Current Events in September 2004

September 30, 2004
BFGoodrich is recalling 46,000 tires carrying the BFGoodrich, Uniroyal, Liberator, Medalist, Phantom and Prospector brands. The company said they do not perform to company standards.

There have been no accidents or injuries reported and no property damage claims filed but the company said there may be similar performance issues with up to 3,500 tires, representing six tire brands. All recalled tires will be replaced free of charge.

The recalled tires have Department of Transportation tire identification numbers which begin with DOT BF and end with the last four digits 1504 or 1604. The DOT codes are found on the inner or outer sidewall of the tire just above the wheel rim and are printed in small type. There are no issues with tires manufactured outside of these DOT weeks.

Consumers should call BFGoodrich Tires at 1-877-788-8899 or Uniroyal Tire at 1-877-458-5878 or go to their tire dealer for a free inspection and replacement.

Giant drugmaker Merck today withdrew its Vioxx from the market, following indications that it can contribute to serious cardiovascular events including heart attacks and strokes.

Vioxx (chemical name rofecoxib) is a non-steroidal anti-inflammatory drug (NSAID) used in the treatment of arthritis and other diseases.

The Food and Drug Administration (FDA) today acknowledged the voluntary withdrawal and issued a Public Health Advisory to inform patients of the action and to advise them to consult with a physician about alternative medications.

The negative reactions were observed among study patients taking Vioxx compared to patients receiving placebo. The study was being done in patients at risk of developing recurrent colon polyps.

"Merck did the right thing by promptly reporting these findings to FDA and voluntarily withdrawing the product from the market," said Acting FDA Commissioner Dr. Lester M. Crawford.

"Although the risk that an individual patient would have a heart attack or stroke related to Vioxx is very small, the study that was halted suggests that, overall, patients taking the drug chronically face twice the risk of a heart attack compared to patients receiving a placebo."

Dr. Crawford added that FDA will closely monitor other drugs in this class for similar side effects. "All of the NSAID drugs have risks when taken chronically, especially of gastrointestinal bleeding, but also liver and kidney toxicity. They should only be used continuously under the supervision of a physician."

FDA approved Vioxx in 1999 for the reduction of pain and inflammation caused by osteoarthritis, as well as for acute pain in adults and for the treatment of menstrual pain. It was the second of a new kind of NSAID (Cox-2 selective) approved by FDA. Subsequently, FDA approved Vioxx to treat the signs and symptoms of rheumatoid arthritis in adults and children.

At the time that Vioxx and other Cox-2 selective NSAIDs were approved, it was hoped that they would have a lower risk of gastrointestinal ulcers and bleeding than other NSAIDs (such as ibuprofen and naproxen). Vioxx is the only NSAID demonstrated to have a lower rate of these side effects.

Merck contacted FDA on September 27, 2004, to request a meeting and to advise the agency that the long-term study of Vioxx in patients at increased risk of colon polyps had been halted. Merck and FDA officials met the next day, September 28, and during that meeting the company informed FDA of its decision to remove Vioxx from the market voluntarily.

Recently other studies in patients taking Vioxx have also suggested an increased risk of cardiovascular events. FDA was in the process of carefully reviewing these results, to determine whether further labeling changes were warranted, when Merck informed the agency of the results of the new trial and its decision to withdraw Vioxx from the market, the agency said.

September 28, 2004
It's bad enough when you are a victim of identify theft. It's downright insulting when you're sold fake protection from identity theft. Oklahoma Attorney General Drew Edmondson has filed suit against an Arizona telemarketing company after the company allegedly offered Oklahoma consumers a bogus identity theft protection service.

The lawsuit accuses Consumer Benefits Group, Inc. (CBG) of violating the Oklahoma Consumer Protection Act, the Commercial Telephone Solicitation Act and the Oklahoma Telemarketer Restriction Act.

"Under Oklahoma law, all telemarketers must register with the attorney general's office before doing business in Oklahoma," Edmondson said. "Consumer Benefits Group was not registered, and they were also placing calls to Oklahomans who are registered on the state's Don't Call list."

