Horizon, Host: Ted Simons

October 28, 2010


Host: Ted Simons

Foreclosures

  |   Video
  • Bankruptcy attorney Diane Drain shares her views on the foreclosure crisis and news that some lenders have been taking potentially fraudulent shortcuts to speed-up the foreclosure process.
Guests:
  • Diane Drain - Bankruptcy attorney
Category: Business/Economy

View Transcript
Ted Simons:
Foreclosures in Arizona are down 2% from the same time last year, but according to Reality Trac, the state still has the second highest foreclosure rate in the nation, second only to Nevada. In recent weeks, some lenders have placed a freeze on foreclosures. That in response to news that lenders were taking potentially fraudulent shortcuts to speed up the foreclosure process. Here with her perspective on the issue is Diane Drain, a bankruptcy attorney. She also teaches at the Arizona school of real estate and is an adjunct professor at the Phoenix school of law. Good to see you again.

Diane Drain:
Thank you.

Ted Simons:
When we talk about these moratoriums, I know Arizona isn't quite the same as other states regarding foreclosures. Let's make -- try to clear that up.




Diane Drain:
There are 23 states in the union that use a judicial foreclosure process. Those are the ones we're talking about having the moratorium. The other states all have another option called a trustee sale. So that is how Arizona produces the majority of all of its foreclosures, is this statutory automated process called a trustee sale. So the forbearances -- the moratoriums don't apply to Arizona when it comes to our normal path for trustee sale.

Ted Simons:
But I did read that Bank of America was putting a hold on some or a lot of trustee sales.

Diane Drain:
Correct.

Ted Simons:
OK. So there is an impact just kind of a corollary impact?

Diane Drain:
I have a feeling that perhaps the banks are a little on the scared side about the consequences of their behavior, and to anticipate potential litigation issues, they're putting things on hold for a while.

Ted Simons:
Talk about their behavior. There are some who are saying that it was just -- it was errors, error were made with these signings, others are saying that's fraud, and they're saying a lot of other stuff going on. What do you see?
Diane Drain:
Certainly when the number of loans that went into default cyst hit the system, the system was ill-equipped to handle it. It's just huge nationwide. As a result of that, as with any employee, when they're trying to mass produce paperwork, they don't necessarily follow the rules, the written rules of the employer. And so it wasn't unusual that people would start to short the system and not deal well with planning ahead, and being proactive, instead they become -- they become more reactive to stresses.

Ted Simons:
So rubber stamping, more rubber stamping than you think out and out fraud?

Diane Drain:
I think so. I truly don't believe -- having been through this when we had the RTC situation in the '80s and having at that point managing one of the larger lenders in Arizona, and I know what went on, I'm really looking at this -- it's probably the same situation, it was just overworked employees without enough staff, without enough supervision, and control from the management. They just did their very best, and unfortunately it went haywire. And then no one came in to shut them down, when they realized this wasn't a surprise, this robo-signing, it wasn't a surprise it was going on. They knew they shouldn't be doing it.

Ted Simons:
So -- hmm. Lax, but not to the point of super --

Diane Drain:
I wouldn't use fraud. I really wouldn't. The problem is, the people that were harmed are the homeowners. The folks who feel like if only people had worked with them for a little bit longer, maybe they would have been able to save their house.

Ted Simons:
Talk to us more about that. Because -- and we can talk about the foreclosure area as well, but also with loan modification. A lot of folks were seeing the villains with the banking industry as far as foreclosures, they're seeing them as far as the fact they can't or somehow having trouble getting their loans modified.



Diane Drain:
Right. When I get those calls I start first with -- the lender's only contractual obligation is to accept your payment. And your contractual obligation is to make it. And if you think you can make the lender do something that the contract doesn't provide for, then the lender could discretionally do something, but you can't make the lender do something. When you add more layers into that, the federal policies, all of our federal programs, and such, whether you're a Fannie Mae or Freddie Mac loan, whatever it is, it starts to make it more complicated. But the reality is that the borrower has to understand, this is a discretionary process for the lender. And when you have an overworked lender with not enough staff, with not enough authority for their staff to make wise business decisions, the poor homeowners who are faced with losing their home are thinking somehow this is a scheme to take their home away from them. It's just people don't have time to deal with it.

