Financial Blog

The market’s tough for homebuyers, so renting may make more sense now.

Let’s face it: Given the current state of the housing market in many parts of the country, it might make more financial sense for you to rent for the time being rather than buy a home.

Such a move truly could work to your advantage in the coming months. Many experts predict that home prices will continue to drop for a while longer, so waiting to buy could pay off for you.

What’s more, because houses and condos are staying on the market for longer stretches of time, many developers and would-be sellers are eager to rent them out. This jump in the inventory of available rental properties puts you in a good position to haggle for more desirable rent prices. You also may encounter landlords who are willing to lower security deposits, cover your utilities or allow you to move in rent-free for the first month.

Even though the tide has turned in renters’ favor for now, renters still need to understand their rights and protect themselves. Whether you’re a longtime renter, a short-term renter or a young person who’s on the prowl for your very first apartment, these tips can help you avoid some of the potential pitfalls of renting.

1. Become an expert on your local rental market. No matter how pressed for time you might be, don’t rent the first place you find. Take time to shop around, visiting several places so you can compare prices and amenities offered. Check the classified ads online at your local Craigslist site and in a variety of daily and weekly newspapers, and ask friends and co-workers if they know of any available rental units. Use a professional rental service only if the fee charged is not too exorbitant.

2. Don’t tolerate discrimination. Federal laws prohibit discrimination on the basis of race, color, national origin, religion, gender, family status or disability. State and local laws prohibit other kinds of discrimination. For information, call the U.S. Department of Housing and Urban Development’s housing discrimination hotline at (800) 669-9777. Renters also can file discrimination-related complaints through this Web site.

3. Eyeball the lease closely. Unless the lease says differently, the landlord cannot raise your rent during the term of the lease. In turn, the lease usually commits you to rent payments for a fixed amount of time, whether or not you live in the unit. If you must move out, clarify in writing what would happen if you or your landlord are able to find another person to rent the space. Make sure you’d be liable for rent only during the time the unit is vacant.

4. Watch out for lease provisions that are undesirable or downright illegal. Undesirable provisions may restrict your guests, pets, minor design alterations or ability to run a home business. They also may include phrases such as: “automatic lease renewal”; “tenant agrees to obey all future rules of landlord”; “rent may increase”; “no one but tenant and immediate family may live in apartment”; and “unannounced or unlimited entry of landlord.” Illegal provisions include: an exculpatory clause that protects the landlord from liability for his own negligence; excessive penalties for late rent; or automatic forfeiture of deposit, which means you’ll lose your security deposit no matter what. Before you sign the lease, make sure you understand everything in it and that all blanks are either filled in or crossed out. If you don’t like certain provisions, negotiate to cross them out, write in changes and have both parties initial the new wording. Do this on all copies of the lease.

5. Know the skinny on security deposits. Landlords typically collect security deposits from tenants up front to cover unpaid rent or damage to the rental unit. As mentioned in the introduction to this column, you may be able to have the amount of your security deposit reduced while the housing slump continues. If you can’t, though, keep these details in mind: All security deposits are refundable; landlords only can keep compensation for unpaid rent, damage to the unit or a failure on your part to leave the unit as clean as it was when you moved in. Before you move in, do a walk-through with the landlord and document any damage that you see, both in writing and via photographs. Take good care of the unit while you live there, and clean it meticulously when the time comes for you to leave. For more details on security deposits, check out this helpful Nolo article on the subject.

6. Clarify exactly when and how the landlord can enter your unit. Do you value your privacy? Then the significance of this tip can’t be overstated. Generally speaking, landlords cannot simply enter your home without giving you some kind of advance notice. Rules on this thorny issue vary from state to state, so it’s important to understand what’s allowed and what isn’t where you live. To find out, check out this chart. In states where landlords’ access to rental properties is regulated, landlords typically are permitted to enter in cases of emergency, in instances when repairs are needed or at times when they need to show the unit to potential renters or buyers. But because statutes do vary, take the time to read up on the rules that apply to you.

7. Understand how to proceed if repairs are needed. Landlords are responsible for keeping their rental properties “livable” and “habitable.” That means your unit should have heat, water, electricity and sufficient weatherproofing, and it also should be structurally sound and sanitary. It doesn’t mean that your landlord is on the hook for purely cosmetic repairs. If a cosmetic repair is really bugging you and you really want to tackle it, don’t assume that doing so will give you a break on that month’s rent. Any such arrangement must be agreed upon by your landlord in advance and spelled out in writing. For those more serious repairs that fall in the “livable” or “habitable” category, though, do this: Write to your landlord about the problem and keep a copy of the letter. Give him or her reasonable time to make the repairs. If the problem never gets addressed even after you follow up about it, you have a variety of rights. For instance, you could withhold a portion of your rent, handle the repairs yourself and deduct the cost from your rent, or report your landlord to local building or housing authorities.