The attorney general's office filed the suit after receiving complaints from two consumers, Edmondson said.

"Telemarketers for CBG were referring to themselves as 'head agent' and 'inspector,'" Edmondson said. "The caller then informed the consumer that they had been placed on a list of consumers targeted for identity theft or that the consumer's credit card information had been given to a third party without the consumer's permission."

According to the state's complaint, the telemarketer then offers to provide the consumer with identity theft prevention services for a $299 fee.

"Identity theft is an increasing concern among consumers," Edmondson said. "We allege that CBG took advantage of the public's concern about this crime and employed scare tactics to turn a quick buck."

In addition to civil penalties and court costs, the attorney general's office is asking the court to issue a permanent injunction that would bar CBG from conducting future business in Oklahoma. The state is also asking the court to issue a temporary injunction against CBG to prevent the company from doing business while legal action is pending. Each alleged violation potentially carries a $10,000 civil penalty.

The attorney general also issued a reminder for consumers.

"Never give out personal information over the telephone," Edmondson said. "If you suspect you have been a victim of identity theft, contact local law enforcement or the attorney general's office. You do not have to pay a fee to fight identity theft."

Starbucks is raising its prices by about 11 cents per cup, effective Oct. 6. The company blames the increase on the higher cost of milk, rent and health insurance. It's the first systemwide increase in the U.S. since August 2000, when the chain raised prices by seven cents.

The company sells about 30 million cups of coffee and related beverages per day worldwide.

Starbucks says the average price of a drink at its U.S. stores is in the $2 to $2.50 range. Most customers spent $3.50 to $4 on each visit.

Thus, caffeine addicts with a $2.50 per day habit are about to have a $2.66 per day habit. Assuming 260 working and coffee-drinking days per year, that's an extra $28.60 out of the annual budget, for a total of $691 per year, not counting tips.

Of course, if the average working stiff saved that money over 30 years of trudging into the office, she or he would have $20,748 put away for retirement, not counting interest or other growth which could easily push the total figure close to five figures.

Is that for here or to go?

September 27, 2004
Forget speed. Sprawl may kill you, according to a study by Rand Corp., which found that the rates of arthritis, asthma, headaches and other health problems are higher among residents of sprawling communities.

Those living in denser areas, like New York's Manhattan, had fewer problems. In fact, living in a dense urban environment was equivalent to adding four years to one's life, the study concluded.

The researchers studied data on 8,600 Americans in 38 metropolitan areas and while the study did not pinpoint the reason for the supposed health differences, health researchers have long been concerned that because they presumably drive everywhere, suburbanites don't get enough exercise and are more prone to obesity, diabetes, high blood pressure and heart disease, among others.

Air pollution may also be a factor, said Roland Sturm, senior economist at Rand and the study's principal author. Sprawling communities tend to have more air pollution, he said.

Very spread-out cities like Atlanta and the Riverside-San Bernardino area had the most health problems. Particularly hard hit by sprawl were the poor and the elderly, Sturm said.

However, there was no corresponding increase in mental health problems in sprawling areas, despite previous speculation that the suburban lifestyle increases isolation and possibly contributes to depression.

The study is being published today in the journal Public Health.

The list, published annually by the independent non-profit organization, uses state records and public complaints to compile a list of homes in states across the U.S. at which consumers should be particularly vigilant.

To compile the Consumer Reports list, researchers looked at five criteria: high-severity deficiencies; substandard quality of care deficiencies; high numbers of repeat deficiencies; high numbers of total deficiencies; and citations for failing to provide access to the survey results.

In a report on the Ensign Group released in August, California-based Nursing Home Watch also exposed resident care problems at several of the company's facilities. The report, "Condition Critical: How Care for Seniors Suffers in California's Ensign Group Nursing Homes," outlined alarming patient care concerns including gangrenous bed sores, repeated falls, unexpected weight loss, medication errors and other problems that threaten seniors at these nursing homes.

