MADRID (AP) — Penelope Cruz and Javier Bardem are expecting their second child.
Cruz publicist Javier Giner told The Associated Press on Tuesday that the Spanish actress is pregnant.
He declined to provide any further details, including when the baby is due.
The 38-year-old Cruz and 43-year-old Bardem had their first child, a boy called Leo, in January 2011.
The couple became romantically involved after appearing together in Woody Allen's 2008 film "Vicky Cristina Barcelona" and later married.
Should brain scans for older adults with suspected Alzheimer’s disease be covered by Medicare?
Many medical experts say yes. But late last month, an expert panel convened by the Centers for Medicare and Medicaid Services concluded that data supporting use of the scans was weak.
Specifically, the panel noted there is no solid evidence that these imaging tests have a meaningful impact on patients’ health; studies that might establish this have not yet been done.
This controversy deserves attention because positron emission tomography, known as PET scans, are becoming available across the country, and proposed guidelines for their use have just been published by the Alzheimer’s Association and the Society of Nuclear Medicine and Molecular Imaging.
Currently, Medicare does not pay for the tests, which cost about $3,000 — an amount that puts them out of reach for many families. The expert panel’s findings will be used by the government later this year to determine whether Medicare should change this policy.
Nearly 400 medical centers already offer this technology or are preparing to do so, according to Eli Lilly, which makes a radioactive agent used in the scans. That agent binds to protein clusters known as amyloid plaques that are a signature characteristic of Alzheimer’s disease, making it possible to see them for the first time in the brains of living patients.
The Medicare panel confronted the question: “How useful is this information, for which patients and under what conditions?” Several experts who testified in late January suggested that the PET imaging tests could help physicians diagnose Alzheimer’s disease or other types of dementia. Currently, diagnosis proceeds from a comprehensive medical evaluation, a careful patient history, and typically, a round of neuropsychiatric tests.
“Should I tell my patients that we have a test available to help clarify their diagnosis but we can’t use it because Medicare doesn’t cover it?” asked Dr. Stephen Salloway, a professor of neurology at the Warren Alpert Medical School at Brown University.
If scans show a lack of amyloid plaques, the “worried well” could be reassured that they don’t have Alzheimer’s and doctors could pursue other lines of medical inquiry, like investigating the potential for thyroid problems, depression or vitamin B12 deficiency, said Dr. Paul Aisen, a professor of neuroscience at the University of California, San Diego, School of Medicine.
If the tests are positive, they could rule out conditions like frontotemporal dementia and motivate patients to start taking medications for Alzheimer’s, enroll in clinical trials and get their financial, legal and household affairs in order, other experts said.
But while amyloid plaques are closely associated with Alzheimer’s, their role has not yet been definitively established. They could be a cause of this condition, a byproduct or serve another function not yet understood. Underscoring this is a notable research finding: about 30 percent of older adults with no symptoms of dementia have been found to have amyloid plaque buildup in their brains.
That means the brain scans cannot ensure the accurate diagnosis of Alzheimer’s. “I see a big potential for overuse and misuse,” warned Dr. Raymond Faught, Jr., a member of the Medicare advisory panel and a professor of neurology at Emory University in Atlanta.
Given that large caveat, the question emerges of which patients would benefit most from getting the tests.
The Alzheimer’s Association and the Society of Nuclear Medicine and Molecular Imaging tried to address that in their recently published “appropriate use” guidelines. The guidelines, which have no binding force, suggest that scans should be considered for patients with Alzheimer’s-type symptoms but “an unclear clinical presentation”; those who develop dementia symptoms before age 65; and those with “persistent” mild cognitive impairment, a condition that often precedes Alzheimer’s.
Tests should not be given to “normal” patients or those who have Alzheimer’s disease already, they say. In other words, if you’re getting older, have mild memory loss, but are still functioning well, you’re not a candidate. Nor is there any value in giving the tests to people who are already deep in the throes of dementia.
The recommendations assume that there is value in knowing test results for physicians, patients and families; that physicians will be better able to manage patients’ care as a consequence; and that doctors will order fewer diagnostic tests or more appropriate tests once they have findings from amyloid PET imaging in hand.
