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Mortgage Meltdown; Gift Cards; Home Winter-Proof; Home Heating Bills; Cutting Grocery Spending
Aired November 17, 2007 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
UNIDENTIFIED FEMALE: There's some women that are here that, you know, have no idea, have never played basketball or touched a basketball.
JOHN GARCIA, ABC REPORTER (voice-over): The term "granny ball" is not actually a reference to the age of the players, but to the style of shooting. See, in granny ball you get two points for shooting it overhand but three points for shooting it underhand, granny-style.
(voice-over): The turnout on this, the second day of tryouts is encouraging to organizers. They had no idea what to expect, but it turns out there are plenty of women, senior citizens, anxious to get out and play.
UNIDENTIFIED FEMALE: To me, this is wonderful. This is what I dreamed of.
GARCIA: John Garcia, ABC 7 News.
VERONICA DE LA CRUZ, CNN ANCHOR: Very impressive.
Yes, and you know they always have medical staff on standby for any athletic event, but they have extra for the granny games.
Folks, coming up here in the CNN NEWSROOM...
T.J. HOLMES, CNN ANCHOR: It's a good thing. The ladies are playing basketball.
DE LA CRUZ: We're in big trouble after this, we're going to go to break and then you're in big trouble.
HOLMES: She's 90 playing basketball, but OPEN HOUSE, Gerri Willis, coming up right now.
GERRI WILLIS, HOST: Hello, I'm Gerri Willis. This is OPEN HOUSE, the show that saves you money. Coming up, gift cards, the perfect Christmas present or holiday headache? Then how to winterize your home and spend less at the grocery store.
But first, the mortgage meltdown. Realty Track's new foreclosure report shows Stockton, California, leading the way with one in every 31 households filing for foreclosure, followed closely by Detroit. Coming in at No. 5, Las Vegas. Now while the city was the spotlight for the Democratic debate this week, it's been a hot spot in the mortgage meltdown for quite some time. In fact, foreclosures there are up 200 percent from just a year ago.
ROGER COOK, LAS VEGAS HOMEOWNER: Good afternoon, Ace office supply. May I help you?
WILLIS (voice-over): Roger Cook has lived in his Las Vegas home for 30 years, but next month, he could lose it.
COOK: I've been here 30 years. In 30 years, if you check my record you see that for the last 15 years, I've never been late on payment up until recently.
WILLIS: Roger used equity in his home to start a small business, but the business hasn't been as successful as hoped and now he can no longer afford the monthly mortgage.
Roger is one of nearly 17,000 homeowners caught in Nevada's foreclosure crisis. Realty Track, which follows foreclosure data says one out of every 48 Las Vegas homes is in foreclosure, the fifth highest rate of any major city.
As the real estate market boomed in the last few years, builders, out of town investors and residents jumped to take advantage of what seemed like a sure bet, a soaring housing market in which prices nearly doubled in just three years. But the gamble didn't pay off for many.
MARK ZANDI, CHIEF ECONOMIST, ECONOMY.COM: The Vegas economy is in recession, because of the housing downturn. It's now so severe and there's so many people employed in housing-related activities and they're losing their job, that it's pushed the entire economy under.
WILLIS: And political watchers in economists alike think more voters may be looking for a change when they head for the polls.
ZANDI: The situation in places like Vegas, California, Arizona, and in Florida, parts of the northeast, industrial Midwest, is indeed getting worse. I think this will become a significant political item and could be at the very top of the political agenda during the presidential election.
WILLIS: Roger Cook is working with ACORN, a non-profit trying to help him avoid foreclosure. And even though he'll need to find $9,000 to keep his house, he says he's not planning to move.
COOK: I don't have any plans because I don't plan to lose the house. You know, like I said, we've been here 30 years and I just can't even imagine losing it. I can't even see it.
(END VIDEOTAPE) WILLIS: Well, a foreclosure in your neighborhood can have a big impact on you. Josh Nasser is the vice president of federal affairs for the Center for Responsible Lending. He's joining us from Washington. Good to see you, Josh. You've got this new study that is so interesting. You say it's not just people who are in foreclosure who are affected by foreclosure. What's the bill for the rest of us?
