Bush Mortgage Bail Out: Thin at Best

With great fanfare, President Bush announced yesterday a new program that would freeze adjustable rate mortgage increases on subprime mortgages. Sounds great, until you review the fine print.

The freeze in rate increases is only available for those with subprime mortgages. Further, it is only available for those who are current on their mortgages and only if there has been no increase already.

A number of lenders went to great lengths to lend money, including using artificially lower interest-only adjustable rate mortgages, mortgages with tremendous balloons, and artificially discounted teaser rates.

The Bush plan applies to an estimated 10 to 15 percent of borrowers who are at risk of foreclosure. That's thin, at best.

At the same time, regulation of lending is lax at best. Oregon, for example, sets no legal underwriting standards. Oregon allows lenders to penalize early payment. Oregon allows refinancing even when doing so does not benefit the lender.

For those who qualify, the President's provision may provide some breathing room. On the other hand, it may merely create future problems for those who get the benefit of the freeze. Regardless, you have to wonder what they were intending to do when they created this great bailout for 10 percent of consumers who are at risk.


David F. Sugerman
Paul & Sugerman, PC
www.pspc.com

Ford Recalls SUVs, Vans and Trucks for Engine Flaw

Through the National Highway Transportation Safety Administration, Ford announced the recall of some 1.2 million SUVs, vans and trucks for an electrical system problem that can cause engine stalls. According to the NHTSA web site, the camshaft position sensor located on the engine of the vehicle may function intermittently, possibly resulting in an engine stall and crash.

Affected vehicles are equipped with the 7.31 diesel engine for the Ford E Series, Excursion, F-450 Superduty and F-550 Superduty for model years 1997-2003.

David F. Sugerman
Paul & Sugerman, PC
www.pspc.com

Federal Jury Finds for Oregon Welder in Toxic Injury Case

A federal jury in Cleveland, Ohio found that an Oregon welder suffered serious injuries from exposure to toxic welding fumes. For years, welders have claimed that manganese fumes from welding causes profound damage to the nervous system. The problems appear similar to Parkinson's disease, with brain damage that affects movement and memory.

Approximately 3,000 cases are pending in Cleveland. Previously, the manufacturers had won most cases; however, the multi-million dollar verdict in this case may represent a turning point in the litigation.

In this era of mass-production, when many people are injured by the same misconduct, there seems to be a fairly predictable pattern in litigation. In almost all cases, the company wins the early cases because it is hard for injured consumers to fully investigate and understand what happened. Later cases build upon the early failures, and consumers or workers often break through with a major victory. At that point, it is not unusual for consumers and workers to achieve a critical mass that allows them to establish higher and higher verdict values by repeatedly trying cases for the same injuries.

Perhaps this is victory represents a turning point for welding workers who are seeking justice.

David F. Sugerman
Paul & Sugerman, PC
www.pspc.com