8. Invest in renters insurance. Renters insurance is really a form of homeowners insurance. It covers losses to your property from a variety of perils, including fire, lightning, windstorms, hail, explosions, riots, aircraft, vehicles, smoke, vandalism, theft, falling objects, electrical current damage and accidental overflow of water. Flood damage is not covered, however, so you must buy flood insurance separately through the National Flood Insurance Program. You may think you can’t afford the added expense of renters insurance, but that probably isn’t the case. Many insurers offer decent policies for $150 to $250 a year, or about $12 to $21 a month.

9. Stay safe. Are you thinking about renting in an up-and-coming area that may still have its share of crime? Regardless of the neighborhood you’re considering, it’s a good idea to contact that area’s local police precinct and inquire about crime statistics. If you have children, ask the police to help you determine whether any sex offenders live nearby. Also check state and local laws to find out whether your landlord is obligated to provide renters with certain safety devices, such as window locks or deadbolts. You can get help finding this information at your local library or through this Web site.

10. Is an eviction looming? If, for whatever reason, you receive an eviction notice from your landlord, you have a decision to make: Should you fight it, or should you walk away? If you’re absolutely convinced that you’re in the right, you may want to follow through with an eviction lawsuit. This may be a wise course to take if your unit is clearly uninhabitable or your landlord didn’t give you adequate notice about the eviction. In other cases, though – particularly if you’ve done anything to warrant the eviction – you should probably just move out. In addition to costing you hundreds if not thousands of dollars, an eviction lawsuit could hurt both your credit score and your ability to get other landlords to rent properties out to you in the future.

Source: msnbc 

Filed under: General by admin No Comments »

The wind turbines that recently went up on Louis Brooks’s ranch are twice as high as the Statue of Liberty, with blades that span as wide as the wingspan of a jumbo jet. More important from his point of view, he is paid $500 a month apiece to permit 78 of them on his land, with 76 more on the way.

Texas, once the oil capital of North America, is rapidly turning into the capital of wind power. After breakneck growth the last three years, Texas has reached the point that more than 3 percent of its electricity, enough to supply power to one million homes, comes from wind turbines.

Texans are even turning tapped-out oil fields into wind farms, and no less an oilman than Boone Pickens is getting into alternative energy.

Wind turbines were once a marginal form of electrical generation. But amid rising concern about greenhouse gases from coal-burning power plants, wind power is booming. Installed wind capacity in the United States grew 45 percent last year, albeit from a small base, and a comparable increase is expected this year.

At growth rates like that, experts said, wind power could eventually make an important contribution to the nation’s electrical supply. It already supplies about 1 percent of American electricity, powering the equivalent of 4.5 million homes. Environmental advocates contend it could eventually hit 20 percent, as has already happened in Denmark. Energy consultants say that 5 to 7 percent is a more realistic goal in this country.

The United States recently overtook Spain as the world’s second-largest wind power market, after Germany, with $9 billion invested last year. A recent study by Emerging Energy Research, a consulting firm in Cambridge, Mass., projected $65 billion in investment from 2007 to 2015.

Despite the attraction of wind as a nearly pollution-free power source, it does have limitations. Though the gap is closing, electricity from wind remains costlier than that generated from fossil fuels. Moreover, wind power is intermittent and unpredictable, and the hottest days, when electricity is needed most, are usually not windy.

The turbines are getting bigger and their blades can kill birds and bats. Aesthetic and wildlife issues have led to opposition emerging around the country, particularly in coastal areas like Cape Cod. Some opposition in Texas has cropped up as well, including lawsuits to halt wind farms that were thought to be eyesores or harmful to wetlands.

But the opposition has been limited, and has done little to slow the rapid growth of wind power in Texas. Some Texans see the sleek new turbines as a welcome change in the landscape.

Texas surpassed California as the top wind farm state in 2006. In January alone, new wind farms representing $700 million of investment went into operation in Texas, supplying power sufficient for 100,000 homes.

Supporters say Texas is ideal for wind-power development, not just because it is windy. It also has sparsely populated land for wind farms, fast-growing cities and a friendly regulatory environment for developers.

“Texas could be a model for the entire nation,” said Patrick Woodson, a senior development executive with E.On, a German utility operating here.