Ted Simons:
So we've got the foreclosure problem. We've got loan modifications that either aren't happening or aren't happening quick enough or not happening effectively enough, how is that playing into bankruptcy rates in Arizona?

Diane Drain:
Right now bankruptcy is doubling every month over the year before. The same month the year before. And that's Arizona statistics. So it's huge. And what we're seeing right now is that those folks who have been trying to hang on for an awfully long time thinking they could stay the course and that the market would get better here, they're now coming to realize they can't get better. At least not for a while. So they've stopped taking money out of their 401(k)s, they're now looking at, let's just file bankruptcy and get on with life.

Ted Simons:
Can you file your bankruptcy and get on -- how long before life gets on?

Diane Drain:
Very short time after filing bankruptcy. Some of my chapter 7 clients, which are the simple and quick bankruptcies, are telling me they're getting preapproved credit cards literally within days after having filed their bankruptcy.


Ted Simon:
Doesn't that seem unusual to you?

Diane Drain:
No, think about it from a creditor's standpoint. They don't owe debt anymore. And if they're hooked, literally addicted to the use of credit, who better to hook again, but somebody who does haven't any more debt.

Ted Simons:
Why does that seem wrong? That doesn't seem right.

Diane Drain:
I agree. I ask my clients to take a year off using credit. And just use debt cards.

Ted Simons:
Everything we've talked about from foreclosure to loan moratorium, especially the foreclosure problem, the foreclosure moratorium in some areas with some lenders, what does that do to the confidence of the buying public?

Diane Drain:
OK. So what I'm hearing generally, the folks who can afford to pay their bills are currently saying they're not going to use credit anymore. They're tired. They're tired of watching their family be hurt, they're tired of watching their friends be hurt, because of the unemployment situation, or the real estate crisis, and they're just not going to be using credit the way they used to. They're not going to be out buying the big-screen TV. They're cutting down on it. I think people are smarter today. I send everyone to FTC.GOV to pull all the articles that they can about the use of credit, and how to plan for it, so if they've got questions about loan modifications, go to HUD. Hud.GOV. And just look to all the resources that are available through the government. Don't pay somebody to do this stuff, because it ends up playing back into all these loan modification scams, and such like that.


Ted Simons:
All right. Good information. Thank you so much for joining us. We appreciate it.

Diane Drain:
you're welcome.

Health Record Bank

  |   Video
  • eHealthTrust is a health record bank that recently launched its service in Arizona. Dr. Bill Yasnoff, the company’s founder, explains the benefits of health record banking.
Guests:
  • Dr. Bill Yasnoff - Founder, eHealthTrust
Category: Medical/Health

View Transcript
Ted Simons:
Electronic medical records may be the wave of the future, and at least one company is catching that wave in Arizona. This month e-Health trust launched its health record banking business in the Phoenix area. For a one-time fee of $99, the company promises its members a secure, electronic safe deposit box for their memo records. Members control who gets access to those records, and eventually the company will offer automatic updates whenever new medical records are generated. In a moment we'll hear from the founder of e-Health trust, but first, David Majure spoke with an early adopter of the company's Services.

Laura Holgate:
You have no idea how much I have to do to keep track of my -- all the medical issues that I have going on.

David Majure:
Laura Holgate is a former nurse and a mother of three children ages 9, 12, and 14, all with special needs.

Laura Holgate:
For Maggie, for Nicholas.

David Majure:
Just keeping track of their medications is a constant challenge.


Laura Holgate:
And then we have the pharmacy.All of them are on many, many meds, and have many doctors' appointments, and visits, and surgeries.