Facilities currently operated by Ensign named in Consumer Reports' 2004 Nursing Home Watch List include:

California

• Arroyo Vista Nursing Center*, San Diego
• Brookside Healthcare Center, Redlands
• Cloverdale Healthcare Center, Cloverdale
• Park View Gardens at Montgomery, Santa Rosa
• Sonoma Healthcare Center, Sonoma
• Victoria Care Center, Ventura
• Vista Knoll Specialized Care, Vista

• Northern Oaks Living & Rehab, Abilene, TX

• Sabino Canyon Nursing & Rehab, Tucson, AZ

Hospitals rely on skilled nursing facilities to provide rehabilitation for patients, and regularly refer patients to nursing homes. For information on local hospitals that refer patients to Ensign homes on this watch list, see www.EnsignWatch.com.

Consumer Reports' Nursing Home Watch List can be found on their Web site: www.consumerreports.org.

Nursing Home Watch is a coalition of senior advocates, nursing home staff, nursing home residents and family members, the Service Employees International Union and community supporters who have united to improve the safety and quality of care in California's nursing homes.

Texas Attorney General Greg Abbott has won a court-ordered injunction to settle a dispute with a now-defunct New Mexico-based online merchant to ensure that no one under 18 may purchase its tobacco products over the Internet.

Cyco.Net Inc. was sued by the Attorney General in May 2003 as part of a coordinated crackdown against Internet scams. The injunction announced today prohibits the company from selling or delivering tobacco products in Texas unless it can establish a system to verify that its purchasers are at least 18 years old, as required by state laws for online sellers.

Brick and mortar tobacco retail merchants in Texas all must comply with this law or face serious penalties, said Attorney General Abbott. The same standard must apply to online retail merchants who target customers for the sale of their products. I am committed to protecting the health of Texas children because thats the law and we will enforce it vigorously.

Cyco.Net, which no longer does business via its former Web site, offered premium cigarettes at low prices. Consumers could place orders and pay for tobacco products online. The company gave consumers an incentive of 20 cents per carton for every new customer they referred to the site, noting that the use of the service was not restricted by age of customer.

Cyco.Nets site represented that it did not sell cigarettes to minors. All purchasers of cigarettes from us will be required to certify that they are of the age of majority. However, the company did not inquire of the prospective customers age or date of birth, nor did it require proof of identification. The company affixed a green stamp to the shipped packages noting adult signature required, but the U.S. Postal Service does not validate age of persons upon delivery.

Texas law regards tobacco addiction as a pediatric disease because more that 80 percent of smokers begin smoking by the age of 18, and more than 50 percent by age 15, according to studies. Thus, people who begin smoking at a young age are more likely to continue smoking and suffer tobacco-related health problems.

Because of this addiction and young peoples underestimation of tobaccos effects on their bodies, Texas law forbids the sale of these products to anyone under 27 years of age unless the person can prove he or she is at least 18.

A trip to the dentist probably doesn't rank high on anyone's to-do list. Now, imagine if your dentist skimps on appropriate amounts of anesthesia before submitting you to painful procedures.

That's just one of the things California Attorney General Bill Lockyer is alleging in criminal complaints against 20 dentists throughout the state. He's charging them with defrauding the state Medi-Cal System of $4.5 million, health benefits and workers' compensation fraud, conspiracy, grand theft, child abuse, elder abuse, assault and intentional infliction of great bodily injury.

"These dentists put at risk the health and well-being of hundreds of children and adults by performing slipshod dental services that were unnecessary and ignoring health problems that needed tending," Lockyer said.

The complaint charges Modesto dentist Kyon Maung Teo, who owns Hatch Dental clinics in Ceres, Stockton and Modesto, with being the mastermind of a scam involving dentists from throughout the state. The complaint alleges Teo placed ads on the back of missing-children flyers and in PennySaver and DollarSaver publications offering gifts or rebates to Medi-Cal beneficiaries and "new patients" who sought services at Hatch Dental.

