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CNN Saturday Morning News

More Developments on the British Marines Captured by Iran; Father Returns Home from War; Foreign Terror Suspect David Hicks Convicted; Health of the Housing Economy; Lebanon's "American Idol"

Aired March 31, 2007 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

HOLMES: Well, hello from the CNN Center in Atlanta. I'm T.J. Holmes. It is, of course, Saturday, March 31st. March madness, final four happening right here in Atlanta.
NGUYEN: Yes, it is. We are excited about that, it's actually right next door.

HOLMES: Right next door.

NGUYEN: T.J.'s still is trying to get tickets. Good morning, everybody. I'm Betty Nguyen. Thanks for starting your day with us.

We so have some new video that we want to show you. It is a new confession from one of those British captives in Iran. Are they being forced to confess? We have new developments to share with you this morning.

HOLMES: And that picture says it all. If you haven't seen this story, this is one you're certainly not going to forget. A father who is just home from Iraq surprises his little boy at school. It's a reunion you do not want to miss. Stick around for that.

NGUYEN: And listen to this 34 percent of homeowners had no idea what type of mortgage they have. Well, you need to wake up. We're going to bring you up to speed on this. CNN SATURDAY MORNING.

HOLMES: Also want to get you up to speed now on the new developments this morning in that diplomatic standoff between Britain and Iran. Well stuck in the middle, 15 British sailors and marines taken in the Persian Gulf last week. Britain's foreign secretary now saying the government has sent a written replay to Iran's note on those detentions. CNN's Paula Newton joins us now live in front of 10 Downing Street in London with the latest. Paula good morning.

PAULA NEWTON, CNN CORRESPONDENT: Good morning T.J. you know day nine of this crises and still really no progress in terms of where we were in the beginning. Fifteen sailors and marines still being held captive in Iran today, British Foreign Secretary Margaret Beckett saying that perhaps she does see some type of opening on the diplomatic front.

MARGARET BECKETT, BRITISH FOREIGN SECRETARY: We have made our response, and now we are beginning to discuss it. But as you may know, it's a holiday period in Iran, and that is perhaps not too helpful at the moment. UNIDENTIFIED MALE: So the response has been delivered to them.

BECKETT: The response has been delivered, yes.

UNIDENTIFIED MALE: A diplomatic note in that form?

BECKETT: Yes, yes, we have a diplomatic note; we have returned a diplomatic note.

NEWTON: This is really the first opening that we have see that will begin to see country-to-country negotiations, perhaps on what happens next. She alluded to the holidays. We have two more full days officially of New Years holidays in Iran. On the British side here, they're hoping that lifts a lot of the confusion that surrounded a lot of these attempted negotiations in the last nine days.

Now, meantime, unfortunately, the news, as far as the Iranian government, isn't good, and there is still a lot of inflammatory language being used back and forth this morning. Iran's ambassador to Russia indicated on Russian TV that in fact he believed that the legal process, perhaps even a trial for these 15 sailors and marines had started.

GHOLAM-REZA ANSARI, IRANIAN AMBASSADOR TO RUSSIA (Translator): The British military contingent are considered in this region as invaders and occupying forces. If the British government would apologize to Iran for this mistake, the problem could be solved on this level.

NEWTON: You know, when you listen to that, you realize, this argument hasn't gone anywhere in nine days. He's still using language like invaders and occupiers. Britain still saying they're not going to apologize, they don't have anything to apologize for, because they were enforcing their U.N. mandate in Iraqi waters. This is not good news for any of the family members following the developments hour after hour. There was hope that at least one sailor would be released. That was Faye Turney, the only woman of the group still to be held. All hopes of that have faded in the short-term. And right now we're just waiting to see if there is any more contact between the British government and the Iranian government.

T.J.

HOLMES: All right, Paula Newton for us this morning live in London. Thank you so much, Paula.