JOSH NASSER, CTR. FOR RESPONSIBLE LENDING: That's right. For folks that are neighbors, within eighth of a mile of a foreclosure, they'll see their property values decrease by an average $5,000.
WILLIS: Wow. Wait a minute, $5,000? for the neighbors?
NASSER: That's right. And on blocks where you have numerous foreclosures, there's a multiplier effect and it can really be a staggering amount. We estimate $223 billion in lost property value and taxes because of the foreclosures that are occurring in the subprime market. It's very dramatic and it's having a huge impact.
WILLIS: It is very dramatic. I understand you say something like 45 million homeowners could be affected; their values of their homes could be impacted. You know, you say this is also tax receipts. And I think that's something people don't consider. What's going to be the impact on communities?
NASSER: Well, the impact on communities can be quite dramatic. For one, you can -- that's less money for schools, for police, for basic goods and services, needs that the communities have. It can really lead to a, you know, a lessening of the quality of life for entire communities. I think the point is that foreclosures have an impact on communities, not just the individuals' that experience the foreclosure, so it's all of our problem.
WILLIS: Josh, it occurs to me this could affect whether businesses want to move to the community if new folks will come and buy houses in the community. I mean, the ramification could be long term.
NASSER: Absolutely. And, you know, this has really been fueled by incredibly irresponsible lending practices where most subprime homeowners have loans that are with massive payment shots and that is really what is creating so much of this problem. We need to return to sustainable homeownership and we need to keep people in their homes and fight this wave of foreclosures.
WILLIS: Who gets hurt the most? What parts of the country are really feeling the pain?
NASSER: Well, metropolitan areas where you have high concentrations of subprime lending are feeling the most pain. Communities where you have high proportions of African-Americans and Latino families are high -- are impacted extremely hard because they have a disproportionate amount of subprime loans in the first place. So, we're talking about really dramatic economic repercussions on communities that can also hurt people's ability to not only sell their homes, but to use the equity in their homes for other critical needs. So the economic repercussions could be extremely severe here.
WILLIS: OK, so minority communities, obviously, hurt badly. What are the numbers that people didn't pay attention to in your study, that I think is fascinating. You're saying the lost equity could amount to $164 billion. Think about that. This is what you own. You don't own the bricks and mortar, you own the equity and that is just leeching away for so many people.
NASSER: That's right. Most people's wealth is tied up in their home equity. And we estimate in total $2.2 million families will lose their home because of these reckless lending practices and the loans made in 2005 and 2006, many of those loans are going to get -- are going to become a major problem for people because their payment is going to increase dramatically. So, we have not seen the worst of this yet.
And we need responsible public policy to make sure lenders make loans that people can afford and we need changes in the bankruptcy code to allow people to keep their homes in bankruptcy. Plus, I need to say that industry needs to do a great deal more to modify mortgages to keep people in their homes. Right now, only about one percent of the loans out there have been modified.
WILLIS: Well, Josh, lots of work ahead. Obviously, we appreciate your helping us out today. Thank you.
NASSER: You're very welcome. Thanks for having me.
WILLIS: Now, if you live in a neighborhood with homes in foreclosure, take action now. Team up with neighbors to mow the lawn and pull weeds at abandoned properties. Think about starting a neighborhood watch. You don't want the property next door to turn into an eye sore or safety hazard or, worse, a place where criminals gather. If the foreclosed home is unsafe, you should call the police or sheriff's office. They'll step in when a property's condition risks public health.
And if you are planning to do the big ticket renovation when others in the neighborhood are being evicted, well, think again. Monitor your investment carefully. Make sure that you don't overinvest making your home overpriced for the market.
And remember, many of the neighborhoods suffering saw incredible price gains during the housing boom. The state experiencing the biggest number of foreclosures right now, California saw the biggest price hikes, 90 percent in the past five years alone. So, don't lose track of that.
Coming up on OPEN HOUSE, before you buy a gift card for someone, we have some very important advice. Then save money winter proofing your home. And are you spending too much for groceries? We'll show you how to get what you crave and save.
But first, your "Tip of the Day."