But those assumptions are not backed up by solid evidence yet. Medications for patients with Alzheimer’s have a modest impact on symptoms for a limited period of time and no impact on the underlying illness. Given this, “the clinical utility of a diagnostic test to alter patient management and result in a quantifiable benefit is very difficult to establish,” the panel writes in the journal Alzheimer’s & Dementia. Also, they note, “data supporting specific outcomes for amyloid PET are not yet available.”
This lack of data was the reason the Medicare panel gave amyloid brain imaging such low marks late last month. Dr. Rita Redberg, chairwoman of the Medicare Evidence Development and Coverage Advisory Committee and a professor of medicine at the University of California, San Francisco, summed up that group’s deliberations this way:
We were there to evaluate the impact of this test on patient outcomes. But all of the speakers said there wasn’t any data linking amyloid scans to outcomes . . . They presented evidence that the test is very good at identifying amyloid, but they did not present evidence that it was very good at identifying the clinical presence of Alzheimer’s disease.
Wei-Li Shao, senior director of the Alzheimer’s business division of Eli Lilly, which stands to benefit from the greater use of the scans, disagreed, saying, “Lilly remains steadfast and resolved in its belief that amyloid imaging provides significant clinical value for clinicians and patients.” The company will work with Medicare going forward to try to secure coverage, he said.
For Dr. Redberg, the essential question is this: “Would you want to know you have an increased chance of getting a disease in (the future) when there are no effective treatments available and you might not even get it in the end? Is that of benefit to patients?”
What do you think, readers?
More than four in 10 Americans are living paycheck to paycheck and nearly one in 10 doesn’t earn enough to pay for essentials, according to a study released Tuesday.
The survey, conducted for the Allstate insurance company by FTI Consulting Inc., underscored the conflicted emotions and attitudes about personal finances among ordinary people.
It showed the challenges that people are facing in a soft economy and troubled labor market, but it also demonstrated that many people make unwise financial decisions even when they know better.
The survey found that 59% of Americans say they generally know how to handle money and make the right financial decisions. But 47% of respondents said they’re saving less money than they should be.
Underscoring the financial dichotomy in the U.S., half of the survey respondents described their financial situation as “excellent” or "good,” while half said it was “fair” or "poor.”
Though 41% live from one paycheck to the next, 8% can't even make it that far, saying they don't have enough to afford everyday essentials.
On the bright side, 82% of people think they’re financially better off than their friends and 52% say they’re better off than when they were growing up.
The survey of 1,000 Americans age 18 and older was conducted in mid-December. It has a margin of error of plus or minus 3.1% in 95 out of 100 cases.
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Grammy Awards voters gave their top honor to British roots music band Mumford & Sons for their album "Babel" on Sunday at the 55th awards ceremony. Other top honors were distributed to a broad array of younger acts, including indie trio Fun., electronic pop artist Gotye, rapper-R&B singer Frank Ocean and rock group the Black Keys.
"We figured we weren't going to win because the Black Keys have been sweeping up all day — and deservedly so," Mumford & Sons front man Marcus Mumford said after he and his band members strode to the stage at Staples Center in Los Angeles to collect the award from last year's winner, R&B-soul singer Adele.
Pop culture historians may look back at 2013, however, as the year the Grammy Awards gave up its long fight against new forms of music dissemination, embracing songs and videos that consumers soaked up by way of YouTube and other Internet outlets as opposed to purchasing them.
PHOTOS: 2013 Grammy Award winners
"Somebody That I Used to Know," the wildly popular collaboration between Gotye and New Zealand pop singer Kimbra, took the top award presented for a single recording upon being named record of the year, which recognizes performance and record production.
"Somebody…" not only was one of the biggest-selling singles of 2012 but also has notched nearly 400 million views on YouTube, powerfully demonstrating the increasingly vital role of the "broadcast yourself" video Internet phenomenon. Different YouTube posts of Ocean's "Thinking About You" single have totaled nearly 60 million views.
New York indie rock trio Fun. was named best new artist, an acknowledgment of the good-time music the group brought to listeners and viewers last summer largely through its runaway hit single "We Are Young," which has racked up nearly 200 million YouTube views. It also was named song of the year, bringing awards for the group's songwriters, Jack Antonoff, Andrew Dost and Nate Ruess, and collaborator Jeff Bhasker.