NGUYEN: Well, the Democrats get more room to maneuver in their standoff with President Bush. At issue, funding and the Iraq war. President Bush says the Pentagon needs Congress to approve additional funds by April 15th or the troops could suffer. Well, now a non- partisan report says funding for the war in Iraq and Afghanistan can go through July without more money from Congress. The House and Senate have passed their funding bills but with a deadline for troop withdrawal. President Bush says he will veto any measure with a timetable. And House speaker Nancy Pelosi in the Middle East this hour, she is leading a congressional delegation. Take a look. Today they are just tourists, though Pelosi and her group toured holy sites in Jerusalem. Tomorrow Pelosi plans to address the Israeli legislature. And in the coming days the group plans to meet separately with Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas, but it is their planned trip to Syria next week that is raising some eyebrows. The White House considers Syria a state sponsor of terror and doesn't want members of Congress to visit.

HOLMES: Australia David Hicks has become the first foreign terror suspect to be convicted among the hundreds of Tailbone and al Qaede members detained at Guantanamo Bay, Cuba. Hicks guilty plea was formally accepted yesterday as part of a plea deal that deal stipulates Hicks was not mistreated at Guantanamo, an important point since Hicks has complained in the past of alleged abuse. Hicks' father is not pleased about that part of the deal.

(BEGIN VIDEO CLIP)

TERRY HICKS, FATHER: The other thing that's come out of this is I believe the Americans have committed perjury by making David sign a piece of paper that's wavering the suing the American government with their actions on him and also his mistreatment and abuses. Now, we know for a fact that David was abused. He was mistreated, and yet he signed a piece of paper saying no, he wasn't.

(END VIDEO CLIP)

HOLMES: Well, Hicks has been at Guantanamo for five years. He will eventually be transferred to an Australian prison where he'll spend nine more months in custody. Australian's prime minister says Hicks got what he deserved.

(BEGIN VIDEO CLIP)

JOHN HOWARD, AUSTRALIAN PRIME MINISTER: The facts over time will be that he pleaded guilty to knowingly assisting al Qaeda. That's an absolutely undisputed fact. It's also an undisputed fact that he's acknowledged that the prosecution could have proved its case beyond a reasonable doubt.

(END VIDEO CLIP)

HOLMES: Hicks, who is a Muslim convert was captured trying to escape into Pakistan after fighting briefly with the Taliban. In his guilty plea, Hicks admitted conducting surveillance on the U.S. Embassy in Kabul on behalf of al Qaeda. He was given a seven-year sentence with all but nine months suspended.

And we want to know your thoughts on the terrorism threat hitting close to home. Opinion Research Corporation did a poll asking whether you were worried that you or someone in your family will become a victim of terrorism. Here now the results from more than 1,000 people, 44 percent of you say yes, you are worried about that, 54 percent say no. NGUYEN: Here's something you may want to worry about another warning for pet owners. Now some dry pet food is being recalled. Meanwhile, the FDA is investigating what may be a different culprit for the whole pet food scare. CNN's Mary Snow has the story.

(BEGIN VIDEO CLIP)

MARY SNOW, CNN CORRESPONDENT (voice over): For the first time, a massive recall includes dry pet food. Hills Pet Nutrition says consumers should stop using one of its products, prescription diet M/D Feline dry food. The development comes roughly two weeks after wet pet food products from a separate company, Menu Foods, were recalled after cats and dogs suffered kidney failure. Some pets got sick, others died. Federal officials are at a loss to explain exactly what went wrong.

DR. STEPHEN SUNDLOF, FDA CTR. FOR VETERINARY MEDICINE: We understand it's confusing. It's confusing to everybody. We're trying to make sense out of it.

SNOW: The Food and Drug Administration says it's found a chemical called Melamine in certain pet foods containing wheat gluten from a supplier in China. In China, Melamine can be found in fertilizers. It's banned for that purpose in the United States but can be found in some plastics. As investigators continue working towards solving the pet food supply program, what are some vets telling pet owners to do?

DR. BRUCE AKEY, CORNELL COL. OF VETERINARY MEDICINE: If you're really, really concerned, then feed your pet a home-made diet for a few days or a few weeks and give this thing a chance to run its course.

SNOW: Dog owner Eileen Moriarity says that's exactly what she intends to do.

EILEEN MORIARTY, DOG OWNER: It's a little scary to think that, you know, it could be in any one of these foods, especially when you think you're buying a premium brand that has better ingredients.

