Iraq death toll

Economy

Mon Sep 22, 8:22 PM ET (Associated Press)

By ADRIAN SAINZ and ALAN ZIBEL, AP Business Writers 47 minutes ago

MIAMI - Al Ray is so strapped for cash, the only time he eats out is on Wednesday or Sunday, when the local McDonald's sells hamburgers for 49 cents.

Ray lost his engineering job last November, and has been working as high school tutor, scratching out about $1,000 a month — if he's lucky. He struggled to make his $1,400 monthly mortgage payment and $330 monthly homeowners' association fee until May, when he stopped paying.

Ray, 44, is looking for work and renting out a room in his two-bedroom condo in Davie, Fla., for $500, but his monthly income doesn't match his expenses and he's facing foreclosure.

"I barely have money to survive," he said.

Ray is one of more than 7.5 million people — almost 15 percent of American homeowners with a mortgage — who are spending half of their income or more on housing costs, according to 2007 data released Tuesday by the U.S. Census Bureau. That is up from nearly 7.1 million the year before.

Traditionally, the government and most lenders consider a homeowner spending 30 percent or more of their income on housing costs to be financially burdened. But that definition now covers almost 38 percent of American homeowners with a mortgage — 19 million of them.

Though home prices have fallen this year, in the most expensive markets where home prices tripled during the boom, many working families still cannot afford to buy a home.

"We had a bubble," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. "This is a case where we absolutely want the market to adjust."

The data underscore the serious affordability problems in this country and highlight how the slightest financial problem — from a lost job to higher gas prices or insurance premiums — can put a family behind on their mortgages and into the realm of foreclosure.

When home prices fell in the early 1990s, borrowers had more equity in their homes, and were able to escape foreclosure. But now, an estimated 10 million homeowners owe more on their mortgages than their homes are worth, according to Moody's economy.com.

More than 4 million homeowners were at least one month behind on their loans at the end of June, and almost 500,000 had started the foreclosure process, according to the Mortgage Bankers Association.

Cascading foreclosures over the past two years created a domino effect in the lending industry, undermining investor confidence and forcing the Bush administration last weekend to announce the greatest rescue package and market intervention since the Great Depression.

And yet, the deal will not help Dolly Hanna, 51, and her husband, who bought five homes in the San Francisco area over the past 20 years, and were enjoying life during the housing boom by renting them out.

But her husband's overtime at his mechanic's job was cut, and the Hannas now find themselves overextended at a loss of $15,000 per month and trying two sell two of the homes.

With four children, Hanna had been a stay-at-home mom, but Monday she started a job in real estate. They are seeking a renter for two upstairs bedrooms in their primary residence for $1,200.

Getting a loan during the boom was easy, Hanna knows. Too easy.

"All you had to was massage the information enough to fit it into their round hole, and they gave us a mortgage," Hanna said.

In San Francisco, more than one out of five homeowners with a mortgage spends half or more of their income on housing.

That's also true in 13 more of the largest 100 metro areas analyzed by the Associated Press. Other places include California metro areas of Stockton, Los Angeles, Riverside, Oxnard-Thousand Oaks, San Francisco, and San Diego. Also in the top 10 are the Fort Myers, Sarasota and Orlando metro areas in Florida, and New York-Northern New Jersey-Long Island.

But the most cost-burdened homeowners in the country live the Miami-Fort Lauderdale-Miami Beach metro area: 58 percent of homeowners spending 30 percent of their income on housing costs, and 29 percent spending half of their income or more on housing.

Though prices here are dropping, the high cost of land, construction, insurance and property taxes makes living in South Florida too expensive for some.

"Certainly, we hear about people leaving South Florida and going into Atlanta where they can get into a house for less money," Suzanne Weiss, associate director for real estate with Neighborhood Housing Services of South Florida.

To help with the affordable housing stock, Neighborhood Housing Services of South Florida joined forces with a construction company to build homes for low- to moderate-income residents that include energy-efficient appliances and hurricane-resistant windows.

Other cities and states are also taking action.

In Illinois, a network of 15 nonprofit housing groups gives free advice to struggling homeowners seeking to avoid foreclosure amid rising mortgage payments.

In New England, an affordable housing program funded by the Federal Home Loan Bank of Boston awards grants and low-interest loans to communities to encourage affordable-housing initiatives for very low- to moderate-income households.