GRAMMYS 2013: Full coverage | Pre-show winners | Winners | Ballot
"Everyone can see our faces, and we are not very young — we've been doing this for 12 years," Ruess said as they collected the award.
The song's title could also serve as a theme for the evening, which was dominated by other relatively young acts in the most prestigious Grammy categories.
Singer, rapper and songwriter Ocean emerged the victor in the one category that pitted him directly against real-life rival Chris Brown, as his critically acclaimed solo debut album, "Channel Orange," won the urban contemporary album award. A few minutes later Ocean got a second Grammy with Kanye West, Jay-Z and the Dream in the rap-sung collaboration category for their single "No Church in the Wild."
GRAMMYS 2013: Winners list | Best & Worst | Red carpet | Timeline | Fashion | Highlights
Ocean's tuxedo covered all but his hands, but it appeared as he picked up the urban album award that his left arm remained in a wrist brace he'd exhibited Thursday at rehearsals for this year's broadcast, a remnant of his scuffle last month with Brown over a parking space at a recording studio. Los Angeles Police Department investigators said Ocean informed them that he would not press charges against Brown.
It was the Black Keys' Dan Auerbach who quickly built up steam as the front-runner to dominate this year's awards, taking several statuettes barely an hour into the show, including producer of the year for himself and three with his group including rock performance, rock song and rock album for "El Camino."
The Black Keys homed in on the fundamentals of rock 'n' roll — big guitar riffs, lustful lyrics and a bevy of musical hooks on "El Camino," one of the best reviewed albums of the group's career.
FULL COVERAGE: Grammy Awards 2013
Auerbach picked up another award as producer of the blues album winner, Dr. John's "Locked Down."
Carrie Underwood grabbed the country solo performance Grammy for the title track from her album "Blown Away," which also won the country song award for writers Josh Kear and Chris Tompkins earlier during the pre-telecast ceremony at Nokia Theatre, across the street from Staples Center.
The Zac Brown Band added to its growing place as a new-generation country powerhouse with a win of the country album trophy for its "Uncaged," built on muscular Southern rock guitar riffs, elaborate multipart vocal harmonies and jam-band instrumental excursions.
Last year's big winner, Adele, collected the first statuette of the night for her single "Set Fire to the Rain" in the pop solo performance category.
The show got off to an eye-popping start with a Cirque du Soleil-inspired performance by Taylor Swift of her nominated single "We Are Never Ever Getting Back Together."
The preponderance of youthful acts not broadly known to mainstream TV audiences heightened the use of cross-generational pairings. Rising songwriter and singer Ed Sheeran shared the stage early with veteran Grammy darling Elton John, while Bruno Mars teamed with Sting and Rihanna in a Bob Marley tribute later in the show. Several members of Americana acts, including Alabama Shakes and Mumford & Sons, sang alongside veterans John, Mavis Staples and T Bone Burnett in a salute to drummer Levon Helm of the Band.
But it was the young guns to whom the evening — and perhaps the future — of the Grammy Awards belonged.
The Grammys are determined by about 13,000 voting members of the Recording Academy. The eligibility period for nominated recordings was Oct. 1, 2011, to Sept. 30, 2012. The show aired on CBS live except on the West Coast, which gets a tape delay.
randy.lewis@latimes.com
Twitter: @RandyLewis2
NEW YORK (AP) — While the Grammy Awards couldn't come close to the freakishly high ratings generated in 2012 because of Whitney Houston's death and Adele's smashing success, this year's show had the second-largest audience for the program since 1993.
The Nielsen company said Monday that music's annual awards show was seen by 28.4 million people Sunday night on CBS.
The Grammys this year were packed with high-powered musical moments and, in its awards, celebrated the industry's diversity rather than overwhelmingly honoring one artist. It also had a few water-cooler moments: Which boyfriend was Taylor Swift specifically dissing in her latest performance of "We Are Never Ever Getting Back Together"? Was Chris Brown flaunting his revived relationship with Rihanna?
The music academy's decision to turn the televised Grammys into more of a showcase than an awards show appears to be bearing fruit, too. The show's audience was nearly 2 million higher than the 26.7 million who watched in 2011. From 2005 to 2009, the Grammy Awards audience fluctuated from 17 million to 20 million viewers.
