Army still has problems with PTSD, report says

SEATTLE (AP) — An Army report released Friday finds the service still has trouble diagnosing and treating soldiers for post-traumatic stress disorder, despite more than doubling its number of military and civilian behavioral health workers over the past five years.

Confusing paperwork, inconsistent training and guidelines, and incompatible data systems have hindered the service as it tries to deal with behavioral health issues, the report said. It's a crucial issue: After a decade of war, soldier suicides outpace combat deaths.

Last May, the Army commissioned a task force to conduct a sweeping review of how it evaluates soldiers for mental health problems at all its facilities. The review came under pressure from Democratic Sen. Patty Murray, of Washington, who was upset to learn that hundreds of soldiers at Madigan Army Medical Center south of Seattle had had their PTSD diagnoses reversed by a forensic psychiatry team, resulting in a potential cut to their benefits and questions about whether the changes were made to save money.

About 150 of those soldiers eventually had their diagnoses restored.

"I am pleased that the Army completed this review and has vowed to make fixes over the next year, though I am disappointed it has taken more than a decade of war to get to this point," Murray said in a statement. "Many of the 24 findings and 47 recommendations in this report are not new. Creating a universal electronic health record, providing better rural health access, and standardizing the way diagnoses are made, for instance, have been lingering problems for far too long. Our service members and their families deserve better."

The report noted that the Army had made strides in some areas, including cutting how long it takes soldiers to obtain a disability evaluation and publishing a guide to the process.

On a conference call with reporters, Army brass emphasized that many of the report's recommendations are already being put into effect. For example, over the past year the Army has been assigning behavioral health workers to brigade combat teams so soldiers will feel more familiar with them and more comfortable about getting help, said Lt. Gen. Patricia D. Horoho, who heads the Army's Medical Command.

Horoho also stressed that there was no evidence that malice motivated the altered diagnoses at Madigan; rather, the changes amounted to difference of opinion, she said.

The task force interviewed 750 people stationed around the globe, conducted listening sessions with 6,400 others and reviewed more than 140,000 records. The Medical Command reviewed diagnoses for all soldiers evaluated for behavioral health problems from October 2001 until last April.

Since September 2001, the report found, 4.1 percent of all soldiers deployed wound up in the disability system with a behavioral health diagnosis such as PTSD or traumatic brain injury.

Nationwide, the report said, 6,400 soldiers had behavioral health diagnoses "adjusted" by medical evaluation boards, with approximately equal numbers having PTSD added as a diagnosis and removed as a diagnosis.

Two locations where medical evaluation boards are held had slightly higher rates of diagnosis changes than the Army-wide average — Fort Polk in Louisiana and Fort Irwin in California, Horoho said. Cases from those locations are being reviewed to ensure no soldiers were improperly affected, but part of the reason for the higher rates may be because those bases rely heavily on civilian health workers, she said.

Last year the Army — and the military as a whole — suffered the highest number of suicides ever recorded, prompting then-Defense Secretary Leon Panetta to declare it an epidemic. The Army had 183 suicides among active-duty soldiers, up from 167 in 2011, and the military as a whole had 350 suicides, up from 301 the year before.

Among the problems the report documented was that Army bases don't have a person on site dedicated to overseeing behavioral health issues, despite the many problems they can cause: suicide, alcohol abuse, drug abuse, and child and spouse abuse. Each installation needs someone with a view of all those programs to make recommendations to the commander, the report said.

Army Secretary John M. McHugh said in a statement that the Army will work to place behavioral health experts "at the command and installation levels to provide better consultation, guidance, coordination and recommendations to improve behavioral health care for our soldiers."

The task force found that of the soldiers surveyed, 37 percent had never received any information about the Army's disability evaluation system or had to seek the information out on their own. It also said it was confusing and inefficient for troops to navigate the vastly different disability systems maintained by the Army and the Veterans Administration.

The Army and VA plan to have a joint disability system, by which health care providers in either organization will have access to records, by 2017.

"Some changes can be made immediately," McHugh said. "Others will require more time and coordination. Importantly, this report reviewed our systems holistically — recommending not only short-term solutions, but longer term, systemic changes that will make care and treatment of our soldiers and family members more effective."

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Associated Press writer Pauline Jelinek in Washington contributed to this report.

