Federal mortgage modification plan disappointing so far

Red tape and limited savings are hampering the much-lauded $75-billion mortgage modification plan. A new round of government help may be on the way as foreclosures are expected to reach 3 million in 2010.

Atlanta

The Obama administration announced Friday that its much-lauded mortgage modification plan has had a disappointing start, helping far fewer Americans stay in their homes than originally hoped.

Intended to bolster struggling homeowners, the Home Affordable Modification Program (HAMP) has permanently helped only 66,000 homeowners out of 4 million that may be eligible.

As foreclosures are expected to rise from 2.8 million in 2009 to 3 million in 2010, analysts expect the Obama administration to modify the modification program to keep it from becoming another major political issue in a year when Democrats are facing a growing anti-spending sentiment among the voting public.

“HAMP is running into issues of too few permanent modifications, and re-default performance is expected to be poor," Barclays Capital said in a recent research note to clients.

Treasury Department officials said Friday that more than 900,000 homeowners have signed up for trial modifications and the program has yielded “measurable success.” The conversion rate from trial to permanent modification, however, is only about 15 percent.

So what's hampering HAMP?

One problem reported by the Treasury Department is that only 75 percent of homeowners are able to stay current on their new payments for a three month trial period. What’s more, the Obama administration and mortgage servicers say homeowners aren’t fully completing the needed documentation proving income and hardship.

But homeowners are blaming servicers, who get paid for successfully lowering monthly payments. One dissatisfied applicant used the Huffington Post to register his dissatisfaction – and shed some light on why the program may need to be fixed.

Calling the program a “cruel joke,” HAMP applicant Craig Vale said “you are falsely led to believe that some help may actually come your way, but in truth the banks want little to do with you or the HAMP program.”

Mr. Vale claims he’s saving less than $2 a day on his reworked mortgage, calling the entire thing a “failure.” The irony,” he adds, “is that my bank will tell uncle Sam they ‘successfully’ modified my mortgage.”

More than $1.5 billion saved

Treasury officials said that 854,000 homeowners taking part in both trial and permanent modification requests have saved more than $1.5 billion on their mortgage payments, receiving an average reduction of $516 a month.

US banks, insurance companies and carmakers, meanwhile, have received over $373 billion in taxpayer bailouts, writes the HuffPo's Shahien Nasiripour.

In his weekly Saturday address, President Obama vowed to keep up the pressure on US banks to do right by the American taxpayer, who, after all, bailed out much of the financial industry over the last 18 months.

Saying that, “We’re not going to let Wall Street take the money and run,” Obama vowed to make sure that banks can never put the US economy at risk again.

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Hershey Preps Cadbury Bid: Report

HERSHEY, Pa. (TheStreet) -- Hershey(HSY Quote) is planning to bid at least $17.9 billion next week for Cadbury PLC(CBY Quote) , according to a published media report

Such an offer would top Kraft Foods'(KFT Quote) existing bid, which is valued at roughly $17.2 billion.

Hershey was wrapping up a financing package for such a deal on Friday, according to the report, published Saturday on The Wall Street Journal's Web site. The report cited anonymous sources familiar with the matter.

Under the package, Hershey plans to borrow at least $10 billion from banks including JPMorgan Chase(JPM Quote) and Bank of America's(BAC Quote) Merrill Lynch, according to the report.

The plan is also expected to include $5 billion in new Hershey shares and a minimum of $3 billion in financing from private investors and the Hershey trust, the report added.

> > Bull or Bear? Vote in Our Poll

As currently envisaged, Hershey's offer would be from 800 pence to 820 pence (about $13.00 to $13.34) a share, vs. Kraft's existing offer of 770 pence (about $12.50).

David West, Hershey's CEO, who has argued against such a bid, has accepted its inevitability, according to the report, which added that Hershey's board has promised him the CEO's job in a merged company. Hershey and its trust declined to comment, according to The Wall Street Journal.

Kraft has until Tuesday to raise its current offer, while Hershey has another four days, until Jan. 23, to make a decision to bid

Hershey shares closed Friday at $36.25, while Cadbury's U.S.-listed shares ended the session at $51.90. Kraft stock ended the day at $29.58.

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Google Users in China Fear Losing Important Tool

BEIJING — At the elite Tsinghua University here, some students were joking Friday that they had better download all the Internet information they wanted now in case Google left the country.