SNOW: Exactly how many pets have been affected by the tainted food remains unclear. The FDA is confirming the deaths of approximately 14 pets but says it's received over 8,000 complaints it's now reviewing.

Mary Snow, CNN, New York.

(END VIDEO CLIP)

NGUYEN: OK. If you want more information on what brands are included in the recall, all you have to do is go to CNN.com.

HOLMES: Well, you might want to be glad you're not in that. Heavy rain left all this behind in north Texas. Flooded homes and streets, and some spots strong winds also knocked over utility poles, and that of course left a lot of folks without power. Several people, as well, had to be rescued from the rising waters. At least one emergency shelter has been set up to handle those forced from their homes.

Well, we got water there. We're talking fire in the hills. You might recognize these hills. Those are the Hollywood Hills. Police say two teenage boys confessed to starting a fire that spread toward that famous Hollywood sign. However, 150 acres were destroyed. No homes or buildings, fortunately, were damaged.

NGUYEN: This next story, well, you're not going to forget it. A U.S. sailor comes home from Iraq and heads straight to his little boy's school for a surprise reunion. Reporting now from western Washington State, Elisa Hahn from CNN affiliate KING.

(BEGIN VIDEO CLIP)

ELISA HANN, KING (voice over): For the last seven months, Bill Hawes has been in Iraq. An eternity for his family, especially his 6- year-old son who had no idea his dad was coming home and was surprising in class.

BILL HAWES, U.S. NAVY: (INAUDIBLE)

JOHN HAWES, SON: I missed you daddy.

HAHN: All year the Sedro-Woolley 6-year-old had written letters to his dad, and his kindergarten class at Central Elementary joined in, sending the sailor care packages. A tearful John got to introduce his father to all his pen pals.

UNIDENTIFIED FEMALE: What's his name?

J. HAWES: Bill.

UNIDENTIFIED FEMALE: This is Bill.

B. HAWES: It's great to be home. Seven months over there. It's nice to see my kids and all again, my wife.

MRS. HAWES, WIFE: I am so ecstatic to have my husband back home. I'm so proud of you.

HAHN: The Hawes family was happy to share their joy with the whole class who all took part in the welcome home party. The sweetest homecoming for a sailor who had been gone too long and for a little boy who dreamed of this day with his dad.

In Sedro-Woolley, Elisa Hahn, KING 5 News.

(END VIDEO CLIP)

NGUYEN: You know they are both smiling today. What a happy family.

HOLMES: Well, here is something for you. How can your power bill affect your credit card payments? Not exactly sure of that connection, but we'll explain universal default and how you can fight it. That's coming up at the bottom of the hour on "Open House."

NGUYEN: And check this out. Is this an Easter celebration that actually, shall we say got out of hand? Find out why police got involved in this strange shipment of colorful baby chicks.

HOLMES: And next, helping your homeownership IQ. What you don't know could hurt you. For example, do you know what a HELOC is? Is it a new kind of heating system? Is it a loan? Is it the next generation of TV? Or a new home tax break? Again, that's a HELOC. The answer when CNN SATURDAY MORNING continues.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Developments in subprime mortgage markets raise some additional questions about the housing sector. The flattening in home prices has contributed to the increase in delinquencies by making refinancing more difficult for borrowers with little home equity.

(END VIDEO CLIP)

HOLMES: That is the Federal Reserve chairman Ben Bernanke testifying this week before Congress about the health of the housing sector and the nation's economy. Bernanke does not think the country is going to slip into recession, despite the meltdown in the subprime mortgage market.

Also this week, the financial web site Bankrate.com released a survey. Some pretty disturbing findings it found that 34 percent of homeowners had no idea what type of mortgage they had, whether it was fixed or adjustable rate, and of those that did know that they had an adjustable rate mortgage, 34 percent of them had no idea what they were going to do when the interest rates actually did adjust.

Well, when it comes to keeping a roof over your family's head, what you don't know certainly can't hurt you, so we wanted to simplify things for you in this complicated world of home financing by doing what else talking with CNN "Open House's" Gerri Willis.