The quaint windmills of old have been replaced by turbines that stand as high as 20-story buildings, each capable of generating electricity for small communities. Powerful turbines are able to capture power even when the wind is relatively weak, and they help to lower the cost per kilowatt hour.

Much of the boom in the United States is being driven by foreign power companies with experience developing wind projects, including Iberdrola of Spain, Energias de Portugal and Windkraft Nord of Germany. Foreign companies own two-thirds of the wind projects under construction in Texas.

Filed under: General by admin No Comments »

The day after the federal government cut interest rates, online lending companies saw record traffic to its site for connecting borrowers and lenders.

As a result, the marketing team at LendingTree pulled back on search engine advertising campaigns that are used to draw visitors, according to company spokeswoman Allison Vail.

“With the fed changes in January, we were driving natural traffic. It’s smarter for us,” said Vail, whose Charlotte, N.C., company can pay an average of $2.70 per click for a search engine listing on Google or Yahoo, according to industry estimates.

Trends from search-engine companies and some anecdotal evidence suggests that the biggest buyers of paid search and online advertising–financial services companies–have cut back on spending online in the face of a housing crunch. It seems like an obvious shift, but one that spooked financial analysts enough last year to trim earnings estimates for search engines like Yahoo and Google, as well as online advertising on the whole. (In 2007, online ad revenue jumped 25 percent year over year to a record $21.1 billion, according to a report out this week.)

Signs of slowing growth in spending by financial services companies haven’t appeared until the first quarter of this year. According to research firm Nielsen Online, spending growth in the sector plummeted year over year in January 2008 compared with the previous year’s rise. Financial services firms spent roughly $132 million on online ads–including paid search and banner ads–in January 2007, up 58 percent from the comparable month in 2006. But this January, overall spending in the category went up year over year by 12.7 percent to roughly $149 million, according to Nielsen.

Efficient Frontier, one of the largest buyers of paid search listings for marketers, has traced similar trends more specific to the search industry, but with even less percentage growth. Ellen Siminoff, chairman of Efficient Frontier, said search advertising spending in the financial sector has typically risen by 30 percent to 50 percent annually, but this year it’s either flat or down for some companies. It’s no wonder with companies like LendingTree and Countrywide struggling in a housing crisis. From January 2006 to January 2007, credit and mortgage advertisers raised their spending by 24 percent, but this year, their spending has risen only 3 percent year over year, according to its data.

“It’s either not the kind of growth we’ve seen in the past or there are spending changes altogether,” Siminoff said.

How that might play out for the biggest search engines, Yahoo and Google, remains to be seen. Yahoo declined to comment for this story, and Google did not immediately respond to requests for comment.

The financial services sector spends as much as $2.7 billion annually on online advertising in the United States, and about one-third of that pie, or $900 million, is related to mortgages, according to estimates by Oppenheimer. Between 30 percent and 45 percent of those advertising dollars gets funneled into paid search and for that reason, Oppenheimer analyst Sandeep Aggarwal said, any pullback could affect earnings of sites that depend on paid search for revenue.

Siminoff and others were positive that growth in spending in other markets would offset any losses from the financial sector.

“Yahoo has bigger issues by being distracted by what’s going on with Microsoft, but retail advertising spending is still strong,” Siminoff said. “I do not think Google would be hugely impacted because they have enough growth outside the United States.”

This week, Google’s stock price fell by about 8 percent on fears that people weren’t paying as much attention to its search engine ads. Research firm ComScore said this week that it tracked about flat growth in advertisements viewed on Google pages from January 2007 to January 2008. Google shares also fell on analysts’ concerns that its overseas growth wouldn’t be as strong this quarter.

The financial services spending slowdown could add to that concern. Financial services are the highest-spending category in online advertising, accounting for 15 percent to 20 percent of the revenue annually in the United States, according to figures from PriceWaterhouseCoopers and the Interactive Advertising Bureau. And the sector pays among the highest rates for search listings–nearly six times that of retail advertisers, according to industry estimates.

The average cost per click (or the amount the advertiser pays per click) for a mortgage or credit services ad in Web search results is $2.70, according to figures from Efficient Frontier. That’s more than seven times what a retailer pays at about 36 cents per search click and almost four times what travel marketers pay at 65 cents per click. So cost-cutting in the lending sector is more meaningful in terms of dollars than cutbacks in retail, travel, or dating ads.

Similarly, financial services companies pay an average of $1.24 per click when their text ad appears next to related content. In comparison, retailers pay 24 cents per click and auto companies pay 58 cents per click for the same deal.

