KeNo's Housing and Economic Portal: Monday September 13 Housing and Economic stories

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Government to Deploy Broader Mortgage Aid - (online.wsj.com) The Obama administration on Tuesday will launch its most ambitious effort at reducing mortgage balances for homeowners who owe more than their homes are worth. Officials say between 500,000 and 1.5 million so-called underwater loans could be modified through the program, the first initiative to target homeowners who are current on their mortgage payments but are at risk of default because they have no equity in their homes. Some experts are warning, however, that the same knots that tied up prior initiatives could do so again. Under the new "short refinance" program, banks and other creditors that write down mortgages to less than the value of the property can essentially hand off the reduced loan to the government. The process involves refinancing borrowers into loans backed by the Federal Housing Administration. While the program puts taxpayers at risk—officials estimate one in five loans in the program could default—the government has set aside $14 billion previously earmarked for housing aid from the Troubled Asset Relief Program to cover losses. The new program, which was announced in March, is starting as the housing market shows signs of renewed trouble and as the Obama administration's signature Home Affordable Modification Program, or HAMP, falls short of its goals of helping three million homeowners. Half of the 1.3 million borrowers that enrolled in temporary loan modifications have fallen out of HAMP because they didn't qualify. Only one-third has received permanent modifications.

The Latest Scheme In California: Dissolving Cities - (www.businessinsider.com) Some cities in California are so bloated in debt and other problems they are considering dissolution. Mercury News asks is this The End of Half Moon Bay? Between budget losses and lawsuit payments, Half Moon Bay's financials have become so dire that if a local sales tax measure doesn't pass this November, officials say they may have to disincorporate. City leaders have been using the "D" word for a few weeks now as they try to persuade voters to pass Measure K, a one-cent sales tax increase that would help the city balance its budget with an extra infusion of $1.4 million per year for the next seven years. Dissolving Half Moon Bay -- handing the city's budget, operations and services to San Mateo County -- would be an absolute last resort, but the city may not have many other options left, City Councilman John Muller said. At first glance, disincorporation could save taxpayers some money: no more city administration to support. Police services would be contracted out, and the county would cover planning, building and public works projects from its offices in Redwood City. City Manager Michael Dolder admits disincorporation is one of the options on the table now. The City Council already cut $900,000 from the current budget -- including half its employees -- and imposed furloughs on those who remain. Some of the cuts were needed to pay for the Beachwood lawsuit settlement, a $15 million burden the city will shoulder in bond payments for the next 20 years.

The End of Half Moon Bay? - (www.mercurynews.com) Between budget losses and lawsuit payments, Half Moon Bay's financials have become so dire that if a local sales tax measure doesn't pass this November, officials say they may have to disincorporate. City leaders have been using the "D" word for a few weeks now as they try to persuade voters to pass Measure K, a one-cent sales tax increase that would help the city balance its budget with an extra infusion of $1.4 million per year for the next seven years. Dissolving Half Moon Bay -- handing the city's budget, operations and services to San Mateo County -- would be an absolute last resort, but the city may not have many other options left, City Councilman John Muller said. "The council has done everything in its power to keep the city whole," Muller said. "If it doesn't pass, we could seriously not be in business much longer." At first glance, disincorporation could save taxpayers some money: no more city administration to support. Police services would be contracted out, and the county would cover planning, building and public works projects from its offices in Redwood City. On the other hand, county officials said there is a chance that locals would end up paying more than they do now for fewer services.

Driver's License Facility, State Lawmakers Face Eviction Over Nonpayment of Bills by State of Illinois - (Mish at globaleconomicanalysis.blogspot.com) The state of Illinois is sitting on $4 billion in unpaid bills. Some of that is to hospitals, some to schools, some of it is internal transfers, but a lot of it affects the lives of real people who need the money to pay their bills. For example, please consider Libertyville driver's license facility may be evicted: Stephen Martin, whose family owns the Brookside shopping center on the 300 block of Peterson Road that houses the Secretary of State office, has sent a letter to state officials saying he wishes to terminate the lease agreement because of the long-overdue payments. Martin said the state owes him nearly $43,000 in back rent and expenses. It's not the first time the state has fallen behind on payments for the facility, which opened in 1987, Martin said. Payments were six months overdue by the time a check was cut in December, and this past April the state owed Martin four months-worth of rent when it finally paid. If the state doesn't pay up this time, Martin said, he will go to court and begin eviction proceedings. The delinquent rent checks are symptomatic of the state's ongoing financial problems. The comptroller's office has $4.3 billion in unpaid bills in its system, spokesman Alan Henry said this week.

Prescription Drug Use Rose to Include Half of Americans in 2008 - (www.bloomberg.com) Almost half of Americans took at least one prescription drug per month in 2008, an increase of 10 percent over the past decade, a U.S. study found. One of every five children ages 11 or younger took at least one medication each month in 2008, led by asthma and allergy treatments, according to the survey released today by the U.S. Centers for Disease Control and Prevention. Among those ages 60 or older, 37 percent used five or more prescriptions per month. The most common medications for adolescents were treatments for attention-deficit disorder, a condition in which people have trouble paying attention and engage in impulsive behavior. For adults ages 20 to 59, antidepressants, including Eli Lilly & Co.’s Cymbalta and Pfizer Inc.’s Zoloft, were the most-used drugs. Cholesterol-lowering medications, including Pfizer Inc.’s Lipitor and AstraZeneca Plc’s Crestor, were the most common drugs taken by people ages 60 and over, with 45 percent of those in that age group on such therapies.