Gerri, good to see you again. We're talk being these mortgage and these terms, and let's see, the subprime. We hear that a lot, we hear interest-only, we hear ARMS. I don't know if most people even understand what we're talking about. So tell us, what exactly do each of these terms mean?

GERRI WILLIS, CNN CORRESPONDENT: Well, there's a ton of jargon out there for homeowners, and the first thing to know is subprime. These are loans that go to people with less than stellar credit. So they have higher rates of interest, they pay higher fees for their loans. They typically have adjustable-rate mortgages. That means they lock in their rate for a period of time, and then the rate adjusts every year after that.

And they may have an interest-only loan. That means this is crazy, T.J. in the beginning, they could pay just the interest. They don't have to pay anything else, just the interest on the loan, and I've got to tell you, at the end of the day, it's not a great deal for them.

HOLMES: All right, well the ARMS as well. We hear 5 in 1-ARM, 7 in 1-ARM. What exactly is that? And a HELOC, what is that?

WILLIS: Let's start with the HELOC. That's a home equity line of credit, and that's just borrowing money against your house, against the equity you already have on your house, if you want to fix it up, if you want to put the kids through school. It works like a credit card. It's just borrowing money against your home. But the 5 in 1, which you were asking about, this is again an Adjustable Rate Mortgage. You lock the term in for a period of time, five years. And then at the end of the five-year period, the rate adjusts each and every year after that. So you could have lock-in rates, T.J., of three months, three years, five years, and fifteen years. It all depends on what you sign up for.

HOLMES: So a lot of that does sound OK to folks. They say, hey, when the term comes up, I'll just refinance. But what could you possibly be getting yourself into? What are some those pitfalls, things you need to know before you sign on that dotted line?

WILLIS: Well you've got to know how much those interest rates can go up once the rate resets. Is there a cap on those rates? Can they go up every year, every six months, every month? You've got to understand the terms of your loan so you know what you're on the hook for. I think what a lot of people are facing right now that is so unnerving to them is they don't know how much the interest rate on their loan is going to go up. And as you know, T.J., even a quarter- point difference in interest rates on a mortgage loan can make a very big difference each and every month. People fight for that quarter point. So if you're on the hook for 1, 2, 6 percent interest rate hikes on your loan over the life of it, that's a lot of money on the table.

HOLMES: And finally here Gerri, tell us what's coming up for us on "Open House."

WILLIS: Well, at 9:30 a.m. Eastern on "Open House," we'll be talking about the mortgage meltdown in the subprime market. Universal default, what you don't know about your credit card. And home makeovers that sell. A lot of people out there on the market going to be selling this spring, T.J. we're going to give them some great advice.

HOLMES: All right, we will see you then.

WILLIS: Thank you.

HOLMES: All right that was a lot of stuff that just came your way, a lot of information. If you need to learn more about mortgages, you can visit several web sites. CNN's financial site can be found at Money.com. Also you can check out Bankrate.com. And for mortgage and foreclosure advice, you can log onto Mortgagemitigationservices.com as well as Justice.gov.

NGUYEN: You can also use the web to look for housing deals, and here's Veronica De La Cruz with a preview of that. Hi there.

VERONICA DE LA CRUZ, CNN.COM: Hey, there, Betty. You know, those exotic mortgages might be pushing more than a million homeowners here in the U.S. into foreclosure. I'll show you which parts of the country have been the most affected. That's coming up next from the dotcom desk."

Betty.

NGUYEN: Thank you, Veronica.

Plus, can a young woman's voice unite a war-torn nation? We have her story when CNN SATURDAY MORNING continues. Don't miss it.

(COMMERCIAL BREAK)

NGUYEN: OK, so, do you know someone with those foreclosure blues? The practice of predatory lending has pushed many homeowners into foreclosure, and Veronica De La Cruz joins us now with what she has found online. Good morning.