And in Las Vegas, the Nevada Fair Housing Center is helping Rita Harvey renegotiate her mortgage from $2,700 to around $1,800 per month.

Harvey, 64, lives on about $3,300 a month in social security and disability payments for herself and her four disabled grandchildren. She nearly lost her home this summer after her adjustable rate mortgage payment jumped.

"I did not understand that in two years, this would adjust out of control," she said. "Nobody deserves what I've had to go through."

US Blamed

Iranian president blames US for market collapse

By EDITH M. LEDERER, Associated Press Writer 1 hour, 28 minutes ago

UNITED NATIONS - Iran's president blamed U.S. military interventions around the world in part for the collapse of global financial markets ahead of his speech Tuesday to the U.N. General Assembly.

President Mahmoud Ahmadinejad also said the campaign against his country's nuclear program was solely due to the Bush administration "and a couple of their European friends."

"The U.S. government has made a series of mistakes in the past few decades," Ahmadinejad said an interview with the Los Angeles Times. "The imposition on the U.S. economy of the years of heavy military engagement and involvement around the world ... the war in Iraq, for example. These are heavy costs imposed on the U.S. economy.

"The world economy can no longer tolerate the budgetary deficit and the financial pressures occurring from markets here in the United States, and by the U.S. government," he added.

In a separate interview with National Public Radio, Ahmadinejad said he does not want confrontation with the United States.

Despite U.N. sanctions against Iran over its nuclear program, Ahmadinejad claimed vast international support for his position and said the campaign consisted "of only three or four countries, led by the United States and with a couple of their European friends."

Iran insists its nuclear activities are geared only toward generating power. But Israel says the Islamic Republic could have enough nuclear material to make its first bomb within a year. The U.S. estimates Tehran is at least two years away from that stage.

Ahmadinejad's speech will come just hours after President Bush made his eighth and final speech to the U.N. General Assembly.

Bush said Tuesday the international community must stand firm against the nuclear ambitions of Iran and North Korea. And he said that despite past disagreements over the U.S.-led war in Iraq, members of the U.N. must unite to help the struggling democracy succeed.

"A few nations, regimes like Syria and Iran, continue to sponsor terror," Bush said. "Yet their numbers are growing fewer, and they're growing more isolated from the world. As the 21st century unfolds, some may be tempted to assume that the threat has receded. This would be comforting. It would be wrong. The terrorists believe time is on their side, so they've made waiting out civilized nations part of their strategy. We must not allow them to succeed."

Throughout Bush's speech, Ahmadinejad at in his seat and smiled and waved to people in the chamber. At one point during Bush's 22-minute talk, Ahmadinejad turned to someone at his side and gave a thumb's down.

Bush's appearance was overshadowed by the U.S. financial crisis that has rippled through world markets. Trying to reassure world leaders that his administration is taking decisive action to stem market turmoil, Bush said he is confident that Congress will act in the "urgent timeframe required" to prevent broader problem. But he did not ask other nations to take any specific actions.

French President Nicolas Sarkozy called for a wholesale reform of the global financial system, urging major economic powers to meet before the end of the year to examine the lessons of the crisis.

"Let us rebuild capitalism in which credit agencies are controlled and punished when necessary, where transparency ... replaces opaqueness," Sarkozy said. "We can do this on one condition, that we all work together in our globalized world."

Brazil's President Luiz Inacio Lula da Silva also called for a global solution to the financial crisis and lashed out at speculators whom he blamed for the "anguish of entire peoples."

"The global nature of this crisis means that the solutions we adopt must also be global," Silva said.

Secretary-General Ban Ki-moon painted a grim picture of a world facing not only a financial crisis but food and energy crises as well as new outbreaks of war and violence.

"We must do more to help our fellow human beings weather the gathering storm," he told world leaders. "I see a danger of nations looking more inward, rather than toward a shared future. I see a danger of retreating from the progress we have made, particularly in the realm of development and more equitably sharing the fruits of global growth."

"We need to restore order to the international financial markets," he said. "We need a new understanding on business ethics and governance, with more compassion and less uncritical faith in the `magic' of markets. And we must think about how the world economic system should evolve to more fully reflect changing realities of our time."

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