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Johnson can be reached at https://twitter.com/GeneAPseattle

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Exclusive: Mortgage problems? Turn your house into a billboard (Reuters)

BUENA PARK, California (Reuters) – When they saw the house on El Dorado Drive in this Los Angeles suburb being painted a startling orange and green and giant billboards hung on the outside, Scott and Beth Hostetler's neighbors were initially angry and confused. Some even considered calling the police.

But what they witnessed on Friday was not an offensive redecoration decision by the Hostetlers, but rather the debut of one of the more unusual schemes to arise from the housing crisis. In return for allowing the front of their four-bedroom house to become a garish advertisement, the Hostetlers are getting their nearly $2,000 monthly mortgage paid by the marketing company behind the project, Brainiacs From Mars.

In a residential neighborhood without heavy traffic, cars passing by the house slowed and drivers gawked at the vivid colors and a giant Brainiacs From Mars billboard.

Romeo Mendoza, the company's founder and CEO, told Reuters that his ultimate goal is to turn 1,000 homes across the United States into giant advertisements for his marketing firm.

And in each case struggling homeowners will get their mortgage paid, for up to a year.

"If we roll it out to scale and impact the foreclosure crisis, that would be amazing," Mendoza, 42, said.

Mendoza said he chose the Hostetlers because they are nice people and he wants to choose the most deserving cases rather than homes on the busiest streets.

Since he advertised the scheme on his website in April 2011, Mendoza says he has had 38,000 applications, from as far afield as Russia and Japan.

The Hostetlers, who are both deaf, were one of those applications and were informed three months ago that their home had been chosen to launch the scheme.

There are a number of issues that could prevent the idea from gaining traction, namely zoning laws and other city codes that limit where advertising can be placed and sometimes regulate other aspects of a home's appearance.

But Mendoza says the idea could help struggling homeowners who face being evicted from their homes through foreclosure, although the Hostetlers say they are going to use the money to pay down credit card debt.

Most of the 38,000 applicants have come from California, Nevada and Florida - the three U.S. states hardest hit by the foreclosure crisis triggered by the collapse in housing prices after the 2008 financial crash.

GRAFFITI OR GODSEND?

In southern California 44 per cent of homeowners are "underwater," owing more on their mortgages than their homes are worth. In Buena Park, about one in every 270 homes has been foreclosed upon.

"The response has been overwhelming," Mendoza says. "People are hurting, and struggling to stay in their homes. If we can help some of them, that would be great."

Mendoza's plan is to advertise his company's name and its social media marketing tools on the front of people's homes. In return, he hopes the quirkiness of the scheme will convince companies to hire Brainiacs From Mars to run their advertising campaigns.

He says he is already negotiating deals with some big firms. The payments to homeowners for the initial experiments are being funded by profits from some of his company's other projects.

The reaction of the Buena Park city council, and some of the Hostetlers' neighbors, suggests that Mendoza could face a bumpy ride.

The Hostetlers' neighbors have been told that the house will only be a giant advertisement for a month. In fact Mr. Hostetler says he would like it to stay that way for six months.

Neighbor Vivian Largent said: "If it's for a month, I'm ok with it. But no longer."

Echoing that sentiment, another neighbor, 80-year-old Bob Pancoast, said: "All the neighbors were a little upset at first. We thought they had gone off their rocker. But I guess it's a good idea for them."

Mendoza said he had checked and that there are no restrictions in Buena Park on the colors homeowners can paint their houses. "They can paint them multi-colors if they like," Mendoza said.

Fred Smith, who sits on the Buena Park city council, was surprised when told about the scheme - and not at all happy.

The color scheme was fine, he said. But the advertisements were another matter.

"This does not follow with the city codes," he said. "They are going to be in trouble. They need to go someplace else."

Charles Mclaughlin, a finance expert in the housing industry, said: "I don't think the program will be a success. It will be akin to graffiti - that's how people are going to look at it. They are going to run into zoning problems everywhere."

Mendoza said: "There are definitely zoning issues in some cities, and we realize that.

"But we have really hit a nerve, and we can't let that stop us. Once people start seeing how it works, once they get it, the moment they realize it is paying people's mortgages, they are always on our side, because of this economy."