The investigation showed Teo recruited 19 other dentists, who were paid about 25 percent of the insurance proceeds received by Hatch Dental for the work they performed. The alleged kickbacks provided an incentive to perform unnecessary dental procedures of poor quality, including unnecessary fillings and even unnecessary root canal procedures.

It was not uncommon for a patient to walk out of Hatch Dental with 20 or more unnecessary fillings, Lockyer charged. To help increase billings, dental assistants also were instructed to perform procedures such as cementing crowns, which lawfully can only be performed by licensed dentists.

Co-defendant Kin Thor Pang, Teo's wife, was the office manager for all three Hatch Dental clinics. The complaint alleges she trained office staffers to complete false dental claims, including changing dates of service or billing Medi-Cal and private insurance companies for "emergency" office visits if the patients were ineligible for routine coverage at the time of service.

The Hatch clinic staffers were also were trained to fabricate periodontal charts and prepare Treatment Authorization Requests (TARs) to obtain Medi-Cal reimbursement for services based on the fabricated charts, Lockyer said. Claims also were submitted for visits that never occurred and for non-existent procedures purportedly performed during the fabricated office visits. Insurance billing clerks were docked a dollar from their paycheck for each "mistake" they made.

As part of the conspiracy to defraud the Medi-Cal system, the dentists committed acts injurious to public health, placing the patients at risk of pain, infection, loss of teeth and great bodily injury, including: reusing dental instruments without sterilizing them, developing treatment plans that called for unnecessary dental surgeries such as root canals and fillings, performing dental surgeries without considering the patient's medical history, providing numerous shallow fillings in lieu of comprehensive treatment to patients in need of such treatment, issuing prescriptions for Schedule III narcotics without documenting the source and type of pain, forcibly restraining children during dental operations, performing extensive dental treatment on minors without fully disclosing the extent of the treatment to the minor's parent or guardian and performing dental surgeries without adequate anesthesia.

I was born and raised in southern California - one of the USA's most expensive spots to live. No matter how hard I worked, I was always behind the housing market. When the average home price for a house you'd want to live in hit $580,000 in 2004, I knew I'd have to leave the state in order to own a home before I died. I'm 51 now, and the prices are still breaking records monthly.

So, like the informed consumer I am, I started my research. I called a mortgage broker to discuss what options were out there for self-employed people. He told me how I could qualify, how my hard-won high credit score (more about that later) would help, and what sort of loans were out there. He warned me off some packages, led me towards others.

He was honest and upfront in warning that as a self-employed person, I'd probably get penalized on what sort of package I could get, but stressed that I could get a loan, and suggested I go to a low-documentation, or "stated income" loan.

Stated Income Mortgages

Bear with me here, this might get a bit technical - it was for me.

Stated Income Mortgages are the most commonly used and least expensive product in the reduced or no documentation suite of programs. A Stated Income Mortgage Loan is often the perfect choice if you have verifiable employment (self-employment is fine and usually two years is the minimum) and assets. Income that is stated on the application must be reasonable in terms of your occupation and assets.

The Stated Income Mortgage is the least expensive reduced documentation product if it works for you. If not, a No Ratio or true No Doc mortgage but may be a better choice.

Stated Income Mortgage Loans are available as:
• 15 or 30 year fixed rate; require only 5% equity and the rate will not change, however rates are lower with more equity.
• 5 year ARM or interest-only options

Stated Income Mortgage Loans are available for single family, townhouse, some manufactured housing, and low-rise condos. Some programs allow high-rise condos, 2-4 unit buildings, second homes or investment properties but are slightly more expensive or require more equity.

Allowable uses are for purchase or rate and term refinance. The programs will allow a "cash out" refinance but there are limitations on the allowable cash back. The fundamental thing to keep in mind with true No Doc Mortgages is that the lender only has your credit profile and property to evaluate. If your situation allows verification of either employment or assets you will save some money because you have lowered the lenders risk. The choice is yours.