But to many of the young, well-educated Chinese who are Google’s loyal users here, the company’s threat to leave is in fact no laughing matter. Interviews in Beijing’s downtown and university district indicated that many viewed the possible loss of Google’s maps, translation service, sketching software, access to scholarly papers and search function with real distress.

“How am I going to live without Google?” asked Wang Yuanyuan, a 29-year-old businessman, as he left a convenience store in Beijing’s business district.

China’s Communist rulers have long tried to balance their desire for a thriving Internet and the economic growth it promotes with their demands for political control. The alarm over Google among Beijing’s younger, better educated and more Internet savvy citizens — China’s future elite — shows how wobbly that balancing act can be.

By publicly challenging China’s censorship, Google has stirred up the debate over the government’s claim that constraints on free speech are crucial to political stability and the prosperity that has accompanied it. Even if it is unlikely to pose any immediate threat to the Communist Party, Google’s move has clearly discomfited the government, Chinese analysts say.

“The average age of Chinese netizens is still very young,” said Hu Yong, a journalism professor at Peking University. “This is a matter of the future and whether the government’s Internet policy wants to fight with the future.

“If this process goes on, more and more people are going to realize that their freedom of information is being infringed upon, and this could bring changes down the line,” he said.

Google may rank a distant second to the Baidu search engine, but its estimated 80 million users are comparatively better educated and wealthier. Surveys show that roughly two-thirds are college educated. A Beijing technology consultant, Kaiser Kuo, describes them as “a potentially very noisy constituency.”

An Internet expert who insisted on anonymity for fear of repercussions from the government said: “They have bought into the bargain of get rich, have a good job, life gets better, just don’t mess with the Communist Party.”

If Google leaves, he said, “they may start asking, ‘What’s wrong with my country that it doesn’t let me do this?’ ”

“It is not like they are going to take to the streets,” he added. “But it further erodes the legitimacy of what the Communist Party is doing. This is a group the party doesn’t want to lose any more than it already has.”

On the other hand, the Chinese government managed to cut off nearly all Internet access to an entire region of 19 million people for half a year without encountering any significant political resistance. The blackout, imposed in the western Xinjiang region after deadly riots in July, is only now being gingerly lifted.

Other Internet users argue that Google must respect the Chinese government’s policies if it wants to do business here.

“I think government control of this is quite reasonable,” said Liu Qiang, 29, a Tsinghua University mechanical engineer graduate student. “Our party needs to stabilize its governance.”

Some predict that any inconvenience caused by Google’s exit will be short-lived. “The Internet is really big,” said Wang Quiya, a 27-year-old worker in Beijing’s financial district. “Something will take its place, right?”

The government’s recent efforts to tighten Internet controls have already cost some Chinese some pleasures. In the name of rooting out pornography and piracy, Chinese authorities have shut down hundreds of Web sites offering films, music downloads, video games and other forms of entertainment since November.

Li An, a Tsinghua University senior with wide eyes and thick black braids, said she used to download episodes of “Desperate Housewives” and “Grey’s Anatomy” from sites run by BT China that are now closed. “I love American television series!” she said with frustration during a pause from studying Japanese at a university fast-food restaurant on Friday.

The loss of Google would hit her much harder, she said, because she relies on Google Scholar to download academic papers for her classes in polymer science. “For me, this is terrible,” Ms. Li said. Some students contend that even after Google pulls out, Internet space will continue to shrink. Until now, Google has shielded Baidu by manning the front line in the censorship battle, said one 20-year-old computer science major at Tsinghua.

“Without Google, Baidu will be very easy to manipulate,” he said. “I don’t want to see this trend.”

A 21-year old civil engineering student predicted a strong reaction against the government. “If Google really leaves, people will feel the government has gone too far,” he insisted over lunch in the university cafe.

But asked whether that reaction would influence the government to soften its policies, he concentrated on his French fries. “I really don’t know,” he said.

Xiyun Yang, Li Bibo and Nancy Zhao contributed research.

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Yahoo Drawn Into Growing Cyber War Between Google and China

Yahoo (YHOO) was drawn into the growing international cyber-war between Google (GOOG) and the Chinese government Saturday after it declared its support of the U.S.-based search giant. Google threatened to pull out of China after it became the victim of a massive cyber attack that is believed to be masterminded by the Chinese government. Now several other U.S. companies are also believed to have been victims of a similar attack, including Yahoo.

Yahoo said it is "aligned with Google" in it rebuke of Chinese censorship, and condemned "any attempts to infiltrate company networks to obtain user information."