(Editing by Cynthia Osterman)

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SanDisk Faces Solid Problems (The Motley Fool)

Flash-memory maker SanDisk (Nasdaq: SNDK - News) saw its third-quarter earnings fall by a disastrous 28% even though revenue was in line with analyst expectations. So what happened?

The numbers
While the company's net income fell drastically, revenue increased by 15% to $1.4 billion. Gross profits also took a haircut of 3% from the year-ago quarter to $625.6 million. The fall in profits was from a 37% decline in the average selling price per gigabyte of storage. Moreover, even though product sales had effectively increased, the decline in license and royalty income pulled net earnings down further.

On the margins front, SanDisk disappointed with gross margin crashing down to 44.2% from loftier 52% levels. This fall was due to a combination of unfavorable yen exchange rates, product price declines, increased noncaptive usage, and start-up costs.

Net income margin also went down drastically from 26% to just 16.5% due to increased income tax expenditure and higher research and development expenses. What's even worse is that this declining trend has been consistent since the third quarter of last year.

Solid business
In May 2011, SanDisk acquired solid-state-drive maker Pliant Technology for $327 million in order to further expand into the high-margin, high-growth business of enterprise-class SSD flash storage. Subsequently, the company has been successful in this space and has seen its enterprise SSDs qualify in three out of seven Tier 1 storage OEMs. This in turn has contributed strongly to the company's revenue.

From a demand standpoint, the future of NAND flash memory looks very bright. NAND is a type of solid-state memory that is primarily used in USB flash drives, memory cards, and solid-state drives. But the key growth driver here is the fact that NAND-based memory cards are used in mobile devices such as smartphones, tablets, and ultrabooks. They're even used on an enterprise scale for servers and storage systems.

For SanDisk, mobile revenues grew well from the previous year's quarter due to increased sales of embedded products. This was on the back of growth in the mobile market, which includes tablets and phones such as those of Apple (Nasdaq: AAPL - News).

The tablet market did witness a considerable shakeout during the quarter, but nevertheless retail and OEM mobile segments managed to deliver a strong 25% growth in revenue from the same period last year.

The company's retail sales also grew continuously since the first quarter of 2010, backed by strong demand from emerging markets.

However, the party-pooper here is the economy, which seems to be slipping further into despair.

Economic woes
SanDisk is not the only flash-storage device maker that's trapped in the throes of an economic slowdown. High-performance solid-state drive and storage memory maker OCZ (Nasdaq: OCZ - News) also reported solid revenue in its latest quarter, but failed to deliver on the bottom line. And then there is the infamous "c" word. That's right: competition.

Solid state of competition
SanDisk is not the only one producing solid-state memory products. It also faces competition from other small and large players. These include STEC (Nasdaq: STEC - News) manufacturer of enterprise SSDs, chip giant Intel (Nasdaq: INTC - News) and OCZ.

In addition, let's not forget traditional hard disk manufacturers like Western Digital (NYSE: WDC - News) and Seagate (Nasdaq: STX - News), who are making faster traditional and hybrid hard disk drives at much cheaper rates.

The Foolish bottom line
Despite the slowdown in the economy, flash memory will probably continue to be in demand because of the widespread use of tablets and smartphones. And then there is the demand for solid-state drives which, according to Gartner, is set to grow as much as 70% to 90% in the next five years. So from a long-term perspective, SanDisk does look like a good bet. However, it has to deal with a lot of competition in the days ahead. Fools should consider tracking SanDisk for the long term.

Fool contributor Keki Fatakia does not own shares in any of the companies mentioned in this article. The Motley Fool owns shares of Intel, Apple, and Western Digital. The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Intel and Apple. Motley Fool newsletter services have also recommended creating bull call spread positions in Apple and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Reverse Mortgage Problems Raising Red Flags (U.S. News & World Report)

The government-insured reverse mortgage program is struggling with a host of serious problems. The loans, available only to homeowners at least 62 years old, are designed to help people use the equity in their home to pay off any mortgage debt, tap a portion of any remaining equity, and live mortgage-free in their home for the rest of their life, should they choose.

Reverse mortgages have been controversial, however, due to high loan and insurance fees and because some lenders convinced seniors several years ago to spend loan proceeds on inappropriate investments.

[See the Top 10 Individual Tax Breaks.]

The Federal Housing Administration (FHA) reverse mortgage is called the Home Equity Conversion Mortgage (HECM). It insures lenders against losses and guarantees seniors that they will not lose access to any funds promised as part of their loans. The agency created a program of mandatory consumer counseling before a reverse mortgage loan can be approved with a participating lender. It also instituted a lower-cost loan last year, called HECM Saver, to reduce high fees and make it easier for seniors to take out reverse mortgages.

However, even though the program frees seniors from making mortgage payments, thousands of seniors have fallen behind on property taxes and home insurance premiums for their homes. Under current rules, lenders are not allowed to determine if borrowers will have enough money to pay taxes and insurance. Lenders are seeking rule changes that would allow them to include tests of prospective borrowers' ability to afford these payments.

The FHA required lenders to report on problem loans so it could fashion better oversight rules. But those reports, due more than four months ago, have been delayed and the agency says it still does not have an accurate picture on loans in default. Accordingly, a spokesman said, it still hasn't issued the rules sought by industry lenders.

[See Why Working Longer Won't Close Retirement Shortfalls.]

This continued delay contributed to the announcement by Wells Fargo last week that it would stop making reverse mortgages. Wells Fargo is the nation's largest reverse mortgage lender with more than a 26 percent share of all activity as of April, according to statistics assembled by industry data provider Reverse Market Insight. Earlier in the year, the industry's second leading lender, Bank of America, said it would exit the business as well.

The volume of HECM loans averaged about 110,000 a year from 2007 through 2009, according to government reports. It dropped to less than 79,000 in 2010 and has continued at this lower pace in 2011. As of April--seven months into the government's fiscal year--there were slightly more than 45,000 HECM loans taken out.

Beyond reduced loan volume, borrowers in many older HECM loans have run into financial problems in recent years. An estimated 20,000 to 25,000 of 550,000 active HECM loans are in default because of non-payment of taxes and insurance premiums, according to government and industry projections.

To date, lenders have not foreclosed on these loans, says Peter Bell, president of the National Reverse Mortgage Lenders Association (NRMLA). There is a long foreclosure process, he notes, which may include up to two years for borrowers to solve their default problems. "It's not until you've exhausted all opportunities" that the lender would then ask HUD to classify a loan as immediately due and payable, he says. "As far as I know, few if any cases have gotten to that point."

[See 5 Retirement Planning Reminders.]

Bell's organization has worked with the FHA to fashion new financial eligibility requirements for HECM borrowers. The process is complex, he says, because retirement income sources extend beyond paychecks to include Social Security, pensions, and retirement savings. Despite the obstacles, lenders are pushing the government for more guidance and clarification.

"Our official position here is that we're hoping that Wells's decision to depart [the HECM program] becomes a call to action," Bell says.

Reverse mortgage lenders have funded a pilot counseling program to see if borrowers in default can solve their problems by working with credit counseling agencies. "Even among those borrowers with the most challenging problems, we're finding that many of these cases are able to be resolved," says Barbara Stucki, vice president for home equity initiatives with the National Council on Aging.

The pilot program has involved only 26 reverse mortgage borrowers, however, so extending its intensive counseling support a thousand-fold would be a major undertaking. "I think it's absolutely possible to scale up," Stucki says. The costs, while substantial, are "clearly much, much less" than it would cost a lender and the FHA to go through a foreclosure. "Plus," she adds, "no one wants to force seniors to move out of their homes."

Twitter: @PhilMoeller

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BofA working through mortgage problems: CEO (Reuters)

CHARLOTTE, North Carolina (Reuters) – Bank of America Corp (BAC.N) is working to improve profits by reducing its number of problem mortgages and cutting other expenses, Chief Executive Brian Moynihan told shareholders on Wednesday.

Moynihan, speaking at the company's annual meeting in downtown Charlotte, said the mortgage business of the largest U.S. bank by assets is "still struggling mightily" as it slowly crawls out from under billions in soured home loans.

"There's still a lot of work ahead to get through this," Moynihan told shareholders.

At the meeting, shareholders elected all 13 director nominees onto the board of directors. No shareholder proposal gained enough support to pass, including one by the New York City Comptroller seeking a review of BofA's foreclosure practices.

The bank's annual meeting -- during which shareholders asked some contentious questions, particularly about the company's mortgage operations -- was a far cry from the slugfests between shareholders and management in recent years.

The meeting was held in a smaller auditorium that seats roughly 450 in a downtown Charlotte office tower adjacent to the company's headquarters.

Unlike the previous two annual meetings since the 2008 financial crisis, empty seats were scattered throughout the auditorium, and investors began to trickle out before the meeting's conclusion.

Two years ago, shareholders blasted management for the purchase of Merrill Lynch, and for the performance of then-CEO Kenneth Lewis. Since then, the company has brought in nearly an entirely new board and changed much of its management team.

During the nearly three hour meeting this year, shareholders were as complimentary of Moynihan and BofA's senior management as they were critical.

"You were put in the position to do an impossible job," said Jim Connelly, a Washington, D.C.-based shareholder in the bank, who then complimented Barbara Desoer, Bank of America's mortgage chief, on her work with the bank's mortgage problems.

Moynihan, in his prepared remarks to shareholders, described the bank as a tale of two companies.

Most of the bank is beginning to return to normal as the bank is working to build "more consistent, predictable returns."

But BofA's mortgage woes that are crimping earnings will not vanish overnight, he said.

"Its obvious we have to get the mortgage crisis behind us," he said.

The two primary risks to the mortgage business are regulatory demands and the potential cost of principal writedowns, he said.

Moynihan, who replaced Lewis as CEO in January 2010, initially produced a string of profits for the bank. But bad mortgages have held Bank of America back from the levels of profitability that some rivals have been reporting in recent quarters.

Bank of America's losses in the second half of 2010 came as a surprise to some investors. While significant non-cash charges weighed on the bank's bottom line, its mortgage business also hampered core results.

Although Bank of America reported a first-quarter profit of $2 billion, earnings missed analyst expectations and were below the bank's year-earlier profit of $3.2 billion.

As BofA works to combat legacy loan problems, finding new business has been challenging as well. Its revenue and loan portfolio have continued to shrink in recent quarters as the U.S. economic recovery has slowed.

Investors are spooked the bank could be on the hook for billions more in soured mortgages held by outside investors, and that its foreclosure problems show no signs of abating.

Bank of America's home loans business lost $2.39 billion during the first quarter alone.

BofA was also one of a few banks whose dividend increase proposal was rejected by the Federal Reserve this year, following a second round of stress testing. The company has been paying only 1 cent per share quarterly.

At the meeting on Wednesday, Moynihan reiterated his assertion that BofA will pay a higher dividend as soon as it receives regulatory approval and that share repurchases are a "high priority."

General Counsel Edward O'Keefe also said that the bank paid $1.4 billion worth of legal fees last year.

Moynihan said Bank of America must judge how a mortgage repurchase dispute will "damage you on the other side" when considering a settlement. Moynihan's comment was softer than the tone of his remarks last year, when he said the bank would engage in "hand-to-hand combat" in repurchase battles.

BofA shares were unchanged at $12.28 in Wednesday afternoon trading.

(Reporting by Joe Rauch; Writing by Lauren Tara LaCapra; Editing by Gerald E. McCormick, Matthew Lewis and Tim Dobbyn)

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Fannie report warned of foreclosure problems: report (Reuters)

WASHINGTON (Reuters) – Fannie Mae was warned in a 2006 internal report of abuses in the way lenders and their law firms handled foreclosures, The Wall Street Journal reported on Thursday.

Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) have both been under investigation since September 2008 for their role in the mortgage crisis.

The 2006 report said foreclosure attorneys in Florida had "routinely made" false statements in court in an effort to more quickly process foreclosures, The Wall Street Journal reported.

The report said Fannie Mae officials "believe foreclosure counsel are sacrificing accuracy for speed" but did not name any firms, the Journal said.

The internal document also raised questions about whether some mortgage servicers or another entity had the legal standing to foreclose, the newspaper said.

The Fannie Mae report found no evidence that borrowers were improperly placed in foreclosure, The Wall Street Journal said.

"Fannie Mae took the necessary steps to address the specific issues identified by the 2006 report and regularly evaluates and enhances oversight of its retained attorney network," a spokeswoman for the government-controlled firm told the newspaper.

The U.S. Treasury took control of Freddie Mac and Fannie Mae at the height of the financial crisis in September 2008 as losses mounted from mortgages gone bad.

(Reporting by JoAnne Allen; Editing by Gary Hill)

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