David Majure:
Her 12-year-old son has a serious medical condition. He's had surgeries all over the country.

Laura Holgate:
It is just a daunting task to have to keep everything current for him. Because every time guy to a doctor's office, I have to bring his list of diagnosis, what he's had done, his chart is this thick at Phoenix children's hospital. So -- but they don't have the records from Boston, San Francisco, all those places. So to get this all in one place would be awesome for me.

David Majure:
To better manage her family's medical information, Holgate signed up for e-Health trust after a friend who works for the company told her about it.

Laura Holgate:
It will be worth it if I don't have to spend so much time collating information for my children and keeping track of it.

David Majure:
Soon her family's medical records will be stored on servers in a huge Phoenix warehouse. She'll control which records are deposited there. And who is authorized to withdraw the information.

Laura Holgate:
If people are comfortable using online banking, then this is really similar to that.


Ted Simons:
Here to talk about health record banking is Dr. Bill Yasnoff, the founder of e-Health trust. He's an adjunct professor of health sciences informTiCS at Johns Hopkins University and he's worked for the federal government on efforts to establish a national health information infrastructure. All your health records, electronically filed in one place. Concerns over security?

Dr. William Yasnoff:
Sure. Obviously our health records are probably the most sensitive information about us there is. And so clearly everyone wants them to be secure, and private. And that's what we do. We make them secure by putting them in a secure data center, we use the same types of computer security techniques that the banks use for your online banking information. And then in terms of privacy, you control who sees your records. You set your own privacy policy.

Ted Simons:
So basically if I ask you who mass access to all of my medical records, you ask me, who has access to all your medical records.

Dr. William Yasnoff:
Exactly. Whoever you say has access.

Ted Simons:
What about the concept, let's talk about just selling information. For research purposes, for other purposes. How much of that goes on?

Dr. William Yasnoff:
So your information in the health record bank is yours. We do not do anything with it unless you consent to it specifically. But clearly, having that information available in the aggregate, non-identified, is fantastically valuable for research. So when you become a member, we ask you if you would like your data included in those non-identified summaries that we can provide, and of course we generate revenue from that and we share that revenue with you.

Ted Simons:
The interesting -- the -- what about insurance companies, what about drug companies, these sorts of things?

Dr. William Yasnoff:
If you authorize it, it's available. If you do not authorize it, it is not available.

Ted Simons:
Here's one for you. What about paper-based documents? You've still got guys that are based -- they don't want to touch the medical -- electronics. What happens if our doctor is paper-based.

Dr. William Yasnoff:
Most doctors still have paper records. And this is a problem, and so part of our program is to provide free electronic medical records to physicians so that they can then deposit the electronic records in the health record bank. Now, while physicians still have paper records, we can take those records and we can put pictures of them in the health record bank. But clearly, that's not as good because the computer can't really process and organize that information.

Ted Simons:
Is it the kind of situation, and you say, I've got a doctor here, a specialist there, I want them to all know what's going on so I give them access. All of a sudden I'm not crazy about this doctor, I'm going to change, or I don't want this doctor -- once the window, the portal opens, is I -- and I close it, doesn't it all fly out and it's all out there anyway?

Dr. William Yasnoff:
Here's the situation. You can decide any time to stop anyone's access. But if you have provided that access in the past, what you have allowed that doctor to see, then becomes part of that doctor's record. And that doctor has to be able to keep that to justify the decisions that were made. But any new information would no longer be accessible because you've closed the door.

Ted Simons:
OK. Arizona, trailblazer in this? How did that happen?

Dr. William Yasnoff:
Arizona is the very first large-scale health record bank in the nation. And we came to Arizona for several reasons. First of all, the health care community is very innovative. And has been on the cutting edge of looking at this problem and understanding this problem. Second, people here are very independent minded and are willing to try something new. The third reason is, there are many tourist and snow birds here who have a need to have all their records in one place if they happen to get sick or injured while they're here.