Last year, 39.9 million people tuned in to see how the industry would react to Houston's death just before the awards and celebrate the coronation of its hottest star, Adele, who won six Grammys.
This year's show featured the musical return of Justin Timberlake, collaborations honoring Bob Marley and Levon Helm, and performances by the majority of stars up for major awards.
The Grammys far outpaced the Emmys, which had 13.3 million viewers last September for its more traditional awards show, and the Golden Globes, which had 19.7 million viewers in January. The upcoming Oscars usually get more than 30 million viewers.
The Chinese new year, the Year of the Snake, could leave the stock market snake-bitten.
Sunday ushered in the Chinese New Year but, investors may wish it hadn’t. The Year of the Snake is the only one of the 12 Chinese lunar calendar years in which the Standard & Poor’s 500 index has a losing record, according to researcher Capital IQ.
Since 1900, the benchmark index is down an average of 2.9% in the Year of the Snake, according to Capital IQ. It has risen in only three of the nine snake years since 1900, marking the worst performance of the any of the named lunar years.
Investors will miss the just-departed Year of the Dragon, which has a 10.4% average historical return, according to Capital IQ.
The best showing has come during the Year of the Pig. The S&P is up an average of 12.8% in those years and has risen during 78% of them.
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Denise Penegar puts a little extra effort into the teenage girls, the ones who've dropped out of high school to care for their firstborns.
Don't be afraid, the outreach worker tells them. Come down to the housing project's community center, get your GED and some job skills. Change your life.
"I was one of those girls," said Penegar, now 51 and still living in Jordan Downs, the Watts housing project where she was born.
Sometimes, she imagines how different her life might have been if someone had knocked on her door when she was 17, caring for her first baby. What would it have meant just to have "someone who is here who can help pick me up"?
Penegar is on the front lines of a bold social experiment underway at Jordan Downs, a project notorious to outsiders for its poverty, blight and violence but seen by many longtime residents, for all its problems, as a close-knit community worth preserving.
In the last year, the Housing Authority of the City of Los Angeles has begun an effort to transform Jordan that could cost more than $600 million. The plan is to turn the complex of 700 aging units into a mixed-income community of up to 1,400 apartments and condominiums, with shops and restaurants and fancy touches such as native plant gardens. The city hopes to draw in hundreds of more-affluent residents willing to pay market rate to live side by side with the city's poorest.
Spurred by changes in federal funding and policy, such "mixed use" developments have sprung up in place of infamous housing projects all over the country. But experts say Jordan is taking an approach that has not been tried on this scale.
Typically, public housing residents are moved out ahead of the bulldozers, scattered to search for new shelter. In Los Angeles, the housing authority has promised that any of the 2,300 Jordan residents "in good standing" can stay in their old units until the day they move into new ones. The project is to be built in phases, beginning with units on 21 acres of adjacent land purchased by the authority in 2008 for $31 million.
To ease the transition, the city has dispatched "community coaches" like Penegar, along with teachers, social workers, therapists — even police officers whose charge is not to make arrests but to coach youth football and triathlon teams.
In essence, officials intend to raze the buildings, not the community — and radically change its character.
It will be an enormous challenge, with success likely to be measured in tiny increments.
Only 47% of adults at Jordan reported any wages to the housing authority last year. As in many urban projects, poverty and social ills have multiplied through the generations, leaving some residents unfamiliar with opportunities and expectations beyond the neighborhood. Some rarely leave the area.
Before inviting in new neighbors with expectations of safety and comfort, the housing authority has begun flooding Jordan Downs with social services. Many of the programs are focused on women, because more than 60% of Jordan Downs' tenants live in households headed by single mothers. But men are targeted too — for job training and lessons in parenting, for instance.
By December, 10 months into the effort, more than 450 families had been surveyed by intake workers and 280 signed up for intensive services.
"Most people would say it's ambitious, but I think it's essential," said Kathryn Icenhower, executive director of Shields for Families, the South Los Angeles nonprofit that is running many of the new programs under a more than $1-million annual contract with the housing authority.