(BEGIN VIDEOTAPE) WILLIS (voice-over): Long live the Thanksgiving tradition of leftovers, but don't get sick. The Center for Science in the Public Interest recommends that your meal be moved from the oven to your table to the refrigerator in two hours or less. In order for food to cool quickly, it should be separated and stored in shallow containers. And, remember, all refrigerated leftovers should be eaten within four days of the meal. Food you want to keep longer, freeze it.
That's your "Tip of the Day."
WILLIS: Gift cards, they're more popular than ever with the average shopper expected to spend more than 200 bucks this year on cards. That's up about $17 from last year. But before you buy that plastic gift, you'll want to listen to our next guest. Ellen Cannon is the managing chief editor of Bankrate.com in West Palm Beach.
ELLEN CANNON, MANAGING EDITOR, BANKRATE.COM: Hi, Gerri.
WILLIS: Ellen, let's start with a number of people using these things. It's astronomical. Who are they really targeting out there?
CANNON: Oh, everyone. Every -- parents, teenagers, grandparents in particular who don't know what to buy their teenagers, very popular market.
WILLIS: All right. So we're going to spend something like $35 billion on gift cards this year, that's phenomenal to me. What's better, the retail or the credit cards? Which works better? What do you prefer?
CANNON: Well, it depends who you're shopping for. None of the retailers that we surveyed, and we surveyed 21 of the largest retailers in the country, none of them have a fee to purchase the gift card and they don't have expiration dates. Whereas the big four, American Express, Discover, MasterCard and Visa, as well as the big shopping mall operators, they all charge for their gift cards. And that's because that's the only way they make money.
WILLIS: Well, how much do they charge for them?
CANNON: They range from $2.95 to $6.95 per card, plus shipping and handling.
WILLIS: That's not nothing. I mean, I hate to pay that extra money at the margin which could go to the person who will use it. But let's talk about expiration dates for just a moment, because I hear scare stories about, if you let it expire, you lose all your money. You lose some of your money. What actually happens?
CANNON: What happens is for the credit card issuers, 366 days after the gift card is issued, they have an expiration -- that's the expiration date. But your card's not really expired. It just means from that point on every month there will be a $2 maintenance fee charged to that account until the balance is zero. So, you can still spend it, but you should spend it before then.
WILLIS: But you are leaking money like a sieve is the problem.
CANNON: Exactly, $2 every month, yes.
WILLIS: And don't some states have laws in this regard? Aren't they trying to protect us?
CANNON: Many states are passing laws saying that expiration dates are not valid. And that California, Florida, many states and there are many, many more in the works.
WILLIS: What about registering cards? I hear about this. What does it mean?
CANNON: Registering cards just means that when you receive the card, go online to the Web site, register the card number so if you lose it or you want to check your balance, then you can do that. Oftentimes the point of sale, they're not able to check your balance, so before you go out shopping with it, it's a good idea to check it online.
WILLIS: Any last-minute advice on how to use these things once you're in the store?
CANNON: Use them fast. That's the one problem that people forget them, they put them in the back of the drawer. They think, I'll wait until the January sales or whatnot and then they never get spent. So, use them as soon as you get them.
WILLIS: Use it or lose it. Ellen, great advice. Thanks for the help today.
CANNON: Thank you.
WILLIS: Still ahead on OPEN HOUSE, is your home winter-proof? I'll show you how to save energy and your wallet.
And, spending too much on the food aisle? How to save on groceries without compromising your lifestyle.
But first, your mortgage numbers.
WILLIS: Home heating bills they're are on the rise to almost $1,000 this year. But before you start taking cold showers, there are some simple tricks to lower those bills before the winter really sets in. Ed Del Grande is with HGTVpro.com.
Ed, great to see you, yet again.
ED DEL GRANDE, HGTVPRO.COM: Oh Gerry, it's always my pleasure.
WILLIS: All right. So you've got some great information for us today.
DEL GRANDE: Great heating information, yeah.
WILLIS: Now look, you might have forced hot air, you might have forced water systems. There are two different kinds. Let's start with the old-fashioned kind, the steam kind. What should I do to winterize it?