DE LA CRUZ: Hey there, Betty. We're taking a look at cities across the nation that have been hardest hit by foreclosures, and the top three Greeley, Colorado. The median cost of a house is just under $164,000. But foreclosures are up nearly 15 percent since January. It is seven times the national average. Next on that list is Detroit. The foreclosure rate there up 80 percent since the beginning of the year. Analysts blame the decline on the auto industry. Miami is number three. The median home price there is much higher, $350,000, but foreclosures are through the roof. Take a listen to this 90 percent, more than 90 percent since January. But it is not all bad news. A house can still be a great investment if you know where to look. Number one on the list of the best places to buy, Panama City, Florida, on the Gulf of Mexico. Homes there are expected to appreciate 72 percent over the next five years.

And it looks pretty good on Florida's Atlantic Coast, too, especially when it comes to property in Vero Beach. Buy a home today and you could see appreciation as high as 64 percent over the next five years. And if you don't want to deal with Florida's hurricanes, Bridgeport, Connecticut, might be a better choice for you. Homeowners there are looking at a 63 percent increase by 2011.

Now, these are the areas you don't want to buy real estate in California's Central Valley, believe it or not. Analysts describe this stretch of Highway 99 from Sacramento to Bakersfield as a real estate ditch. Overbuilding and high unemployment are to blame. And the retirement haven of southwest Florida also rated a no-buy zone. Homes typically cost $500,000, which is much more than many retirees can afford if you can imagine. The number three housing market to avoid is the Jersey Shore.

Again, you can get all of that online at CNNMONEY.com. I'll be back in the next hour with another look at the final four on the Web. Our e-mail question this morning is "How has the final four affected you? Is it affecting your work, can't get anything done as you place your bets or maybe watch the games?" You can send your thoughts to WEEKENDS@cnn.com.

Betty.

NGUYEN: Well, I can tell you how it's affected T.J. He is frustrated!

HOLMES: I am. I need tickets.

DE LA CRUZ: Why is this?

HOLMES: I need tickets desperately.

DE LA CRUZ: Oh, it's the tickets question.

HOLMES: That should have been the e-mail question this morning.

NGUYEN: T.J., just pay the money and do it.

HOLMES: I don't mind paying, a small fee.

NGUYEN: Yet he's still waiting.

HOLMES: Veronica, thank you.

NGUYEN: All right, neighbors warning neighbors about a serial rapist. The rapist's target, listen to this, teenage girls alone at home. At the top of the hour we are going to talk with an Arizona detective investigating the case.

HOLMES: Also, the changing ways of credit card interest rates.

UNIDENTIFIED MALE: They've come up with this idea that if you pay some other credit card company or your utility bill or even have an unpaid parking ticket, that even though you've paid them on time as agreed all the time, they can raise your preferred rate from 5 percent to 30 percent or more. It's called universal default.

NGUYEN: Wow.

HOLMES: I might have a problem, Betty. That's coming up --

NGUYEN: I think we all might have a problem!

HOLMES: Five minutes away. "Open House" tells you how you can fight back and win.

NGUYEN: And check this out or should we say, chick this out? That's a bad pun. But look at those cute, little things. There is a problem with this as well. We're going to tell you how an Easter promotion went bad.

(COMMERCIAL BREAK) NGUYEN: You might dismiss shows like "American Idol" as meaningless fluff, right?

HOLMES: I actually do, Betty.

NGUYEN: But oh, contraire; they could actually be the model for world peace?

HOLMES: We've got proof here, follow along here. Star academy, that is an "American Idol" style show in Lebanon it actually proved it could bridge the gap between Shiites and Sunnis. It's all because of one young Iraqi lady.

NGUYEN: Her name is Shada Hassun, there she is and she emerged as the winner of the four-month-long competition across the Arab world. Today Shada Hassun is a superstar in more ways than one.

HOLMES: OK, that has a different meaning to it than some of the other shows.

This has quite a meaning all its own, Betty. This is just in time for Easter. This is a life-size crucifix done in chocolate. It's a controversial work that's called "My Sweet Lord."

NGUYEN: The 200-pound Jesus was to go on display in midtown Manhattan Monday, but now the show has been canceled, and here's why. There is outrage from Catholics.

HOLMES: You might be thinking it's because of the chocolate. But the outrage is because Jesus is depicted, Betty, as an --

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