Ted Simons:
The stimulus program, President Obama's stimulus program mentioned information infrastructure electronic, infrastructure specifically. Lots of money being funneled for this effort. Helping your situation?

Dr. William Yasnoff:
Yes and no. Most of that money has not yet been spent. But there are substantial incentives to physicians to convert to electronic medical records. We are adding to that, and we are synergistic with that program by providing free electronic records to Doc and they can use that incentive money are terror cover the one-time conversion costs they have. Look, Ted, when a physician converts to electronic records, typically they have three to six months where they can only see a fraction of the number of patients they normally see because the system slows them down. That hurts their revenue. So that stimulus money can help to make up for that, but if they still have to pay for the electronic record system, that's a problem. We eliminate that problem.

Ted Simons:
Last question, about 30 seconds, why has health information lagged as far as technology is concerned?



Dr. William Yasnoff:
Health is a very -- health information is very complex. And it's mostly been on paper, there hasn't been an incentive for folks to convert to electronic, and we haven't had the technology we need to make all the reports available when and where they're needed.

Ted Simons:
All right. Good to have you here. Thanks for joining us.

Dr. William Yasnoff:
Thanks for having me.

Renewable Energy Jobs

  |   Video
  • Scottsdale-based Fluidic Energy is locating its manufacturing center in Maricopa County. Greater Phoenix Economic Council President and CEO Barry Broome talks about this development in Arizona’s ongoing effort to become a leader in renewable energy.
Guests:
  • Barry Broome - President and CEO, Greater Phoenix Economic Council
Category: Business/Economy   |   Keywords: susatinability,

View Transcript
Ted Simons:
Arizona continues to make progress on efforts to become a leader in renewable energy. Today the greater Phoenix economic council announced that Scottsdale-based Fluidic Energy will locate its manufacturing center in Maricopa County. Choosing Arizona over other southwester states. The company has developed a new battery technology for storing renewable energy. Here to tell us what this means for Arizona is Barry Broome, president and CEO of the greater Phoenix economic council. Good to see you again. Without get doing technical, what exactly does this company do?

Barry Broome:
Well, one of the fastest growing elements of this new renewable solar, wind, energy market is the ability to store the energy. And so we create a metal air battery, it's rechargeable, which is different than you see in the marketplace today, the metal air battery is the preferred system for long-term low-cost storage. We have a rechargeable technology, and it eliminates a lot of the elements of diesel generation, and battery aesthetics, but this storage technology is very versatile, it can be used in solar, wind, electric cars, smart grid, so we're starting to see as we've built this solar strategy and renewable strategy, we're starting to see the versatility of how technology and components can come into this market to not only serve our solar and renewable app tights, but smart cars and grids.

Ted Simons:
It sounds like the kind of deal where I know with the renewable energy there's a concern when the sun is not shining or when there's low or high demand, whether or not that energy will still be there, will still be attainable. This helps.

Barry Broome:
Yeah. And a lot of -- the two questions on renewable and solars, are the costs going to come down, and is the energy going to be reliable. What we're starting to see now in the market is breakthrough storage technology, and this is a great example of a lot of people doing a lot of great work. Not only the work of GPEC on the tax credit program and our work with the company, but this is really I think one of the greatest achievements of Arizona State University that this technology comes out of ASU, and it's another example of Governor Brewer coming to the table and working on keeping jobs in Arizona.

Ted Simons:
I want to talk about that partnership with ASU in a second. Back to this company, they're going to put a manufacturing plant in. What kind of jobs and how many, and what are we talking about?
Barry Broome:
The first phase is -- projects to be several hundred jobs. A lot of these companies are backed with private equities, this company is both manage and run and backed financially by world class people with tremendous track records in the solar and renewable space. These jobs will pay on the levels of the honeywells and Intels. So you're looking at jobs in the 50, 60, 70, 80,000 range, a lot of engineers, a lot of technology jobs, and it's going to be -- it's a good example how the University system interfacing with the economy can create the better scalable jobs that we've been missing in the past, and I think it's a real achievement for Arizona state.