DEL GRANDE: Well, steam is an old system. You don't have to worry about winterizing it, because it's usually -- it's steam going through the lines and not water, but if some of that steam condenses, Gerri, and makes water pockets, that's when you get the binging and water hammering, so you should have technician come down, check that steam boiler and really drain back the system so the steam can flow freely through the pipes.
WILLIS: That happens in my house. OK, let's talk about force hot air, because a lot of people have that. What do you do to maintain it, winterize it right now?
DEL GRANDE: Well, get a new filter in there right away, you want fresh air. But don't get the regular cheap filters that you can see through. Look at this, feel this, Gerri, it's like a piece of cloth. This is called a HEPA filter.
WILLIS: What does that stand for?
DEL GRANDE: It stands for High Efficiency Particulate Air Filter.
WILLIS: That sounds so technical.
DEL GRANDE: Well, funny you say that because NASA really used these with the astronauts and now we have them in vacuum cleaners and heating systems. So, that really cleans out the air and it lasts longer.
WILLIS: All right. Now you say insulate your pipes. So, is this what I use?
DEL GRANDE: Yeah, these are neoprene sleeves. You can see they come in long lengths.
WILLIS: How does it work?
DEL GRANDE: Well, these are for forced hot water systems or hot water pipes. It's like putting a winter coat around your pipes. And let me show you what to do. You just open it up, see, and you get the ones presplit and peel back these tabs. It can be a little tricky. See what I'm doing? Just peel that back.
WILLIS: Oh, I got it. DEL GRANDE: Now look, it's self adhesive. You glue it together. That will not come apart unless you really pull at it and once that's set...
DEL GARNDE: Well, it's on for awhile, but it will keep your thumb warm, so that's good.
WILLIS: Love that, that's perfect. OK, so you say it's not just about the furnace. It's not just about the system inside the house. It's also what you do outside. You're worried about water.
DEL GRANDE: Right, because water can ruin a foundation, especially if it forms ice and splits your foundation. So, let's get that water away. Gutter guards. Pull on that.
WILLIS: What is this?
DEL GRANDE: Just pull it. There we go. These go on the end of your gutters. They come in different sizes and it you can even bend them to any figure...
WILLIS: Oh, I love this.
DEL GRANDE: Yeah, see Gerri. If you get the water away from your house then it can't get into the foundation to damage it.
WILLIS: So, you're pushing it away from your foundation, makes a lot of sense. Now, you brought some WD-40, here. Why?
DEL GRANDE: Yeah. Well, this is like a ring coat for all the metal things outside. Anything where you see metal, like swing sets, furniture that you leave out that's made of metal. You just get it and spray down your pipes and it's putting a raincoat on it and it really protects it for the winter.
WILLIS: What about wooden furniture. You know, a lot of people, they don't have the metal anymore, they've got teak. How do you take care of that, right now?
DEL GRANDE: You got to take it in. Wooden furniture just gets beat up by the winter, so take that in or at least put some kind of cover over it or you could get teak oils or any kind of wood oils and that'll protect it, similar to the spray lubricants.
WILLIS: All right, so if you had one thing you could tell folks out there, one thing you cannot forget to do, what would it be?
DEL GRANDE: Well, just make sure that you are prepare for any storms. And the new thing coming up now days, they have standby generators and they're pretty much affordable compared to the old days. So now, if your power goes out, the generator automatically kicks on and doesn't interrupt your power.
WILLIS: Ed, that is perfect. Thank you so much for helping us out today.
DEL GRANDE: Thank you, Gerri.
WILLIS: Good to see you.
DEL GRANDE: You too.
WILLIS: Still ahead, are groceries eating up your budget? Grab that pen and paper. We'll show you how to save in the food aisle and still satisfy your cravings, but first your "Local Lowdown."
(voice-over): Minneapolis, Minnesota, as the weather gets downright cold, check out what you can do free indoors and stay warm. Head to the Minneapolis Institute of the Arts where you can view over 100,000 works of art at no cost.
Stop by the Mall of America, the largest retail and entertainment complex in the U.S., but you can do far more than shop here. Check out a music festival, a book signing or even a cooking demonstration. And if you don't want to brave the cold, consider the skyways. More than seven miles of enclosed pedestrian bridges linking the 80-city blocks of downtown Minneapolis. That's your "Local Lowdown."
