Monday, February 27, 2006

Home Repair Scams

Fight Back: Home Repair Scams

Elderly low-income seniors long have been a favored target among home repair scam artists, who sell unnecessary and overpriced "home improvements" and even go so far as to attach liens to the homes of seniors who refuse to pay for shoddy or incomplete work, according to the National Consumer Law Center. Seniors can protect themselves from unscrupulous contractors by following these tips:
􀂄 Never purchase home improvement services from a door-to-door contractor or on the basis of a television commercial.
􀂄 Always get a second estimate for the same job from another contractor before you sign a contract for work to be performed.
􀂄 Always get a written contract or estimate that describes the job, the price, the hourly rate for any additional work and the contractor's clean-up responsibilities.
􀂄 Get references and call them.
􀂄 Visit other job sites to review work previously preformed by the contractor.
􀂄 Watch out for bait-and-switch tactics and shady financing schemes.

Source: National Consumer Law Center

Thursday, February 23, 2006


With rising interest rates curbing refinancing activities, which homeowners often use to fund remodeling projects, the remodeling market slowed during the fourth quarter of 2005, according to the National Association of Home Builders' Remodeling Market Index (RMI). For the first time since the first quarter of 2003, the RMI components dipped below 50; indices above 50 indicate more remodelers view market conditions as good versus poor.

During the fourth quarter of 2005, the current market conditions component, based on existing home additions, alterations and repairs being completed, declined 4.3 points to 46.6, while the future expectations index, determined by factors such as the amount of work committed for the next three months and the backlog of remodeling jobs, slipped to 47.5 from 51.8. Regionally, the West reported the strongest remodeling activity with the current and future RMI components increasing to 58.5 and 63.5, respectively. Remodeling activity declined in the South, Northeast, and Midwest regions.


The U.S. leading index rose for the fourth consecutive month in January, increasing 1.1 percent to 140.1 (1996=100), The Conference Board recently reported. Six of the 10 indicators composing the leading index rose in December, including initial claims for unemployment insurance, real money supply, building permits, vendor performance, stock prices and interest rate spread. A key barometer of economic conditions, the leading index has increased in five of the last six months, suggesting economic growth is "likely to pick up in the near term," according to the report.The coincident and lagging indices, which reflect current and past economic activity, respectively, also increased in January. The coincident index edged up 0.2 percent to 121.7, while the lagging index rose 0.7 percent to 122.8.

Wednesday, February 08, 2006

30-year U.S. Treasury bonds - why is it coming back now and who wants it.

**The last sales of 30-year bonds, known as the "long bond," were made in August 2001. On Oct, 31, 2001, then-Treasury Under Secretary Peter Fisher announced: "We do not need the 30-year bond to meet the government's current financing needs, nor those that we expect to face in the coming years."

**At the time, Treasury was stepping up its short-term borrowing in the wake of Sept. 11, 2001, terror attacks that had deepened an economic downturn and helped wipe out a brief period of budget surpluses. But Treasury maintained it did not need the bond because it felt the long-term budget outlook was strong.

**Since then, U.S. budget deficits have continued to soar as wars in Afghanistan and Iraq and relief to hurricane-hit U.S. Gulf Coast states have climbed, leading to a projected $423 billion deficit for fiscal 2006 ending Sept. 30. On May 4, 2005, Treasury said it was considering bringing the long bond back to give it a broader borrowing range. "We're doing this, really, because times have changed," said Treasury Assistant Secretary Timothy Bitsberger.

**Sales of 30-year bonds started in 1977 to create a very low-risk debt instrument. The bond became a risk-free gold standard by which much private-sector debt was priced. While the size of auctions shrank in the late 1990s and the early part of this decade, making it less of a benchmark for setting other interest rates, it is still highly prized by investors ranging from individuals to pension funds that want or need it to add certainty to long-term planning.

Monday, February 06, 2006

30 Year bond is back after 5 years.

After nearly a 5-year hiatus, the United States Department of the Treasury will reintroduce 30-year Treasury Bonds. On February 9th, 2006 the Long Bond will be up for auction. But many interest rate followers are fearful that the added supply of paper will cause overall bond prices to decline and home loan rates to rise. Are those fears justified? Let’s take a closer look.
Bonds are essentially a form of debt and are sold by companies and governments to raise money. In turn, an investor who purchases bonds receives a return on the investment in the form of interest payments. For example, let’s say the city where you live is proposing to build a new sports stadium but does not have the funds available for construction. They sell bonds in order to raise the funds needed.
The same goes for the government. When the government is in need of funds, they offer bonds to investors and pay interest over the life of the bond. The US uses Treasury Bills (maturity of 1-year or less), Notes (maturity of more than 1-year up to 10-years) and Bonds (maturity greater than 10-years) to raise cash.
Back in October of 2001, the US government suspended issuance of 30-year bonds due to a budget surplus. However, since 2001 the government has undergone many expenses (e.g., funding of the war in Iraq, and increased costs for Medicare and Medicaid) that require additional funding via sales of Treasury securities.
So, will the reintroduction of the long bond push home loan rates higher? Not materially. The reintroduction of the 30-year bonds was announced in August 2005 and it is likely that the market has already reflected this news. The amount to be auctioned is $14 Billion dollars…sounds like a lot, but a relatively small amount that should be easily absorbed. And even if rates blipped higher, it should be temporary.

Thursday, February 02, 2006

Fed raised Fed Funds rate

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4-1/2 percent.