It is unknown, however, how effective the social services will be, how easy it will be to draw in wealthier residents and how many millions of dollars the federal government — a major source of funding — will provide.
Already, the housing authority has picked a development team — the for-profit Michaels Organization and the nonprofit Bridge Housing, both with respectable track records in other cities. But with financing still uncertain, it is unclear exactly how many units will be built or how much various occupants would pay.
Ultimately, a working family could pay hundreds of dollars more in rent than unemployed tenants next door for a nearly identical unit. Officials say they do not expect Watts to draw the same kind of high-income residents as the former Cabrini Green project in Chicago, which sat on prime real estate near downtown. But Jordan is in a convenient location, near the intersection of the 105 and 110 Freeways; and in a high-rent city like Los Angeles, even the steepest rates at Jordan are likely to seem a bargain.
Despite the onslaught of social services and some palpable changes — including a 53% plunge in the violent crime rate at Jordan last year — financial risks abound.
Later this spring, the authority plans to put in an application for $30 million from the federal government's Choice Neighborhoods Program as seed money. Without it, the project could be delayed.
LOS ANGELES (AP) — Everybody's thinkin' about Frank Ocean.
Ocean is a cause celebre and the man with the momentum as Sunday's Grammy Awards approach. One of six top nominees with six nominations apiece, the 25-year-old R&B singer turned cultural talking point will have the music world's attention.
It remains to be seen if it will be the "Thinkin Bout You" singer's night, but there's no question he's dominated the discussion so far. Already a budding star with a gift for building buzz as well as crafting songs, Ocean was swept up by something more profound when he told fans his first love was a man last fall as he prepared to release his major-label debut, "channel ORANGE."
It was a bold move and one that could have submarined his career before it really even got started. Instead, everyone from Beyonce to the often-homophobic R&B and rap communities showed public support. It was a remarkable moment.
"It speaks to the advancements of our culture," renowned producer Rick Rubin said. "It feels like the culture's moving forward and he's a representative of the new acceptance in the world for different ideas, which just broadens (our experience), makes the world a better place."
A recent altercation in a parking lot with Chris Brown only focused more attention on Ocean. Ocean says Brown was the aggressor; both are competing against each other in one of the Grammy categories.
Ocean is up for the major awards best new artist, album of the year and record of the year when the show airs live on CBS at 8 p.m. EST from the Staples Center, sharing top-nominee billing with fun., Dan Auerbach of The Black Keys, Mumford & Sons, Jay-Z and Kanye West.
Don't hand Ocean those trophies just yet, though. R&B and hip-hop performers (Ocean is part of the Odd Future collective) have had a spotty history at the Grammys recently when it comes to major awards.
Only one R&B act has won album of the year this century, and it's hard to even call him just an R&B act given his legend, artistic scope and material: Ray Charles for his "Genius & Friends," an all-star collaboration that was honored posthumously.
Also limiting Ocean's chances for a clean sweep are his fellow top nominees. Most are riding waves of their own.
Fun. became just the second act to sweep nominations in all four major categories with a debut album, equaling Christopher Cross' 1981 feat. Like Cross' "Sailing," the New York-based pop-rock band has ridden along on the crest of an inescapable song: "We Are Young," featuring Janelle Monae.
Cross won five Grammys, sweeping the major awards. Fun. likely will have a much harder time piling up that number of victories because of the buzz surrounding the group's competitors. It's not just Ocean who has people talking.
London-based folk-rockers Mumford & Sons had one of the top-selling albums of the year with "Babel" and already has a history with The Recording Academy's thousands of voters, having been nominated for major awards the year prior. Also, The Black Keys have a winning track record at the Grammys.
And don't count out West and Jay-Z, who were shut out of the major categories but remain very much in voters' minds.
Jack White's "Blunderbuss" competes with fun.'s "Some Nights," Ocean's "channel ORANGE," Mumford's "Babel" and The Keys' "El Camino" for the night's top award, album of the year.
Gotye's "Somebody That I Used To Know," featuring Kimbra, Taylor Swift's "We Are Never Ever Getting Back Together" and Kelly Clarkson's "Stronger (What Doesn't Kill You)" join the fun., Ocean and Black Keys entries in record of the year.