WILLIS: The average family spends around $5,000 a year on groceries. And with the holidays right around the corner, it's easy to overbuy. Before you end up with more receipts than cash in your wallet, well you might want to listen to our next guest, Lisa Freeman. She's editor in chief of "ShopSmart" magazine.
You guys did a really fabulous survey on the best stores with the best prices. What did you find?
LISA FREEMAN, EDITOR-IN-CHIEF, SHOPSMART MAGAZINE: Well, this was a reader's survey of 24,000 people. And what we found is the specialty stores like trader Joe's and Aldi actually had great prices.
And you're not going to do your weekly shop there, per se. It's a place you can go to get good prices and then you'll still have to go somewhere else to do your weekly shop. Another store that rated very high was Costco, may not go there for your weekly shop, but great for loading up and stocking up and getting goodies.
WILLIS: And Wal-Mart is on your list?
FREEMAN: Wal-Mart and the superstores, yes, absolutely.
WILLIS: Slater Brothers. Shoppers Food. Really interesting stuff, because it matter house much you pay.
Now, let's get to some ways you can actually save on your bill. First off, you say packaging matters. Now we've got a couple of Snapple's here. What your trying to tell us?
FREEMAN: More and more people are buying convenience food, you're buying precut, presliced, precooked, prechilled.
WILLIS: Bigger check. Bigger check at the...
FREEMAN: It costs more. And you know, if you are doing it consistently, it really is going to add to your bill. So, this is one easy way to shave off the costs. For example, cheese. We bought Jarlsburg cheese sliced, at the deli counter for $7.99 a pound. We bought hunk Jarlsburg cheese for $3.99.
WILLIS: If you are willing to slice it yourself you can save dough. The Snapple if you buy cold, if it's been in the freezer, it costs more than if you pick up something that's warm.
FREEMAN: That's right.
WILLIS: All right. OK, so let's get to some of these issues about the store brand versus the name brand.
FREEMAN: The store brands can save you a ton of money.
WILLIS: And some of them are fabulous.
FREEMAN: Save up to 50 percent. And we've been testing these products, all kinds of store brand products from canned peaches to frozen french fries to paper towels. And what we found consistently is they are just as good as the brand name items or...
WILLIS: I got to tell you, though, I am going to argue you with you just a little bit. Because you brought in yogurt. And I like the name brand yogurt than I like the unbranded yogurt. Might be occasionally find but...
FREEMAN: You know, the deal is these things are constantly being reformulated. So, it's worth trying them. So, maybe you didn't like the store brand, but because it's always being reformulated, you may like it the next time. So, it's worth trying. Don't give up.
WILLIS: Well, because of that, we are actually going to do a test here right in the studio. OK. We have a name brand, voila, of paper towel. And this is from what store?
FREEMAN: That's Costco.
WILLIS: OK. All right, so we have the Costco and we're going to do a little test here to see which one is the better picker-upper.
FREEMAN: Just stick them in there.
WILLIS: Hmm, what am I seeing here? They look pretty similar to me.
FREEMAN: They look very similar, but I think the Kirkland store brand is a little bit -- looks like it sucked it all up. WILLIS: Is that what you're finding?
FREEMAN: That's what we have found in the past that it's just as good or even better. And so it just goes to show, don't assume they are inferior products and you can save a lot of money.
WILLIS: Absolutely. Lisa, thank you for being with us today. I really appreciate it.
FREEMAN: You're welcome.
WILLIS: If you have an idea on how to save money, send us an e- mail to firstname.lastname@example.org. And if you want to check out this "Project Savings" again, logon to cnn.com/openhouse.
You can hear much more about the impact of this week's news on your money on YOUR MONEY with Christine Romans and Ali Velshi coming up in a few hours at 1:00 p.m. Eastern right here on CNN.
As always, we thank you for spending part of your Saturday with us. OPEN HOUSE will be back next week, right here on CNN, and you can catch us on HEADLINE NEWS every Saturday and Sunday at 3:30 p.m. Eastern Time. Don't go anywhere. Your top stories are next in the CNN NEWSROOM. Have a great weekend.
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