“If financial advertisers pull back their online ad spending it’s going to have an impact on all the companies receiving a share of that money,” said Pete Petrusky, an online advertising analyst with PriceWaterhouseCoopers.

Still, Petrusky and others say that in a recession, search advertising should remain strong because it provides a more immediate return for marketers compared with traditional advertising.

“Our experience is that on the search side, any performance-based media is less likely to be affected because marketers are paying on a price per lead. Our feeling is that as ad budgets get cut–and if the economy gets soft they will get cut–performance will less likely be cut than general impression or branding ads,” said Geoff Yang, a venture capitalist and partner at Redpoint Ventures, which has investments in search companies Oodle.com and TheFind.com.

Yang added that the industry might see 10 percent cutbacks across the board in such an event, and that his companies are already seeing signs of recession in the online advertising business.

Other data backs that less-than-gloomy notion. A recent report from JupiterResearch said financial services would continue to be the strongest category for online ad spending. (The companies typically split their online budgets 50/50 between paid search and display ads, according to the research firm.) Financial services will boost online ad spending from $3.5 billion in 2007 to $6.3 billion in 2012, a rise of 76 percent with a compound annual growth rate of 12 percent, according to JupiterResearch.

Certainly, LendingTree’s marketing team “pulls levers at all hours of the day” to respond to market changes, Vail said. It’s just that online marketers can change gears in paid search advertising with more ease and speed (without contract penalties by the search engines) than banner-ad campaigns, she said. Vail clarified that the company, which has lost about 60 percent of its staff since May, hasn’t made any drastic cuts to its online ad spending.

Executives in the online performance advertising business are less clear about how much mortgage lenders have cut their spending. But at least one online ad executive said ad aggregators like LowerMyBills.com, which is owned by Experian, and NexTag aren’t buying the same amount of inventory that they once did.

One shift is already happening. Aggregators are beginning to offset a downturn in the mortgage business by advertising education opportunities, as part of a philosophy that when the economy sours, people turn to education. LendingTree and NexTag are both moving into the education lead generation market, according to the source. NexTag and LowerMyBills.com didn’t respond immediately to requests for comment.

Similarly, one ad company has noticed that auto lending advertising has picked up in recent months. The thinking behind that change is that people who were previously prepared to go into debt for a home–now without that option–are looking at car debt instead.

“Mortgage brokers are collapsing daily and the business is moving back to where it belongs, at the banks,” said one insider who asked to remain anonymous. “How it will shake out for the overall business will be interesting; there isn’t enough history to predict.”

Information is taken from: NY Times

Filed under: Loans by admin No Comments »

In a move that strengthens the American-backed effort to isolate Iran, a leading international organization responsible for combating financial crimes called Thursday for all countries to be wary of Iran’s banking system because of concerns over money-laundering and aid to terrorists.

The action, by the Paris-based Financial Action Task Force, was welcomed by the Bush administration as likely to help its drive to punish Iran economically for its nuclear activities and its support of Hezbollah and other militant groups.

A separate American effort to get the United Nations Security Council to impose mild sanctions on Iran is proceeding slowly, and European countries are planning to offer new incentives to Iran if it agrees to halt its uranium-enrichment program.

In a separate development on Thursday, the Bush administration imposed penalties on four Syrians accused of easing the flow of money, weapons and people involved in terrorism through Syria into Iraq. The action had the effect of freezing their assets in the United States, a largely symbolic step because the Syrians are not thought to have such assets.

On Iran, the language of the Financial Action Task Force’s statement is indirect, in that it simply calls on banks and other institutions to take into account the risk of the Tehran government’s “deficiencies” in controlling money-laundering and financial support for terrorists, and to exercise “due diligence” in dealing with Iran.

But experts at the Treasury Department said the statement would have a powerful effect at a time when many American and European banks have already started to pull back from transactions with Iran in response to pressure from the United States.

In a statement, the Treasury Department said the action “sends a clear message to governments and financial institutions worldwide that the threat Iran poses to the international financial system continues unabated.”

The Bush administration has been trying to persuade banks in the Persian Gulf and Asia to follow the lead of European and American banks in withdrawing from Iran. The number of foreign branches operating in Iran has dropped to 20 in two years, from 46, according to American and Western diplomats.

The American hope is that the financial task force will strengthen the case for isolating Iran, especially because Russia and China are members and both countries have resisted sanctions on Iran at the United Nations.

Sir James Sassoon, president of the task force, said its action, adopted at a board meeting in Paris, “increases the pressure on Iran” to “urgently” address its shortcomings in controlling money-laundering and terrorist financing.

