Al's Morning Meeting

The story said:

The promise of low monthly payments has been irresistible in recent years as adjustable-rate mortgages offered a low-cost foothold in the once red-hot housing market or an easy way to tap into home equity.

But now the bills are coming due.

Millions of homeowners soon will face a financial nightmare brought on by a combination of higher interest rates, risky mortgages and a housing market gone cold. The result is likely to be a rising tide of delinquencies and foreclosures, particularly among low-income borrowers, although economists say it's too early to project how severe the situation will be.

Just a few years ago, adjustable-rate mortgages looked like a solution, not a problem. They made homes seem affordable when wages stagnated as prices soared. They were just the ticket for cash-out refinancings and home equity credit lines that bought cars and swimming pools and paid off credit card debt.

"What happened in a lot of expensive real estate markets is that first-time home buyers who felt they could not afford a home otherwise, took on a loan that had lower monthly payments than a traditional mortgage would have," said Allen Fishbein, director of housing policy for the Consumer Federation of America. "They weren't being underwritten on the basis of the borrower's reasonable capacity to handle these loans."

The payments started out manageable, especially since many loans offered teaser rates. But borrowers are getting a lesson in what the word "adjustable" means. More than $130 billion in mortgages have payments that will reset this year.

The Winston-Salem (N.C.) Journal picked up the same theme:

The foreclosures come at a time when the economy is still strong, new neighborhoods seem to spring up from every pasture with good road access, and nearly two-thirds of Americans own a home.

But many of those still left out in the cold lack the financial means to obtain traditional mortgages. In recent years, residential developers, lenders and potential home buyers have pursued increasingly creative, and risky, mortgage strategies, said Chris Estes, the executive director of the N.C. Housing Coalition.

Those strategies include short-term adjustable-rate mortgages, interest-only loans and piggyback loans in which the homeowner makes no down payment. There are even mortgage products where consumers can begin homeownership with a home-equity loan.

Tony Plath, a finance professor at the University of North Carolina at Charlotte, said that "really relaxed" mortgage-underwriting standards means that "just about anybody can qualify for a 100-percent, loan-to-value mortgage on a house."

Unfortunately, Estes said, "this pursuit is getting people into homes with little, or no, financial cushion."

On Friday, five federal regulatory groups directed lenders to properly explain the risks of alternative mortgage products, including that the loans "were consistent with prudent lending practices, including consideration of a borrower's repayment capacity."

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Softer Racetrack Debuts

The people at Keeneland racetrack in Lexington, Ky., dropped me a note to say that when the track opens for its fall meet Friday (Oct. 6),  the horses will be running on a new, softer synthetic surface called Polytrack. There are other such synthetic surfaces, including Tapeta Footings. (See a photograph of what Tapeta looks like.)

You may remember that I told you about this new kind of track after Barbaro's injury earlier this year. The new track surface is designed to reduce injuries in race horses.

Here is a story in The Blood-Horse magazine (sort of the Bible of the thoroughbred industry).

Tracks in California are also installing the new surfaces for the 2007 racing season. The Washington Post ran a column earlier this year (before Barbaro's injury) about the move to synthetic surfaces. The columnist praised the safety aspect, but was unimpressed with what the new surface might mean for the character of the sport.

Polytrack's Web site says it remains to be seen if the new track will affect race times.

As I reported to you on Al's Morning Meeting in May, state racing commissions may track this information:

This is the Washington State Racing Commission's [PDF] report on fatal racehorse injuries, just as an example.

In California alone, another study says [downloadable document], "Musculoskeletal injuries were responsible for 77 percent of 946 deaths in California racehorses from 1997-1999."

If that is right, then there were, on average, more than 300 deaths per year in California during that period of time.

An Australian advocacy group, Animal Liberation Inc., notes two U.S. reports that state that there are generally between 1.4 and 1.7 fatal injuries per 1,000 race entrants.

In 1997, a paper [PDF] issued by the American Association of Equine Practitioners reported study results from several states and countries, all showing essentially the same one-in-1,000 death rate -- give or take a tenth of a percent. The exception was Japan, where the rate turned out to be about three in every 1,000. The higher rate, though, might have something to do with Japan's injury-reporting system being more thorough than its U.S. counterpart.

Another AAEP study from 1997 noted that the trainers who had the most wins on the track also had the lowest rate of injured horses.

Dog Owners Warned About Xylitol

We have known for some time that it might be harmful for dogs to ingest the sugar substitute xylitol. But a new study just published says that, as the ingredient is used in more products, more dogs are getting sick.

The study in the Journal of the American Veterinary Medical Association says:

The Animal Poison Control Center of the American Society for the Prevention of Cruelty to Animals has managed a substantially increased number of cases involving xylitol poisoning in dogs. Found in sugar-free chewing gum, candy, and baked goods, xylitol is a sweetener that can cause serious and sometimes life-threatening problems for pets.

The center managed more than 170 cases of xylitol poisoning in 2005, up from approximately 70 in 2004, said Dana Farbman, a certified veterinary technician and spokesperson for the center. As of August, the center had managed nearly 114 cases in 2006.

An increase in availability of xylitol-containing products may be one reason for the rise in cases, Farbman said.

While it was previously thought that only large concentrations of xylitol could cause problems in dogs, lesser amounts of the sweetener may also be harmful, the center reported.

"Our concern used to be mainly with products that contain xylitol as one of the first ingredients," said Dr. Eric Dunayer, who specializes in toxicology at the center. "However, we have begun to see problems developing from ingestions of products with lesser amounts of this sweetener." Dr. Dunayer said that with smaller concentrations of xylitol, the onset of clinical signs could be delayed as much as 12 hours after ingestion.

According to Dr. Dunayer, dogs ingesting substantial amounts of items sweetened with xylitol could develop a sudden drop in blood sugar, resulting in depression, loss of coordination, and seizures. "These signs can develop quite rapidly, at times less than 30 minutes after ingestion of the product. Therefore, it is crucial that pet owners seek veterinary treatment immediately," Dr. Dunayer said. He also said that there appears to be a strong link between xylitol ingestions and the development of liver failure in dogs.

Reuters has more:

Xylitol, a naturally occurring product, is found in many sugar-free chewing gums, candies, baked goods and toothpastes.

Researchers Sharon Gwaltney-Brant and Eric Dunayer with staff at a poison unit of the American Society for the Prevention of Cruelty to Animals in Urbana, Illinois, gathered information on eight dogs treated between 2003 and 2005 after eating products containing xylitol.

Each dog became ill, and five died or had to be put down because of liver failure, possibly from ingesting xylitol.

One dog who had to be euthanized had eaten four large, chocolate-frosted muffins containing about 1 pound (0.45 kg) of xylitol.

"People don't think sugar-free gum can kill their dog. I didn't before I got into this. But this is something people should be aware of," Gwaltney-Brant, who co-authored the study with Dunayer, said in a statement.

Here are some other studies involving humans and lab rats. 

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