Ted Simons:
Is there a location that they're looking at, extra -- what kind of -- Maricopa County, a big county.


Barry Broome:
They're in scale right now, and one of the things we like to do in our organization is if the company was built in Scottsdale, Scottsdale is a great location, but the jobs and the taxes and the income that circulate from this company will be shared across many municipalities. So they're going to open up something, hopefully something in the spring, get under construction and begin delivering next generation storage technology to the market to scale.

Ted Simons:
You mentioned Scottsdale-based. Up and coming company. Looking to expand for this manufacturing plant. Could have gone anywhere, decided to stay put. First of all, how important is it to keep these kinds of companies, and secondly, who else was gunning for them?

Barry Broome:
Throughout the mountain west region, Denver, northern California in particular, very good reputations in renewable and storage technology base, and one of the challenges we have in adds is not only bringing the companies to Arizona, but keeping the companies that come out. Lots of great companies have spun out of the University of Arizona, even T-GEN and gone into the California market because they have better innovation platforms. This is a company that's going to be taking advantage of the semi conductor heritage in this market, the great engineering talent that's come out of the University of Arizona, and Arizona state University. But renewable tax credit program that Governor Brewer signed will lower their taxes by 80% over 10 years, and depending on the scalability of this technology, could provide them $11 million in refundable tax credits. The difference in the past a year ago, we could not have offered this company anything. We couldn't have affected their tax position, we could not lowered their capital costs, and now that company is going to go out and shop and go in the markets that offer equal or better environments for technology and talent, and offer better economics. Now our economic position is a lot better and we just need to improve on the talent side to grow these companies.

Ted Simons:
Back to the partnership with ASU and using ASU as kind of a regional driver, if you will, for these kinds of companies, talk to us about that.


Barry Broome:
Well, one of the things that I think -- we're really blessed with a University system across the board that really feels it has a dedicated responsibility to grow jobs in the community. And Arizona State University I think with achievements like sky song, the development of their efforts in the downtown campus, Polytechnic, some of the work that they're doing with solar and renewables becoming world class, is really becoming an important jumping-off point for us. Arizona state University is also doing some really impressive things on the health care side with Dennis Cortiz, Arizona state still works in concert with the University of Arizona and the medical campus downtown that University of Arizona is anchoring. So these universities work very well together, they're important part of the economic solution in Arizona, if we're going diversify this economy, the Universities and the ability to leverage Arizona State University is going to be one of the key components, and this is a perfect example of that.

Ted Simons:
Before we go, science foundation Arizona is getting some discretionary stimulus money from the governor's office. A couple million dollars, I should say. What does that mean for, again, growth in technology sectors and just overall growth here in Arizona?

Barry Broome:
One of the things I think Governor Brewer is doing a great job is she's really starting to think about Arizona's economy in a strategic way. We've run into a lot of simple understandings of Arizona's economy, and it's really let us down this path of being incredibly dependent upon retail construction and housing. The ability to build highly specialized scientific capabilities through the science foundation of Arizona, like a bio-signatures lab, it's going to be very important, so that contribution by our governor, a very shrewd example of the governor's use of stimulus dollars, and having the science foundation gives us a vehicle to leverage assets we already have in Arizona.

Ted Simons:
Keeping it is another matter. Do you think it will survive?



Barry Broome:
I do. I think people are going to see -- this governor is going to demonstrate a real commitment to keeping science and technology a centerpiece in her economic platform. And I think we elected a lot of bright young people to the legislature, it looks that way, and I'm confident next year you're going to see the legislature and the governor come together on a jobs bill, that's going to feature not only providing a better tax and economic environment for companies, but a better commitment to science and technology.

Ted Simons:
Very good to see you. Thanks for joining us.

Barry Broome:
Thank you.

Content Partner: