Lisa Bourcier, Horry County's Public Information Officer, said it's all a matter of miscommunication between the county's planning and zoning board, and the Grand Strand Water and Sewer Authority.
The county says the water and sewer authority never obtained a building permit, and never had a review, known as a 540 review, by the planning commission to see if the water tower was compatible with the neighborhood.
The county says the water and sewer authority will probably have the review, which is a state requirement, in late May or early June.
However, the county says even if the planning commission does not approve the water tower, they cannot stop construction. The utility will only have to notify the county that the plan was not approved.
As far as the building permit goes, the utility will have to pay a penalty double the cost of the permit, totaling $5,900.
CEO of Grand Strand Water and Sewer, Fred Richardson, told people in the neighborhood Thursday night at a public meeting, that he didn't know about the 540 review required by the county; and while the county has a heavily regulated building permit process, he believed that the water tower was exempt because it is a public utility.
People at Thursday night's meeting say they will continue to fight the tower. Some even threatened to file a class action lawsuit.
Saturday, May 3, 2008
Friday, May 2, 2008
FTC Charges Mortgage Foreclosure “Rescuers”
The Federal Trade Commission has charged Foreclosure Solutions, LLC and Timothy A. Buckley with operating a nationwide mortgage foreclosure “rescue” scam that charged consumers as much as $1,200 to save their homes from foreclosure but failed to do so. The FTC seeks to bar them from further law violations and make them forfeit their ill-gotten gains.
According to the FTC’s complaint, the defendants market their services through direct mail to consumers named in court records of foreclosure actions and through Internet Web sites, including www.program10.com and www.foreclosuresolutionsusa.net. Through the direct mail solicitations, the defendants warn that consumers could lose their home within 10 days, and they promise that they can stop foreclosure proceedings. In one of their letters they claim a 93 percent success rate.
Consumers who call a toll-free number are told that the defendants will provide an attorney and a case manager to help them avoid foreclosure, the complaint alleges. The defendants allegedly state that they have helped thousands of others, and they promise to guarantee in writing that they will save each consumer’s home. In some instances, consumers are permitted to pay about half the fee up-front and the balance within 30 days for an extra $50.
The defendants allegedly send a representative to the consumer’s home to close the sale and collect the up-front fee. In the agreement they require consumers to sign, they attempt to disclaim their guarantee that they will save the consumers’ homes, stating that they will work faithfully but not guarantee the success of their efforts. The defendants also provide consumers with a money-back guarantee, promising a refund if the consumer follows their instructions to save money and avoid lender phone calls. They also require consumers to sign a power of attorney form, authorizing them to represent the consumer in the foreclosure action.
In addition, the complaint alleges that the defendants instruct consumers to open a savings account and to deposit, every month until further notice from the defendants, the consumer’s monthly mortgage payment plus an additional 25 to 35 percent. They claim that the extra payment will be used to negotiate with the lender to reinstate the loan. After consumers have paid for the services, the defendants often don’t answer or return their calls. In otherinstances, the defendants’ representatives allegedly tell consumers that they are working on a solution, that they need more information from the consumer, or that no solution can be found.
According to the complaint, the defendants hire attorneys to respond to the foreclosure complaints filed against consumers. In many instances, the attorneys file the same form response to every complaint, usually without investigating consumers’ individual circumstances that might identify defenses or counterclaims unique to particular consumers. In many instances, the defendants do not stop foreclosure or save consumers’ homes, and many consumers who have contracted for their services lose their homes to foreclosure. Consumers who stop foreclosure through their own efforts sometimes learn that their lenders offer the same settlement terms regardless of whether the consumers negotiate on their own or through the defendants. Others learn that their lenders will negotiate only with them and not with the defendants.
The Ohio-based defendants are charged with falsely representing that they will stop foreclosure in all or virtually all instances, in violation of the FTC Act.
The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Northern District of Ohio, Eastern Division.
According to the FTC’s complaint, the defendants market their services through direct mail to consumers named in court records of foreclosure actions and through Internet Web sites, including www.program10.com and www.foreclosuresolutionsusa.net. Through the direct mail solicitations, the defendants warn that consumers could lose their home within 10 days, and they promise that they can stop foreclosure proceedings. In one of their letters they claim a 93 percent success rate.
Consumers who call a toll-free number are told that the defendants will provide an attorney and a case manager to help them avoid foreclosure, the complaint alleges. The defendants allegedly state that they have helped thousands of others, and they promise to guarantee in writing that they will save each consumer’s home. In some instances, consumers are permitted to pay about half the fee up-front and the balance within 30 days for an extra $50.
The defendants allegedly send a representative to the consumer’s home to close the sale and collect the up-front fee. In the agreement they require consumers to sign, they attempt to disclaim their guarantee that they will save the consumers’ homes, stating that they will work faithfully but not guarantee the success of their efforts. The defendants also provide consumers with a money-back guarantee, promising a refund if the consumer follows their instructions to save money and avoid lender phone calls. They also require consumers to sign a power of attorney form, authorizing them to represent the consumer in the foreclosure action.
In addition, the complaint alleges that the defendants instruct consumers to open a savings account and to deposit, every month until further notice from the defendants, the consumer’s monthly mortgage payment plus an additional 25 to 35 percent. They claim that the extra payment will be used to negotiate with the lender to reinstate the loan. After consumers have paid for the services, the defendants often don’t answer or return their calls. In otherinstances, the defendants’ representatives allegedly tell consumers that they are working on a solution, that they need more information from the consumer, or that no solution can be found.
According to the complaint, the defendants hire attorneys to respond to the foreclosure complaints filed against consumers. In many instances, the attorneys file the same form response to every complaint, usually without investigating consumers’ individual circumstances that might identify defenses or counterclaims unique to particular consumers. In many instances, the defendants do not stop foreclosure or save consumers’ homes, and many consumers who have contracted for their services lose their homes to foreclosure. Consumers who stop foreclosure through their own efforts sometimes learn that their lenders offer the same settlement terms regardless of whether the consumers negotiate on their own or through the defendants. Others learn that their lenders will negotiate only with them and not with the defendants.
The Ohio-based defendants are charged with falsely representing that they will stop foreclosure in all or virtually all instances, in violation of the FTC Act.
The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Northern District of Ohio, Eastern Division.
Thursday, May 1, 2008
dump the real estate agent and save some big bucks?
After soaring for years, home prices have fallen sharply, and sellers want to get as much as they can for their homes. Sometimes, they mull over the idea of going it alone. After all, you can go to any open houses on your own, and you can make an offer on any home on your own. Likewise, you can put out signs and sell your home on your own, too.
So why not? Why not dump the agent and save some big bucks? After all, a 6% commission on a $300,000 home is a not-so-insignificant $18,000.
Well, there are good reasons to stick with the traditional buying-and-selling process. Real estate agents may look like they're earning easy money, but appearances can be deceiving. Here are some things to consider.
Get what you pay for
A good buyer agent can help you spend your dollars wisely and save you money, despite what he or she earns in commissions. Before I bought my house, my agent told me several times to lower my bid. He said it wasn't worth anything close to its asking price. He showed me dozens of homes and spent a lot of time doing so. He also persuaded the seller to sell to me.
And when my parents used him later, he found a great house they hadn't even noticed, whisked them quickly off to see it, and helped them win a bidding war for it.
If you're selling on your own, you might not have a good handle on what your home is worth. A not-so-good agent might entice you with promises of high values, but a good one will give you a realistic expectation. On your own, just using online resources won't always give you the most accurate information.
The folks at Zillow.com, for example, have said that Zestimates, their estimates of home values:
... are designed to be a starting point for consumers who want to learn about the value of homes. We make every effort to explain on our site the role of Zestimates as a research tool, as well as to clearly display our rates of accuracy for every area we cover.
Most of us buy or sell houses only a few times in our lives. Our experience with the process and its intricacies are rather modest, compared with a seasoned professional who has a full bag of tricks. For example, the house I finally bought was slated to be sold without its major appliances. My realtor asked the seller whether she would sell me the oven, fridge, washer, and dryer for $1, and she said yes. I might not have thought to ask.
Now that I've sung the praises of real estate agents, let me also warn you about them. They're not all created equal. When you look for one, don't just go with the cousin of a good friend unless you're confident he knows his stuff. Seek out the ones with glowing recommendations. It will be worth it.
So why not? Why not dump the agent and save some big bucks? After all, a 6% commission on a $300,000 home is a not-so-insignificant $18,000.
Well, there are good reasons to stick with the traditional buying-and-selling process. Real estate agents may look like they're earning easy money, but appearances can be deceiving. Here are some things to consider.
Get what you pay for
A good buyer agent can help you spend your dollars wisely and save you money, despite what he or she earns in commissions. Before I bought my house, my agent told me several times to lower my bid. He said it wasn't worth anything close to its asking price. He showed me dozens of homes and spent a lot of time doing so. He also persuaded the seller to sell to me.
And when my parents used him later, he found a great house they hadn't even noticed, whisked them quickly off to see it, and helped them win a bidding war for it.
If you're selling on your own, you might not have a good handle on what your home is worth. A not-so-good agent might entice you with promises of high values, but a good one will give you a realistic expectation. On your own, just using online resources won't always give you the most accurate information.
The folks at Zillow.com, for example, have said that Zestimates, their estimates of home values:
... are designed to be a starting point for consumers who want to learn about the value of homes. We make every effort to explain on our site the role of Zestimates as a research tool, as well as to clearly display our rates of accuracy for every area we cover.
Most of us buy or sell houses only a few times in our lives. Our experience with the process and its intricacies are rather modest, compared with a seasoned professional who has a full bag of tricks. For example, the house I finally bought was slated to be sold without its major appliances. My realtor asked the seller whether she would sell me the oven, fridge, washer, and dryer for $1, and she said yes. I might not have thought to ask.
Now that I've sung the praises of real estate agents, let me also warn you about them. They're not all created equal. When you look for one, don't just go with the cousin of a good friend unless you're confident he knows his stuff. Seek out the ones with glowing recommendations. It will be worth it.
24% of U.S. homeowners are “considering using” the stimulus money
The survey’s other key findings included:
Homeowners between the ages of 25 and 34 were most likely to consider using the rebate checks for a home improvement (33%); homeowners older than 65 were least likely (20%).
Homeowners in the West were most likely to use their rebate check for a home improvement (27%); homeowners in the South were least likely (22%).
The most common reasons cited for pursuing a home improvement project with the rebate money were comfort (34%), aesthetics (17%), environmental impact (15%), resale (13%), and return on investment (8%).
Among all respondents, 31% of homeowners said they are planning to start a home improvement project during May, which is National Home Improvement Month.
“Clearly, many homeowners agree that investing in their homes can improve their quality of life and provide a solid return on investment,” said Mark Ziegert, JM’s senior brand manager for building insulation products. “People who use their rebate check to improve their home’s energy efficiency not only enhance the comfort of their home, they will achieve cost saving in both the winter and summer through improved energy efficiency, and they may increase the resale value of the home.”
Resilient American homeowners intend to shake off concerns about the slumping real estate market and plant the money they receive as part of the federal economic stimulus package into what for many is their most important financial asset: their homes.
A national consumer opinion survey released today found that 24% of U.S. homeowners are “considering using” the money they will receive as part of the federal economic stimulus package to upgrade or improve their homes. In addition, roughly one in five respondents, or 19%, said they would “definitely use” their rebate money for a home improvement project. The survey was conducted in April by Johns Manville (JM), a building and specialty products manufacturer, and Opinion Research Corp., a market research firm.
“The federal government is hoping that Americans will spend these checks and help stimulate the nation’s economy, and this survey confirms that many Americans are prepared to do that, at least when it comes to their homes,” said Wayne Russum, senior vice president of Opinion Research Corp.
Among respondents who said they are not considering using their rebate check for a home improvement, the most common intended uses were saving it (45%), paying down debt (40%), taking a vacation (14%), purchasing a luxury item (9%), or something else (5%).
The tax rebates were created earlier this year by a Congressional bill aimed at encouraging consumer spending in the face of a slumping economy and a weak housing market. The checks started arriving in taxpayers’ bank accounts on Monday. Single taxpayers with annual adjusted gross income of less than $75,000 qualify, as do joint filers making less than $150,000.
The telephone survey of 751 American homeowners was conducted from April 11-14 by Opinion Research Corp., a national market research firm based in New Jersey, on behalf of Johns Manville, an international building materials manufacturer based in Denver. The survey’s sampling error was plus or minus four percentage points.
The survey found that the most popular projects for respondents considering using their rebate checks for a home improvement project included: household upgrades, including landscaping (23%) or an upgrade of the bathroom (13%) or kitchen (12%); improving their homes’ energy efficiency, including adding attic insulation (9%), caulking or sealing (4%), or installing energy efficient light bulbs (4%); or painting a room (10%).
Homeowners between the ages of 25 and 34 were most likely to consider using the rebate checks for a home improvement (33%); homeowners older than 65 were least likely (20%).
Homeowners in the West were most likely to use their rebate check for a home improvement (27%); homeowners in the South were least likely (22%).
The most common reasons cited for pursuing a home improvement project with the rebate money were comfort (34%), aesthetics (17%), environmental impact (15%), resale (13%), and return on investment (8%).
Among all respondents, 31% of homeowners said they are planning to start a home improvement project during May, which is National Home Improvement Month.
“Clearly, many homeowners agree that investing in their homes can improve their quality of life and provide a solid return on investment,” said Mark Ziegert, JM’s senior brand manager for building insulation products. “People who use their rebate check to improve their home’s energy efficiency not only enhance the comfort of their home, they will achieve cost saving in both the winter and summer through improved energy efficiency, and they may increase the resale value of the home.”
Resilient American homeowners intend to shake off concerns about the slumping real estate market and plant the money they receive as part of the federal economic stimulus package into what for many is their most important financial asset: their homes.
A national consumer opinion survey released today found that 24% of U.S. homeowners are “considering using” the money they will receive as part of the federal economic stimulus package to upgrade or improve their homes. In addition, roughly one in five respondents, or 19%, said they would “definitely use” their rebate money for a home improvement project. The survey was conducted in April by Johns Manville (JM), a building and specialty products manufacturer, and Opinion Research Corp., a market research firm.
“The federal government is hoping that Americans will spend these checks and help stimulate the nation’s economy, and this survey confirms that many Americans are prepared to do that, at least when it comes to their homes,” said Wayne Russum, senior vice president of Opinion Research Corp.
Among respondents who said they are not considering using their rebate check for a home improvement, the most common intended uses were saving it (45%), paying down debt (40%), taking a vacation (14%), purchasing a luxury item (9%), or something else (5%).
The tax rebates were created earlier this year by a Congressional bill aimed at encouraging consumer spending in the face of a slumping economy and a weak housing market. The checks started arriving in taxpayers’ bank accounts on Monday. Single taxpayers with annual adjusted gross income of less than $75,000 qualify, as do joint filers making less than $150,000.
The telephone survey of 751 American homeowners was conducted from April 11-14 by Opinion Research Corp., a national market research firm based in New Jersey, on behalf of Johns Manville, an international building materials manufacturer based in Denver. The survey’s sampling error was plus or minus four percentage points.
The survey found that the most popular projects for respondents considering using their rebate checks for a home improvement project included: household upgrades, including landscaping (23%) or an upgrade of the bathroom (13%) or kitchen (12%); improving their homes’ energy efficiency, including adding attic insulation (9%), caulking or sealing (4%), or installing energy efficient light bulbs (4%); or painting a room (10%).
proposal to modernize FHA
The Bush Administration has put in place solutions to help American families stay in their homes and avoid foreclosure, U.S. Department of Housing and Urban Development Deputy Secretary Roy A. Bernardi said this week. Delivering the keynote address at the Federal Home Loan Banks Annual Directors Conference, Bernardi highlighted President Bush’s responsible plan to strengthen the economy and help homeowners by allowing HUD’s Federal Housing Administration (FHA) to be “a good safeguard against foreclosure.”
“This is the time for vision and prudence. We must give the American people real solutions to the housing crisis, not multiply problems. The Bush Administration favors responsible, specific efforts to save homeowners and allows FHA to be a central part of any lasting solutions,” Bernardi said.
In August 2007, FHA modified its refinancing program to help creditworthy homeowners who missed payments after their teaser rates reset. Since then, more than 170,000 families who are current and past due on their home loans have refinanced with FHASecure, FHA’s refinancing product. The number of single family mortgages endorsed by FHA has effectively doubled over the last year, Bernardi said. In the first quarter of 2008, FHA endorsements totaled more than 237,000, which is a 100% increase over the same period last year. Homeowners refinancing from the exotic subprime market to FHA are saving approximately $400 a month on their new mortgages.
Earlier this month, the Bush Administration announced additional administrative steps to extend FHA opportunities to troubled homeowners. Using its current regulatory authority, FHA will assist homeowners who are struggling with their current mortgage payments who have no other way to refinance their loans as their homes lose value. FHASecure will extend assistance to borrowers in subprime adjustable rate mortgages who were late on up to three consecutive monthly mortgage payments or at three different times over the previous twelve months. FHA will allow lenders to voluntary write-down outstanding principal mortgage balances and insure, which will provide an equity cushion and protect taxpayers against risk.
“Expanding FHASecurein this way is a good idea,” Bernardi said. “Borrowers will reduce their principal payments and keep their homes. Lenders will avoid taking a more significant loss at foreclosure. Neighbors will avoid vacant homes in their neighborhood, depressing their home values. And localities will keep a viable tax base to fund community health, schools, and other valuable services. The changes we have made with FHASecurewill help us reach about 500,000 homeowners in total by the end of this year.”
Bernardi also highlighted President Bush’s stimulus package, which will make a positive difference in the mortgage market by temporarily increasing FHA’s loan limits. For the rest of 2008, FHA is able to insure mortgages in higher-cost states and help homeowners hold on to their houses. The new loan limits were announced in March, and the affects of the program should be seen in the coming months.
“The reaction to the new, temporary loan limits should again explain the need for immediate passage of FHA Modernization, which we have urged for two years. Congress needs to make this important bill an immediate priority over other housing proposals that are under consideration. As a first order of business, a good FHA Modernization bill must be sent to the President,” Bernardi said.
The Bush Administration’s proposal to modernize FHA has bipartisan support. Introduced two years ago, this legislation would help hundreds of thousands of homeowners access safe, affordable FHA-backed mortgages by increasing FHA’s loan limits, making down payment requirements more flexible, and introducing fair pricing of insurance. The House and Senate have passed different versions of this legislation, but have not reconciled their differences and sent the President a final bill.
Bernardi also warned against proposals in Congress that “put us on a slippery slope, rapidly moving in the direction of a federalization of the mortgage industry.”
“Americans don’t want to pay for the risky financial behavior of others. And they don’t want to make the Federal government the lender of last resort, with the private sector dumping bad loans on FHA and the taxpayers themselves. We must not harm our economy through solutions that further erode the foundation of the nation’s housing market, hurt homeowners who are meeting their mortgage obligations, or prolong the correction,” Bernardi said.
Finally, Bernardi said the mortgage industry, in cooperation with the Bush Administration, has stepped forward and pro-actively implemented workouts to help homeowners avoid foreclosure, but there is still more work to do. With more subprime loan interest rate resets expected, Bernardi urged the industry to have “a strong and effective response that will quickly help to stabilize housing prices.” Yesterday, the HOPE NOW Alliance announced that mortgage servicers have provided nearly 1.4 million loan workouts since July 2007 for homeowners with prime and subprime mortgages. This includes 503,000 homeowners in the first quarter of 2008.
“I believe that Congress and the Administration can forge a strong working partnership on housing. There is some common ground which should be explored and extended. I will continue to try to convince our lawmakers that we need wisdom, not over-reaction. We must give the American people real solutions to the housing crisis, not multiply problems,” Bernardi concluded.
For more information, visit http://www.hud.gov.
“This is the time for vision and prudence. We must give the American people real solutions to the housing crisis, not multiply problems. The Bush Administration favors responsible, specific efforts to save homeowners and allows FHA to be a central part of any lasting solutions,” Bernardi said.
In August 2007, FHA modified its refinancing program to help creditworthy homeowners who missed payments after their teaser rates reset. Since then, more than 170,000 families who are current and past due on their home loans have refinanced with FHASecure, FHA’s refinancing product. The number of single family mortgages endorsed by FHA has effectively doubled over the last year, Bernardi said. In the first quarter of 2008, FHA endorsements totaled more than 237,000, which is a 100% increase over the same period last year. Homeowners refinancing from the exotic subprime market to FHA are saving approximately $400 a month on their new mortgages.
Earlier this month, the Bush Administration announced additional administrative steps to extend FHA opportunities to troubled homeowners. Using its current regulatory authority, FHA will assist homeowners who are struggling with their current mortgage payments who have no other way to refinance their loans as their homes lose value. FHASecure will extend assistance to borrowers in subprime adjustable rate mortgages who were late on up to three consecutive monthly mortgage payments or at three different times over the previous twelve months. FHA will allow lenders to voluntary write-down outstanding principal mortgage balances and insure, which will provide an equity cushion and protect taxpayers against risk.
“Expanding FHASecurein this way is a good idea,” Bernardi said. “Borrowers will reduce their principal payments and keep their homes. Lenders will avoid taking a more significant loss at foreclosure. Neighbors will avoid vacant homes in their neighborhood, depressing their home values. And localities will keep a viable tax base to fund community health, schools, and other valuable services. The changes we have made with FHASecurewill help us reach about 500,000 homeowners in total by the end of this year.”
Bernardi also highlighted President Bush’s stimulus package, which will make a positive difference in the mortgage market by temporarily increasing FHA’s loan limits. For the rest of 2008, FHA is able to insure mortgages in higher-cost states and help homeowners hold on to their houses. The new loan limits were announced in March, and the affects of the program should be seen in the coming months.
“The reaction to the new, temporary loan limits should again explain the need for immediate passage of FHA Modernization, which we have urged for two years. Congress needs to make this important bill an immediate priority over other housing proposals that are under consideration. As a first order of business, a good FHA Modernization bill must be sent to the President,” Bernardi said.
The Bush Administration’s proposal to modernize FHA has bipartisan support. Introduced two years ago, this legislation would help hundreds of thousands of homeowners access safe, affordable FHA-backed mortgages by increasing FHA’s loan limits, making down payment requirements more flexible, and introducing fair pricing of insurance. The House and Senate have passed different versions of this legislation, but have not reconciled their differences and sent the President a final bill.
Bernardi also warned against proposals in Congress that “put us on a slippery slope, rapidly moving in the direction of a federalization of the mortgage industry.”
“Americans don’t want to pay for the risky financial behavior of others. And they don’t want to make the Federal government the lender of last resort, with the private sector dumping bad loans on FHA and the taxpayers themselves. We must not harm our economy through solutions that further erode the foundation of the nation’s housing market, hurt homeowners who are meeting their mortgage obligations, or prolong the correction,” Bernardi said.
Finally, Bernardi said the mortgage industry, in cooperation with the Bush Administration, has stepped forward and pro-actively implemented workouts to help homeowners avoid foreclosure, but there is still more work to do. With more subprime loan interest rate resets expected, Bernardi urged the industry to have “a strong and effective response that will quickly help to stabilize housing prices.” Yesterday, the HOPE NOW Alliance announced that mortgage servicers have provided nearly 1.4 million loan workouts since July 2007 for homeowners with prime and subprime mortgages. This includes 503,000 homeowners in the first quarter of 2008.
“I believe that Congress and the Administration can forge a strong working partnership on housing. There is some common ground which should be explored and extended. I will continue to try to convince our lawmakers that we need wisdom, not over-reaction. We must give the American people real solutions to the housing crisis, not multiply problems,” Bernardi concluded.
For more information, visit http://www.hud.gov.
Wednesday, April 30, 2008
Fed cuts short-term rate for 7th time
Short-term interest rates will come down again, for the seventh time since September.
The Federal Reserve cut its target for the federal funds rate by a quarter-point, from 2.25 percent to 2 percent. The prime rate will fall by a quarter-point, from 5.25 percent to 5 percent. The move spells good news to people who borrow money on loans, such as home equity lines of credit, that are linked to the prime rate. It's not such good news for savers who want to put their money in short-term certificates of deposit.
The rate-setting Federal Open Market Committee has been slashing rates to encourage consumers to borrow, and therefore stimulate the faltering economy. At the beginning of September, the federal funds rate stood at 5.25 percent; since then, the Fed has cut it by 3.25 percentage points. It has been an unusually rapid series of rate reductions, as the Fed has tried to catch up with the economic slowdown brought on by the housing slump.
"Recent information indicates that economic activity remains weak. Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation have risen in recent months. The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to moderate growth over time and mitigate risks to economic activity," according to the Fed announcement.
This rate cut had been expected, with futures markets pricing in a 1-in-5 chance that the Fed would keep rates unchanged, and a 4-in-5 chance of a quarter-point cut. To the extent that anyone expected the Fed to keep rates unchanged, that sentiment stemmed from the inflation picture. As anyone who drives to the grocery store knows, prices for gasoline and food have been skyrocketing and threatening to eventually push up prices for everything.
Typically, rate cuts make inflation worse. That makes the case for holding short-term rates steady. But this isn't a typical situation. Prices aren't rising because the economy is booming; instead, they are rising despite an economic downturn.
"It's a compromise between two equally persuasive arguments," says Richard DeKaser, chief economist for National City Corp. "On the one hand, there's an increasingly legitimate argument that inflation needs to be pre-empted more aggressively." On the other hand, he says, "there is still risk to the economy in terms of weaker growth."
Downward-facing dollar
On the inflation side, DeKaser says, the Fed has been counting on a weaker economy holding wage growth down, which in turn is supposed to put a lid on inflation. By that reasoning, the Fed can continue to goose the economy by cutting rates, and can put off worrying about inflation until after economic growth resumes. But commodity prices are surging and the dollar is weakening in relation to other currencies. Both of those factors exert upward pressure on prices, especially for imports.
By cutting short-term rates while European central banks keep their rates steady, the Fed contributes to further erosion in the dollar's relative value. In turn, foreign companies either raise prices on exports to the United States to maintain profits, or they sell their goods to countries with stronger economies. Either way, through straight-out price increases or through scarcity, foreign-made goods become more expensive in the United States.
Inflation-fighting takes backseat
How do you turn that around? You could raise interest rates, which would eventually make prices of imports more competitive, but higher rates would restrict overall economic growth. Right now, the Fed prefers to stoke the economy by cutting rates again. Inflation-fighting is a secondary priority at the moment.
"The ongoing concerns related to inflationary pressures have to be weighing very heavily on their minds," says Jim Baird, chief investment strategist at Plante & Moran Financial Advisors in Kalamazoo, Mich.
"They've pumped a lot of liquidity into the system, particularly since the beginning of the year, and I wouldn't be surprised to see them take a step back and let this filter its way through the system at this point. They have to look at which of the battles they want to fight -- keep prices in check to a greater degree or reduce the risk of further softening of the economy and at the same time try to provide some liquidity and stabilize the credit markets."
Consumer impact
This rate cut's impact on consumers "is not likely to be very impactful, but in combination with past rate actions, it has quite a bit of impact," says DeKaser. He believes that a lot of this impact will come via reducing the monthly debt payments that some mortgage holders will have to make.
Specifically, rates on home equity lines of credit will go down again, and that will reduce the minimum monthly payments that borrowers carrying balances will have to pay. And declining short-term rates mean less payment shock for some people with adjustable-rate mortgages.
Long-term rates, such as those for fixed-rate mortgages, don't respond directly to the Fed's rate decisions. Instead, long-term rates are guided by inflation expectations. They could go either way, depending on whether the bond market decides whether the Fed's rate policy is too restrictive, too permissive or just right.
The federal funds rate is the target interest rate for banks borrowing reserves among themselves. The discount rate is the interest rate that the Fed charges banks to borrow reserves from the Federal Reserve. The Fed wants to be the lender of last resort: It wants banks to borrow from one another at the federal funds rate before borrowing from the Federal Reserve at the higher discount rate
The Federal Reserve cut its target for the federal funds rate by a quarter-point, from 2.25 percent to 2 percent. The prime rate will fall by a quarter-point, from 5.25 percent to 5 percent. The move spells good news to people who borrow money on loans, such as home equity lines of credit, that are linked to the prime rate. It's not such good news for savers who want to put their money in short-term certificates of deposit.
The rate-setting Federal Open Market Committee has been slashing rates to encourage consumers to borrow, and therefore stimulate the faltering economy. At the beginning of September, the federal funds rate stood at 5.25 percent; since then, the Fed has cut it by 3.25 percentage points. It has been an unusually rapid series of rate reductions, as the Fed has tried to catch up with the economic slowdown brought on by the housing slump.
"Recent information indicates that economic activity remains weak. Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation have risen in recent months. The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to moderate growth over time and mitigate risks to economic activity," according to the Fed announcement.
This rate cut had been expected, with futures markets pricing in a 1-in-5 chance that the Fed would keep rates unchanged, and a 4-in-5 chance of a quarter-point cut. To the extent that anyone expected the Fed to keep rates unchanged, that sentiment stemmed from the inflation picture. As anyone who drives to the grocery store knows, prices for gasoline and food have been skyrocketing and threatening to eventually push up prices for everything.
Typically, rate cuts make inflation worse. That makes the case for holding short-term rates steady. But this isn't a typical situation. Prices aren't rising because the economy is booming; instead, they are rising despite an economic downturn.
"It's a compromise between two equally persuasive arguments," says Richard DeKaser, chief economist for National City Corp. "On the one hand, there's an increasingly legitimate argument that inflation needs to be pre-empted more aggressively." On the other hand, he says, "there is still risk to the economy in terms of weaker growth."
Downward-facing dollar
On the inflation side, DeKaser says, the Fed has been counting on a weaker economy holding wage growth down, which in turn is supposed to put a lid on inflation. By that reasoning, the Fed can continue to goose the economy by cutting rates, and can put off worrying about inflation until after economic growth resumes. But commodity prices are surging and the dollar is weakening in relation to other currencies. Both of those factors exert upward pressure on prices, especially for imports.
By cutting short-term rates while European central banks keep their rates steady, the Fed contributes to further erosion in the dollar's relative value. In turn, foreign companies either raise prices on exports to the United States to maintain profits, or they sell their goods to countries with stronger economies. Either way, through straight-out price increases or through scarcity, foreign-made goods become more expensive in the United States.
Inflation-fighting takes backseat
How do you turn that around? You could raise interest rates, which would eventually make prices of imports more competitive, but higher rates would restrict overall economic growth. Right now, the Fed prefers to stoke the economy by cutting rates again. Inflation-fighting is a secondary priority at the moment.
"The ongoing concerns related to inflationary pressures have to be weighing very heavily on their minds," says Jim Baird, chief investment strategist at Plante & Moran Financial Advisors in Kalamazoo, Mich.
"They've pumped a lot of liquidity into the system, particularly since the beginning of the year, and I wouldn't be surprised to see them take a step back and let this filter its way through the system at this point. They have to look at which of the battles they want to fight -- keep prices in check to a greater degree or reduce the risk of further softening of the economy and at the same time try to provide some liquidity and stabilize the credit markets."
Consumer impact
This rate cut's impact on consumers "is not likely to be very impactful, but in combination with past rate actions, it has quite a bit of impact," says DeKaser. He believes that a lot of this impact will come via reducing the monthly debt payments that some mortgage holders will have to make.
Specifically, rates on home equity lines of credit will go down again, and that will reduce the minimum monthly payments that borrowers carrying balances will have to pay. And declining short-term rates mean less payment shock for some people with adjustable-rate mortgages.
Long-term rates, such as those for fixed-rate mortgages, don't respond directly to the Fed's rate decisions. Instead, long-term rates are guided by inflation expectations. They could go either way, depending on whether the bond market decides whether the Fed's rate policy is too restrictive, too permissive or just right.
The federal funds rate is the target interest rate for banks borrowing reserves among themselves. The discount rate is the interest rate that the Fed charges banks to borrow reserves from the Federal Reserve. The Fed wants to be the lender of last resort: It wants banks to borrow from one another at the federal funds rate before borrowing from the Federal Reserve at the higher discount rate
Alberta biggest drop in resale housing
Alberta led the country with the biggest drop in resale housing activity in the first quarter of this year while at the same time outpacing the rest of the provinces in new MLS listings.
A report released Tuesday by the Canadian Real Estate Association says MLS sales in the province were down 30.5 per cent compared with the first quarter of 2007, new listings increased by 36.2 per cent, total dollar volume of all transactions dropped by 26.7 per cent but the average sale price increased by 5.4 per cent to $361,544.
And the report also showed a similar real estate scenario during the month of March with the province experiencing the biggest yearly drop in sales across the country at 34.3 compared with March 2007 and a 25.1 per cent hike in new listings for the month - again topping all other provinces.
A group of for sale signs lined the street on Country Village Landing N.E.
Dean Bicknell/Calgary Herald
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Font:****The average MLS sale price in Alberta increased by 3.7 per cent in March from a year ago to $365,888 but total dollar volume of all transactions was down by 31.9 per cent.
At a national level, MLS sales in the first quarter of 2008 were down 13.2 per cent compared with the same period last year and new listings were up six per cent. The average resale price in Canada increased by 6.4 per cent to $312,583. This is the smallest year-over-year price increase since the fourth quarter of 2001.
On a monthly basis, MLS sales dropped by 19.1 per cent compared with March 2007 and new listings decreased by 0.6 per cent. The average national resale price in March was up 4.8 per cent to $314,279. It was the smallest increase since October 2001.
"Resale housing activity is trending lower in the four most active provinces," said CREA chief economist Gregory Klump. "Housing markets are becoming more balanced and price gains are becoming more modest as a result. This trend is forecast to continue as rising mortgage carrying costs and property taxes erode affordability."
A report released Tuesday by the Canadian Real Estate Association says MLS sales in the province were down 30.5 per cent compared with the first quarter of 2007, new listings increased by 36.2 per cent, total dollar volume of all transactions dropped by 26.7 per cent but the average sale price increased by 5.4 per cent to $361,544.
And the report also showed a similar real estate scenario during the month of March with the province experiencing the biggest yearly drop in sales across the country at 34.3 compared with March 2007 and a 25.1 per cent hike in new listings for the month - again topping all other provinces.
A group of for sale signs lined the street on Country Village Landing N.E.
Dean Bicknell/Calgary Herald
Email to a friend
Printer friendly
Font:****The average MLS sale price in Alberta increased by 3.7 per cent in March from a year ago to $365,888 but total dollar volume of all transactions was down by 31.9 per cent.
At a national level, MLS sales in the first quarter of 2008 were down 13.2 per cent compared with the same period last year and new listings were up six per cent. The average resale price in Canada increased by 6.4 per cent to $312,583. This is the smallest year-over-year price increase since the fourth quarter of 2001.
On a monthly basis, MLS sales dropped by 19.1 per cent compared with March 2007 and new listings decreased by 0.6 per cent. The average national resale price in March was up 4.8 per cent to $314,279. It was the smallest increase since October 2001.
"Resale housing activity is trending lower in the four most active provinces," said CREA chief economist Gregory Klump. "Housing markets are becoming more balanced and price gains are becoming more modest as a result. This trend is forecast to continue as rising mortgage carrying costs and property taxes erode affordability."
Tuesday, April 29, 2008
This week's economic calendar
Last week, rates ended about where they began. This week however is jam packed with news that can cause rates to move in a hurry. In addition to the Fed's Open Market Committee meeting slated for Wednesday, the Fed's favorite gauge of inflation is scheduled to be released on Thursday, and if that wasn't enough the all important Jobs Report is due out on Friday. So will rates become more turbulent or is this just what the doctor ordered to push then lower?
This week's economic calendar is chock full of potentially market moving releases. On Wednesday, the FOMC meeting will be held where the Fed will likely lower rates again. However, many experts are predicting it will be only by 25 bps as the fed walks a tightrope trying to stimulate the economy but avoid inflation. As always most eyes will be focused on the wording in the statement that follows the Fed's meeting.
On Thursday, the day after the Fed's meeting and possible rate cut the Personal Consumption Expenditures (PCE) report is due out, which is the Fed's favorite measure of inflation. With this report due out after the Fed announcement it may give the market a chance to "Monday morning quarterback" the Fed's move the prior day.
The week raps up with two key reports on Friday, the ISM Index and the Job's Report which many are expecting to show a negative growth rate to the tune of 80,000 jobs lost.
In some ways the Fed is in a no win situation, if they only lower rates by 25 bps and inflation appears in check but the jobs take a 80,000 loss many will say the Fed didn't do enough. However, if the PCE whiffs of inflation and jobs show better than a 80,000 loss it will appear the Fed is fanning inflation with the 25 bps cut.
The bottom line: Expect rates to be volatile, hang on to your hats!
This week's economic calendar is chock full of potentially market moving releases. On Wednesday, the FOMC meeting will be held where the Fed will likely lower rates again. However, many experts are predicting it will be only by 25 bps as the fed walks a tightrope trying to stimulate the economy but avoid inflation. As always most eyes will be focused on the wording in the statement that follows the Fed's meeting.
On Thursday, the day after the Fed's meeting and possible rate cut the Personal Consumption Expenditures (PCE) report is due out, which is the Fed's favorite measure of inflation. With this report due out after the Fed announcement it may give the market a chance to "Monday morning quarterback" the Fed's move the prior day.
The week raps up with two key reports on Friday, the ISM Index and the Job's Report which many are expecting to show a negative growth rate to the tune of 80,000 jobs lost.
In some ways the Fed is in a no win situation, if they only lower rates by 25 bps and inflation appears in check but the jobs take a 80,000 loss many will say the Fed didn't do enough. However, if the PCE whiffs of inflation and jobs show better than a 80,000 loss it will appear the Fed is fanning inflation with the 25 bps cut.
The bottom line: Expect rates to be volatile, hang on to your hats!
Dogs, cats and even horses suffer from sunburn
The approach of summer will bring constant reminders about the danger of overexposure to the sun and the need for sunscreen.
The dangers are real, and we should all take appropriate measures to prevent skin damage and skin cancer. But, did you know that the family pet is susceptible to many of the same diseases? Dogs, cats and even horses suffer from sunburn, solar dermatitis, and skin cancer.
The skin of a sunburned animal is red and painful, just as in people. Hair loss may also be evident. The most common sites for sunburn include the bridge of the nose, ear tips, skin around the lips, groin, abdomen and inner legs. Pets that have light-colored noses and skin, thin or missing hair, or have been shaved for surgery are at greater risk for solar induced skin diseases.
Sunburn can progress to solar dermatitis which is characterized by redness, hair loss, crusting and ulceration of the skin. With continued sun exposure skin cancer (such as squamous cell carcinoma) may occur.
The best way to prevent sunburn is to avoid the sun between 10 a.m. and 4 p.m. This can be done by keeping the animal inside or providing shaded areas in the yard. Horses can be protected in a barn. Using a black felt-tip marker or tattooing depigmented areas of the nose can help absorb some sunlight, but alone will not prevent sunburn.
Sunscreens may help prevent sunburn in our pets. They are not only a good idea, but are actually recommended by The American Animal Hospital Association in appropriate animals. The sunscreen should be fragrance free, non-staining, and contain UVA and UVB blockers. Because most human sunscreens can be toxic if ingested by a dog or a cat it is best to use a pet-specific product. Sunscreens should be applied liberally and reapplied every 4-6 hours during the brightest part of the day (10 a.m. to 4 p.m.).
Doggles, Nutri-vet, and Epi-Pet all produce pet specific sunscreens and can be found on-line. Be sure to inquire which product is right for your pet as some products should not be used on cats.
Ideally, it is better to prevent sunburn than to treat it. However, if sunburn does occur your veterinarian can provide you and your pet with treatment options.
The dangers are real, and we should all take appropriate measures to prevent skin damage and skin cancer. But, did you know that the family pet is susceptible to many of the same diseases? Dogs, cats and even horses suffer from sunburn, solar dermatitis, and skin cancer.
The skin of a sunburned animal is red and painful, just as in people. Hair loss may also be evident. The most common sites for sunburn include the bridge of the nose, ear tips, skin around the lips, groin, abdomen and inner legs. Pets that have light-colored noses and skin, thin or missing hair, or have been shaved for surgery are at greater risk for solar induced skin diseases.
Sunburn can progress to solar dermatitis which is characterized by redness, hair loss, crusting and ulceration of the skin. With continued sun exposure skin cancer (such as squamous cell carcinoma) may occur.
The best way to prevent sunburn is to avoid the sun between 10 a.m. and 4 p.m. This can be done by keeping the animal inside or providing shaded areas in the yard. Horses can be protected in a barn. Using a black felt-tip marker or tattooing depigmented areas of the nose can help absorb some sunlight, but alone will not prevent sunburn.
Sunscreens may help prevent sunburn in our pets. They are not only a good idea, but are actually recommended by The American Animal Hospital Association in appropriate animals. The sunscreen should be fragrance free, non-staining, and contain UVA and UVB blockers. Because most human sunscreens can be toxic if ingested by a dog or a cat it is best to use a pet-specific product. Sunscreens should be applied liberally and reapplied every 4-6 hours during the brightest part of the day (10 a.m. to 4 p.m.).
Doggles, Nutri-vet, and Epi-Pet all produce pet specific sunscreens and can be found on-line. Be sure to inquire which product is right for your pet as some products should not be used on cats.
Ideally, it is better to prevent sunburn than to treat it. However, if sunburn does occur your veterinarian can provide you and your pet with treatment options.
Monday, April 28, 2008
economic stimulus checks
The federal government is stepping in to help deal with the rising gas and food prices by sending out some economic stimulus checks sooner, especially if you'll get it through direct deposit.
Here's a look at the new schedule.
If the last two digits of your social security number are from 0-20 you should see the direct deposit by Monday.
If the last two digits are 21-75 you could see the money by May 5 and 76-99 will get their direct deposits on May 12.
If your check is mailed to you here's a look at when those checks will go out.
If the last two digits of your social security number is between 00 and 09 your check will be mailed the week of May 9,
10-18 on May 16,
19-25 on May 23,
26-38 on May 30,
39-51 on June 6,
52-63 on June 13,
64-75 on June 20,
76-87 on June 27,
and finally 88-99 - the week of July 4.
Here's a look at the new schedule.
If the last two digits of your social security number are from 0-20 you should see the direct deposit by Monday.
If the last two digits are 21-75 you could see the money by May 5 and 76-99 will get their direct deposits on May 12.
If your check is mailed to you here's a look at when those checks will go out.
If the last two digits of your social security number is between 00 and 09 your check will be mailed the week of May 9,
10-18 on May 16,
19-25 on May 23,
26-38 on May 30,
39-51 on June 6,
52-63 on June 13,
64-75 on June 20,
76-87 on June 27,
and finally 88-99 - the week of July 4.
Sunday, April 27, 2008
real estate or stocks ?
The housing slump has home buyers wondering whether real estate -- traditionally a person's largest investment -- is the best way to lock up their money over the long term. Some are wondering whether the stock market may be a better place to park their cash. Both investment types endure boom and bust cycles, soaring during periods of overvaluation, then slumping when they slip out of favor.
Investors fall in and out of love with either real estate or stocks depending on the cycle, financial planners say. "The stock market was the place to be in '98, '99, especially technology stocks," said Peggy Cabaniss, former chairman of the National Association of Personal Financial Advisors. "Then you see this huge collapse and people say, 'I am never going to go into stocks again. I am going to go into real estate, where it's safe.' "
Now, with home prices falling and property sometimes taking months to sell, some people are running away from real estate again. "It was the dot-com bust, now we have the subprime bust," said Ken Winans, president of investment and management research firm Winans International.
A home bought in 1978 appreciated an average 5.3 percent a year through 2007, while the Standard and Poor's 500-stock index delivered a 9.9 percent return during the same period, according to figures from the National Association of Realtors.
But some economists see it as an impossible choice: Do you follow the example of real estate mogul Donald Trump or billionaire stock market investor Warren Buffett? The answer, they say, is that neither model is right for everyone. "Warren Buffett owns real estate, and I am sure Donald Trump owns stock," said Winans. "The point is there is no one best investment. The people who are successful in the long term usually diversify into both camps."
Financial planners argue that any investment strategy should include real estate and stocks. Real estate can be an important ingredient of a homeowner's retirement plan, for example, said Leslie E. Linfield, founder of the Institute for Financial Literacy. Once a home is paid off, a retiree can either live there with low living expenses or sell it and downsize, she said.
"A home should be a part of everyone's retirement planning," said Linfield.
Investors fall in and out of love with either real estate or stocks depending on the cycle, financial planners say. "The stock market was the place to be in '98, '99, especially technology stocks," said Peggy Cabaniss, former chairman of the National Association of Personal Financial Advisors. "Then you see this huge collapse and people say, 'I am never going to go into stocks again. I am going to go into real estate, where it's safe.' "
Now, with home prices falling and property sometimes taking months to sell, some people are running away from real estate again. "It was the dot-com bust, now we have the subprime bust," said Ken Winans, president of investment and management research firm Winans International.
A home bought in 1978 appreciated an average 5.3 percent a year through 2007, while the Standard and Poor's 500-stock index delivered a 9.9 percent return during the same period, according to figures from the National Association of Realtors.
But some economists see it as an impossible choice: Do you follow the example of real estate mogul Donald Trump or billionaire stock market investor Warren Buffett? The answer, they say, is that neither model is right for everyone. "Warren Buffett owns real estate, and I am sure Donald Trump owns stock," said Winans. "The point is there is no one best investment. The people who are successful in the long term usually diversify into both camps."
Financial planners argue that any investment strategy should include real estate and stocks. Real estate can be an important ingredient of a homeowner's retirement plan, for example, said Leslie E. Linfield, founder of the Institute for Financial Literacy. Once a home is paid off, a retiree can either live there with low living expenses or sell it and downsize, she said.
"A home should be a part of everyone's retirement planning," said Linfield.
South Carolina is luring teachers
South Carolina is luring teachers to the state with generous housing assistance.
The state Housing Authority is making $20 million available for home loans to new teachers. The loans carry a 5.9 percent interest rate. The state expects to offer about 175 loans this year.
The program also includes down payment assistance of up to $7,000 for teachers making less than 80 percent of the county's median income, assistance that will be forgiven if they stay in the home for five years.
Teachers can get the loans, which have a maximum between $180,000 and $240,000, from more than 200 lenders around the state.
843Realtor.com
The state Housing Authority is making $20 million available for home loans to new teachers. The loans carry a 5.9 percent interest rate. The state expects to offer about 175 loans this year.
The program also includes down payment assistance of up to $7,000 for teachers making less than 80 percent of the county's median income, assistance that will be forgiven if they stay in the home for five years.
Teachers can get the loans, which have a maximum between $180,000 and $240,000, from more than 200 lenders around the state.
843Realtor.com
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