Fun. and Clarkson also are nominated for song of the year along with Ed Sheeran's "The A Team," Carly Rae Jepsen's "Call Me Maybe" and Miguel's "Adorn."
And rounding out the major categories, fun., Ocean, Alabama Shakes, Hunter Hayes and The Lumineers are up for best new artist.
Those major nominees figure prominently on the 3 1/2-hour telecast, broadcast live on CBS at 8 p.m. EST.
Swift will kick things off with a show-opening performance. Fun. and Ocean will take the stage. Others scheduled to perform include Justin Timberlake, Carrie Underwood, Clarkson, White and Juanes.
There will be no shortage of mashups the Grammys have become famous for, either. Elton John, Mavis Staples, Mumford, Brittany Howard, T Bone Burnett and Zac Brown are saluting the late Levon Helm, who won the Americana Grammy last year a few months before his death. The Keys will join Dr. John and the Preservation Hall Jazz Band on stage. Sting, Rihanna and Bruno Mars will perform together. Other team-ups include Miranda Lambert and Dierks Bentley, and Alicia Keys and Maroon 5.
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Online:
http://grammy.com
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Follow AP Music Writer Chris Talbott: http://twitter.com/Chris_Talbott.
When a life starts to unravel, where do you turn for help?
Melissa Klump began to slip in the eighth grade. She couldn’t focus in class, and in a moment of despair she swallowed 60 ibuprofen tablets. She was smart, pretty and ill: depression, attention deficit disorder, obsessive-compulsive disorder, either bipolar disorder or borderline personality disorder.
In her 20s, after a more serious suicide attempt, her parents sent her to a residential psychiatric treatment center, and from there to another. It was the treatment of last resort. When she was discharged from the second center last August after slapping another resident, her mother, Elisa Klump, was beside herself.
“I was banging my head against the wall,” the mother said. “What do I do next?” She frantically called support groups, therapy programs, suicide prevention lines, anybody, running down a list of names in a directory of mental health resources. “Finally,” she said, “somebody told me, ‘The person you need to talk to is Carolyn Wolf.’ ”
That call, she said, changed her life and her daughter’s. “Carolyn has given me hope,” she said. “I didn’t know there were people like her out there.”
Carolyn Reinach Wolf is not a psychiatrist or a mental health professional, but a lawyer who has carved out what she says is a unique niche, working with families like the Klumps.
One in 17 American adults suffers from a severe mental illness, and the systems into which they are plunged — hospitals, insurance companies, courts, social services — can be fragmented and overwhelming for families to manage. The recent shootings in Newtown, Conn., and Aurora, Colo., have brought attention to the need for intervention to prevent such extreme acts of violence, which are rare. But for the great majority of families watching their loved ones suffer, and often suffering themselves, the struggle can be boundless, with little guidance along the way.
“If you Google ‘mental health lawyer,’ ” said Ms. Wolf, a partner with Abrams & Fensterman, “I’m kinda the only game in town.”
On a recent afternoon, she described in her Midtown office the range of her practice.
“We have been known to pull people out of crack dens,” she said. “I have chased people around hotels all over the city with the N.Y.P.D. and my team to get them to a hospital. I had a case years ago where the person was on his way back from Europe, and the family was very concerned that he was symptomatic. I had security people meet him at J.F.K.”
Many lawyers work with mentally ill people or their families, but Ron Honberg, the national director of policy and legal affairs for the National Alliance on Mental Illness, said he did not know of another lawyer who did what Ms. Wolf does: providing families with a team of psychiatrists, social workers, case managers, life coaches, security guards and others, and then coordinating their services. It can be a lifeline — for people who can afford it, Mr. Honberg said. “Otherwise, families have to do this on their own,” he said. “It’s a 24-hour, 7-day-a-week job, and for some families it never ends.”
Many of Ms. Wolf’s clients declined to be interviewed for this article, but the few who spoke offered an unusual window on the arcane twists and turns of the mental health care system, even for families with money. Their stories illustrate how fraught and sometimes blind such a journey can be.
One rainy morning last month, Lance Sheena, 29, sat with his mother in the spacious family room of her Long Island home. Mr. Sheena was puffy-eyed and sporadically inattentive; the previous night, at the group home where he has been living since late last summer, another resident had been screaming incoherently and was taken away by the police. His mother, Susan Sheena, eased delicately into the family story.