By supporting Google, Yahoo has drawn the ire of Alibaba (ALBCF), the Chinese internet company in which it owns a 40% minority stake. "Alibaba Group has communicated to Yahoo! that Yahoo's statement that it is 'aligned' with the position Google took last week was reckless given the lack of facts in evidence," Alibaba, which operates two of China's largest e-commerce businesses, said in a statement Saturday.

Other U.S. Companies and Chinese Dissidents Also Victims

On Tuesday, Google revealed it had been the victim of the massive attack targeting Chinese rights activists' Gmail accounts. The sophistication and scope of the attacks has led many to believe that the Chinese government was behind them, and in fact, cyber-security experts at Verisign iDefense labs said their analysis showed that "the attack is the work of actors operating on behalf of or in the direct employ of official intelligence entities of the People's Republic of China."

Meanwhile, U.S. Ambassador to China Jon Huntsman acknowledged Friday that China-based attacks on U.S. government computers have been "ongoing for a long time."

In response to the attacks, Google said it would no longer censor its Chinese search engine and was prepared to quit the country. In response, China declared its Internet "open," and said companies operating in China must follow the law.

The growing international row appeared to edge toward the brink of an all-out diplomatic and trade maelstrom after the U.S. State Department said it would formally demand answers from China about the attacks, which targeted over 30 American companies in addition to Chinese dissidents.

Other than Google, Adobe (ADBE), Symantec (SYMC), Rackspace Hosting (RAX) and Juniper Networks (JNPR), most of the other American companies targeted have not come forward publicly (it's typical practice for most corporation to not disclose information about cyber attacks). However, the list of known companies that have been targeted is increasing by the day to include U.S. defense giant Northrop Grumman (NOC), Dow Chemical (DOW), and now, internet giant Yahoo.

Yahoo's Rocky Road in China

Yahoo knew about the attack before Google notified it, but chose to remain silent, Reuters reported Saturday. Beyond efforts to keep information about cyber attacks confidential, Western companies are also wary of publicly challenging the Chinese government, which administers the world's largest population and internet market.

"They don't want to get any noses out of joint in Beijing," Clyde Prestowitz, president of the Washington-based Economic Strategy Institute, told the newswire.

Yahoo has had a particularly rocky road in China. In 2007, it suffered a major public relations backlash after revelations that it had turned over information about Chinese dissidents to the government. It's relationship with Alibaba has also been contentious. Yahoo invested $1 billion into Alibaba in 2005, when it folded its search engine into the company. Alibaba is thought to want Yahoo to sell its remaining stake in the company.

An Escalating Cyber War

Google's stunning decision to publicly rebuke China has pulled back the curtain on international cyber-warfare and demonstrated the pervasiveness of global network attacks. The controversy has also shown that cyber-crime -- typically associated with corporate spying or financial scams -- often has a political component.

Google explicitly referred to espionage in describing the attacks, which targeted Chinese human right activists and political dissidents. As early as Monday, the U.S. State Department plans to formally demand an explanation from China.

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Customers in Benefit of Verizon, AT&T Price War

Two largest U.S. mobile-phone services, wireless carriers Verizon Wireless and AT&T Inc. cut their calling plan prices. Customer usually benefits, and currently it appears that customers with Verizon Wireless and AT&T will be benefiting in pricing war between top wireless carriers.

Verizon announced that starting Monday people will be charged $69.99 for monthly calling plan. Earlier they charged $100 for the same plan. Another plan that they announced was a Nationwide Unlimited Talk & Text plan to call and send texts, as well as picture and video messages to anyone in the country for $89.99 monthly access.

On late Friday, AT&T Inc. announced some of the same price cuts. AT&T’s regular customers will now pay $70 for unlimited talk, family talk customers can opt for unlimited talk at $120, while text plans remain the same. AT&T smartphone and iPhone customers can get unlimited voice and data for $100, family talk plans with unlimited voice and data costs $180 while text plans go unchanged.

The latest moves in a long-running pricing competition between the nation’s wireless carriers is not just leading to lower prices for some customers: It also shows that data use is becoming an increasingly important service for mobile carriers as they look to new sources of revenue from customers dependent on mobile access to e-mail and the Web.

Verizon announced the expansion of the 25 megabyte for $10 per month data package requirement to include all Verizon Wireless 3G Multimedia phones, which gives customers quick access to Mobile E-mail, games and the Internet. The $20 data package option for 3G Multimedia phones has been discontinued.

In order to get the new rates, customers have to contact their cell phone carriers. Both companies said the new rates don’t require a contract extension.

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