KeNo's Housing and Economic Portal: Tuesday December 3 Housing and Economic stories

Monday, December 2, 2013

Tuesday December 3 Housing and Economic stories

Home equity lines due for reset may be looming financial disaster - (www.latimes.com) .. these credit lines, which are second mortgages with floating rates and flexible withdrawal terms, carry mandatory "resets" requiring borrowers to begin paying both principal and interest on their balances after 10 years. During the initial 10-year draw period, only interest payments are required. But the difference between the interest-only and reset payments on these credit lines can be substantial -- $500 to $600 or more per month in some cases. If borrowers cannot afford or choose not to make the fully amortizing payments that reduce the principal debt, the bank that owns the note can demand full payment and foreclose on the house if there is sufficient equity. According to federal financial regulators, about $30 billion in home equity lines dating to 2004 are due for resets next year, $53 billion the following year and a staggering $111 billion in 2018.

Cisco warns U.S. spying fallout hitting revenue in China - (www.reuters.com) Cisco Systems Inc's shares fell as much as 13 percent on Thursday after the network equipment maker forecast a steep drop in revenue for the current quarter, prompting at least 17 brokerages to cut price targets on its stock and two to downgrade their ratings. Cisco said on Wednesday it expected an 8-10 percent drop in revenue in the current quarter after lower sales to telecom and cable service providers and in emerging markets hurt its results in the quarter ended October 26. Cisco's revenue warning comes after former U.S. spy agency contractor Edward Snowden exposed widespread surveillance by the National Security Agency through internet data, much of which is transmitted via Cisco's equipment.

Hope Is All Obamacare Has Left - Meg McArdle - (www.bloomberg.com) I wrote on Friday that we know things are bad inside the White House because it's stopped bashing health insurers. The administration's favorite campaign punching bag is now its most valuable ally in fixing the disastrous launch of President Barack Obama's signature policy initiative. Yesterday brought confirmation from Juliet Eilperin and Amy Goldstein of the Washington Post: The administration badly needs the insurers' help, because there’s growing concern that the exchanges simply will not be ready by the Nov. 30 deadline it set. That's a big problem. A lot of people with private health insurance are losing their policies. This was supposed to be not so bad because they could go onto the exchanges. Only now, there are no functioning exchanges. If the exchanges aren’t working by December, those people will be in a pickle. Premiums are rising substantially in many markets. For people with incomes below 400 percent of the poverty line, subsidies were supposed to partly offset that price increase. But only policies purchased on the exchanges are eligible for subsidies.

1 million Californians losing their health policies may get more time - (www.latimes.com) About 1 million Californians who are due to lose their existing health insurance Dec. 31 may get a reprieve after all. On Thursday, President Obama said he was encouraging insurance companies nationwide to rescind millions of cancellation notices and allow consumers to keep their current policies for at least another year into 2014. Many policyholders have been irate at being required to find new coverage that complies with the Affordable Care Act, often at higher rates, after Obama repeatedly told Americans they could keep their health plan if they liked it. Now it's up to insurers in the state and California officials on what happens next since Obama's move is optional, not mandatory, in the marketplace.

Lockheed Martin to lay off 4,000 workers, shrink California operations - (www.latimes.com) Defense contractor Lockheed Martin on Thursday said it would cut 4,000 positions and close several facilities due to reduced government defense spending. The Bethesda, Md.-based company said it would close plants in Pennsylvania, Ohio, Texas and Arizona by the middle of 2015. It will also close four buildings at its Sunnyvale, Calif., campus. "Reducing our workforce of dedicated employees and closing facilities are among the most difficult decisions we make," said Chief Executive Marillyn Hewson. "In the face of government budget cuts and an increasingly complex global security landscape, these actions are necessary for the future of our business and will position Lockheed Martin to better serve our customers." Lockheed Martin plans to consolidate some of its facilities to become more efficient. The company said some employees would be moved to other locations, partly to reduce costs.

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