoot down claims made by a fraud examiner who has testified the financier used the money as personal loans. Stanford's financial dealings were being examined during a court hearing in which a federal judge was to decide if Stanford and two ex-executives of his now defunct companies will continue having their legal bills paid for by an insurance policy. They are fighting charges they bilked investors out of $7 billion in a massive ponzi scheme.
Dell says data storage maker 3Par has accepted its raised buyout bid of $1.52 billion, after the computer maker topped an offer from rival Hewlett-Packard. The offer is $24.30 a share in cash. That is up from Dell's previous offer of $1.13 billion. Rival Hewlett-Packard offered about $1.5 billion on Monday, or about $24 per share. The deal is still subject to government approvals and other closing conditions. It's expected to close before the end of the year. Dell believes the deal will boost earning by fiscal 2012. Dell is based in Round Rock.
A government report finds that mergers and acquisitions over the past decade have left just four big carriers in control of 90 percent of the wireless market, thus making it harder for small and regional companies to compete. A study from the Government Accountability Office, the investigative arm of Congress, also found that despite the consolidation, consumers are benefiting from better wireless coverage and prices that are half what they were in 1999. The GAO report comes as the Federal Communications Commission is ramping up oversight of the wireless industry. The report says the number of cell phone subscribers in the U.S. stood at 285 million at the end of 2009, up from 3.5 million in 1989.
American Airlines says it will fight today's record penalty of $24.2 million over maintenance lapses that caused thousands of canceled flights in April 2008. The Federal Aviation Administration says Fort Worth-based American failed to take steps to prevent chafing of electrical wires in the wheel wells of its McDonnell Douglas MD-80-series jets. American has vowed to challenge the proposed penalty. Airlines routinely challenge FAA penalties or negotiate to reduce them. American spokesman Tim Smith says the events happened more than two years ago and the company believes the FAA action is unwarranted. American officials have said the dispute is over a minor matter of leaving too much space between clips that held bundles of wire together. Smith says passenger safety was never threatened. Parent AMR was the only major U.S. airline company to lose money in the second quarter, and it has lost more than $4 billion since the start of 2008 as it struggled against high fuel costs and a slump in travel.
Toyota is recalling more than a million Corolla sedans and Matrix hatchbacks with engines that may stall. Toyota says that the recalls affect vehicles sold in North America from the 2005-2008 model year. Three accidents and one injury have been reported due to the problem. Federal regulators have been investigating the possibility of stalling engines in the Corolla and Matrix models since December and intensified their probe earlier this week.
The cost of gasoline dropped four cents this week in Texas and is at the same price it was exactly five years ago. The weekly AAA Texas gasoline price survey shows that a gallon of unleaded regular fuel was at $2.55. That's the same figure from August 26th, 2005, days before Hurricane Katrina virtually shut down the oil refining business and sent gas prices soaring. Nationally, the average also decreased four cents from last week to $2.69. The cheapest Texas gas is in Houston at $2.49, down a nickel. The highest price is in El Paso at $2.73, two cents cheaper than a week ago. The auto club statement says lower, stable oil prices should make for stability in the cost of gasoline.
A lawsuit accuses two Iowa egg producers and a Texas-based restaurant chain of causing an Austin woman's salmonella poisoning. Houston lawyer Ron Simon filed the lawsuit in Austin on behalf of Amanda Sanchez, accusing Wright County Egg, Hillandale Farms and Taco Cabana of negligence and deceptive trade practices. Simon says his 34-year-old client ate eggs at a Taco Cabana in northwestern Austin on June 26th and was hospitalized two days later for what tests revealed was salmonella poisoning. The lawsuit says Sanchez remained hospitalized for four days. It alleges Wright County Egg and Hillandale Farms, both owned by Quality Egg, were the sources of the restaurant's eggs. Both have recalled 550 million eggs because of possible salmonella contamination. Simon and Sanchez are seeking unspecified actual and punitive damages. Messages left with Quality Egg and San Antonio-based Taco Cabana were not returned.
A federal judge is recommending approval of a $12 million settlement for those sickened or killed in last year's salmonella outbreak tied to a Virginia-based peanut processor. U.S. Magistrate Judge Michael Urbanski issued his recommendation to pay more than 120 personal injury claims related to the outbreak. The settlement must now be approved by a bankruptcy court judge. The outbreak was traced to Lynchburg-based Peanut Corporation of America's plants in Georgia and Texas and linked to at least nine deaths and 700 illnesses. Peanut Corporation filed for Chapter 7 bankruptcy to dissolve amid fallout from the outbreak.
Houston Restaurant Week has been extended through September 6th, benefitting the Houston Food Bank. More than 70 participating restaurants are offering a special three-course gourmet dinner for $35, with $5 of each special dinner directly benefitting the food bank. Select restaurants are also offering a $20 two-course lunch menu, donating $3 of each lunch sold. The event has to-date raised more than $356,000 since 2003 in support of the food bank.
The University of North Texas at Dallas is opening its doors to something it's never had--a freshman class. Officials are welcoming about 100 first-year college students to the South Dallas campus. UNT-Dallas is the city's first public university. School spokesman David Porter says it began as a branch of the Denton-based university in 2000, offering only junior and senior-level classes with some master's degree courses. In May 2009, it became one of three university system centers the state approved for expansion into full-fledged, independent universities. The other two, Texas A&M University-Central Texas in Killeen and Texas A&M University at San Antonio, offer only upper level courses at this point.