“I don’t talk to a lot of people because they don’t get it,” Ms. Sheena said. “They mean well, but they don’t get it unless they’ve been through a similar experience. And anytime something comes up, like the shooting in Newtown, right away it goes to the mentally ill. And you think, maybe we shouldn’t be so public about this, because people are going to be afraid of us and Lance. It’s a big concern.”
Her son cut her off. “Are you comparing me to the guy that shot those people?”
“No, I’m saying that anytime there’s a shooting, like in Aurora, that’s when these things come out in the news.”
“Did you really just compare me to that guy?”
“No, I didn’t compare you.”
“Then what did you say?”
The Federal Housing Administration is the largest source of low-down-payment mortgage money in the country. Its minimum down is just 3.5%, compared with 5% to 20% or more from conventional, non-government sources. For decades, FHA financing has made homeownership possible for first-time buyers with modest incomes and credit history blemishes.
But in the wake of losses tied to bad loans insured during the housing bust years, the FHA has been raising its loan insurance fees and backing more loans to applicants with higher credit scores. With the latest increases, things have gotten to the point where some lenders wonder whether the agency is trying to move away from its traditional customers.
Dennis C. Smith, broker and co-owner of Stratis Financial Corp. in Huntington Beach, is blunt: "I think FHA is putting itself out of business with the moves they've made in the past couple of years."
Although they wouldn't agree with that assessment, the FHA's top officials readily admit that their priority is not increasing market share but protecting the agency's multibillion-dollar insurance fund reserves and cutting losses.
Starting April 1, the FHA's annual mortgage insurance premiums for most new loans will jump one-tenth of a percentage point (10 basis points in lending parlance). This is on top of two previous increases since 2011.
Other changes that won't take effect until June 3 include mandatory manual underwriting of applications by borrowers whose total household debt-to-income ratios exceed 43% and who have credit scores below 620, and mandatory 5% minimum down payments on FHA loans above $625,500 in high-cost areas such as California, metropolitan Washington, D.C., and others.
The FHA also announced that as of June 3 it is rescinding its popular policy of canceling mortgage insurance premium charges for borrowers whose loan balances decline to 78% of the original amount. This will require FHA customers to pay premiums for as long as they keep their loans, and is in stark contrast to the private mortgage insurance market, in which homeowners can request cancellation of premium payments once their loans hit the 78% mark.
"That stinks," said Steve Stamets, a mortgage officer with Apex Home Loans in Rockville, Md. "It's just a money grab" that will cause creditworthy borrowers to avoid FHA loans and seek out low-down-payment alternatives through Fannie Mae and Freddie Mac, using private mortgage insurance.
Already, Stamets said, FHA is the more expensive option for many borrowers who have good credit but don't want to make hefty down payments.
He estimates that with the FHA's new fees, an applicant with a 720 FICO score making a 3.5% down payment on a $250,000, fixed-rate, 30-year FHA mortgage will pay $144.66 more a month than a borrower with the same credit score on a conventional loan of the same amount with a 5% down payment and private mortgage insurance.
Even with a 680 credit score, the conventional loan is cheaper by $85 a month based on the FHA's new fee levels, Stamets said. And those monthly premium payments can be canceled at the 78% loan-to-value level, whereas the FHA will keep charging them for the life of the mortgage.
Steven R. Maizes, managing director of mortgage banking for Mortgage Capital Partners Inc. in Los Angeles, says the FHA's new fees and policies are likely to cost the agency valuable low-risk business on refinancings. Maizes recently ran a spreadsheet analysis for a client with a $460,000 FHA loan at 5%. Even with a 1.5-point rate reduction, the added fees caused the monthly payment to decrease just $97.11.
"If you couple that [small saving] with the fact that the mortgage insurance payment can never go away," he said, refinancing an existing FHA loan for a creditworthy borrower into a new FHA loan will be tough to justify.
Bottom line for you: Make sure your loan officer runs the numbers comparing FHA loans with privately insured conventional alternatives. You may not want to be saddled indefinitely with higher payments — and no right to cancel.
kenharney@earthlink.net
Distributed by Washington Post Writers Group
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