“In view of the continued risks emanating from Iran, the F.A.T.F. is calling on all countries around the world to advise their financial institutions to pay special attention to financial dealings with Iran,” he said.

The financial task force has 32 member countries, as well as the European Union and the Persian Gulf Cooperation Council. Iran is not a member; few Middle East countries are.

Administration officials said it was significant that China and Russia, which recently joined the financial task force, supported the move on Thursday, in part because the task force is a technical body affiliated with the Organization for Economic Cooperation and Development.

A task force official in Paris, speaking anonymously under ground rules used for anyone explaining the group’s public statements, said Iran had made a major effort to head off Thursday’s action. The move was threatened in a statement last October, which warned Iran to change its laws or face difficulties.

Last week the Bush administration announced that a senior Treasury Department official, Daniel L. Glaser, had attended a meeting of the group in Paris along with representatives from Iran, who were trying to persuade the task force that Iran would correct the shortcomings in its banking system.

Since then, the task force official said, Iran changed some of its laws but made only minimal progress in reducing the chances of money-laundering and no progress in setting up restrictions on aiding terrorists.

Source:  NY Times

Filed under: General by admin No Comments »

The European Union’s longest-running fight with Microsoft Corp. neared an end Wednesday as regulators imposed a record $1.3 billion fine on the world’s largest software company for failing to fully comply with a 2004 antitrust order.

Microsoft has not decided whether to appeal the penalty, which amounts to a fraction of the $14.07 billion it earned in fiscal 2007. In all, the company has been fined just under $2.4 billion by European antitrust regulators over the years.

Barring an appeal, the fine shuts the door on an investigation into Microsoft’s behavior that was triggered by a 1998 complaint by Sun Microsystems Inc. It alleged Microsoft was refusing to supply information that servers need to work with its market-dominating Windows operating system.

Microsoft eventually made the information available to rivals, but the EU said it charged “unreasonable prices” until last October.

(MSNBC.com is a joint venture of Microsoft and NBC Universal.)

EU Competition Commissioner Neelie Kroes said Microsoft now appears to have finally complied with the 2004 EU antitrust order. But she warned that the company was not yet in the clear because the EU last month launched new probes into its Office software and Windows’ Internet browser.

She also was skeptical over Microsoft’s announcement last week that it was further expanding its efforts to make its software work better with rival technologies. A news release, she said, “does not necessarily equal a change in business practice.”

“Talk is cheap. Flouting the rules is expensive,” she said.

Wednesday’s penalty far outweighs the next biggest fine — $613 million imposed on Microsoft for using its role as the world’s leading supplier of desktop software to elbow into new markets for workgroup servers and media players.

Fines — which can hit as much as 10 percent of company’s global yearly revenue — are paid into the EU budget which pays out farm subsidies and research grants. The European Commission claims antitrust fines ultimately help reduce the financial burden on European taxpayers.

Microsoft earned $14.07 billion on $51.12 billion in worldwide sales during its last fiscal year that ended June 30.

“We could have gone as high as 1.5 billion euros,” Kroes said, referring to an amount equal to about $2.2 billion. “The maximum amount is higher than what we did at the end of the day.”

Microsoft’s actions stifled innovation, hurting millions of people who use computers in offices around the world, she said, calling the fine “a reasonable response to a series of quite unreasonable actions.”

The software titan fought hard against the EU’s 2004 decision that ordered it to share interoperability information with rivals and sell a version of Windows without media software, taking an appeal to an EU court that it lost last September.

It was fined again in July 2006 — $357 million — for failing to obey that order.

The EU alleged that Microsoft withheld crucial interoperability information to squeeze into a new market and damage rivals that make programs for workgroup servers that help office computers connect to each other and to printers and faxes.

The company delayed complying with the EU order for three years, the EU said, only making changes on Oct. 22 to the patent licenses it charges companies that need data to help them make software that works with Microsoft.

Microsoft had initially set a royalty rate of 3.87 percent of a licensee’s product revenues for patents and demanded that companies looking for communication information — which it said was highly secret — pay 2.98 percent of their products’ revenues.

The EU complained last March that these rates were unfair. Under threat of fines, Microsoft two months later reduced the patent rate to 0.7 percent and the information license to 0.5 percent — but only in Europe, leaving the worldwide rates unchanged.

The EU’s Court of First Instance ruling that upheld regulators’ views changed the company’s mind again in October when it offered a new license for interoperability information for a flat fee of $14,900 and an optional worldwide patent license for a reduced royalty of 0.4 percent.

Filed under: General by admin No Comments »