What I learned were the general guidelines for a Stated Income Mortgage Loan:

• Minimum middle credit score is 640;
• 5 credit accounts are required. 3 may be from alternative sources -- utility, auto insurance, etc.;
• Bankruptcy and foreclosures must be discharged for 3 years with re-established credit in good standing;
• Two years employment with same employer or in the same business;
• Two months PITI reserves are required with an LTV • 5% minimum down payment is required from your own funds. No gifts.

I started looking when I decided that this was my only option for a mortgage. I knew that the Pick-A-Payment option loan I could handle. I had sold my small home and had $42k in cash and a good credit score.

Unfortunately, what was available within my budget was too far from my client base, and in the long run, gas would cost me more than my mortgage. So I made plans to move to North Carolina, where I had friends, and found I'd get a lot more home for the money.

Finding A Realtor

I had searched Homes.com, and found a couple of interesting houses in the area I thought I wanted to be in, so the Realtor and I started an ongoing conversation. He had excellent lenders (gave me the choice of 3) and I packed my stuff and drove across country -- see On the Road Again for the full sga -- and planted myself in the heart of Cary, NC, in the ExtendedStay America Hotel (I had no idea how extended it would turn out to be).

I looked at the houses I had found online with my Realtor. Just as a side note, some houses photograph REALLY WELL. But like characters on a reality show, the inside doesn't always match the outside. So I let him show me some homes he had, and the second one was it. 4 bedrooms, 3.5 baths, two story, two-car garage, with a bonus room (the old garage), an attic, and new master suite over the new 2-car garage, all for about $200k -- oh yea, and a one-acre corner lot! JACKPOT! This home in California would be in the $1-$1.5 million range. It was my dream home. Too bad I had to drive 3,000 miles to find it.

I made an offer, and it was accepted. Then the real work began.

Working With Your Lender

I chose a lender from the three offered, because he understood how much this meant to me and promised to do whatever it took to get me into this house. He did, though it took more work than I expected. I got frustrated at times, really angry at others and finally realized, closings almost always take at least a month. I had initially been told that we could close in 2 weeks because the house was empty.

I had to show my last year's tax statement, which had a business loss of $5,000, but when I explained that I averaged a certain income each year, that became my "stated" income. Then I had to decide how much to put down, because I didn't want to deplete my reserves and be left with no money to make changes. So I decided to put down half of what cash I had, and take out a second mortgage.

NOTE: When you put down less than 10%, you have to pay for PMI - private mortgage insurance. So, in order to eliminate that, a second, interest-only second mortgage will fulfill the requirement of 20% down.

Underwriting - Why They Call it That

After the information on the loan application has been validated, the value of the property has been confirmed and the title search has been completed, the loan is ready to be underwritten. Usually, a trained professional reviews all of the information, analyzes the creditworthiness of the borrower and renders a decision on the loan request.

Increasingly, much of the analytical portion of underwriting is performed by technology through artificial intelligence and use of databases. There are general secondary market underwriting guidelines, but many variables are considered in the analysis.

These are some of the areas covered in the process:

• Monthly Housing Expenses and Total Debt Obligations One of the first things an underwriter determines is the borrower's proposed monthly housing expenses and total monthly debt obligations.

• Monthly IncomeOne of the most important components of the loan underwriting process is determining the borrower's monthly income. The income of all borrowers and co-borrowers is included in the calculation. The income can be derived from several sources, but it must be supported by historical documentation and have a high likelihood of continuation. The following outlines the types of income that are used and the means to support them:

• Salary Income derived from any kind of salary, whether monthly, weekly or hourly is acceptable. Two year employment history is usually required.
• Commission and bonus Commissions and bonuses can be used for income. The underwriter will average the last two years of income shown on federal income tax returns and the year-to-date earnings from the written verification of employment or pay stubs.
• Self-employment income Generally, the underwriter will average the income derived through self-employment for the last two years from the applicant's federal tax returns and the year-to-date earnings from a profit and loss statement on the business. Usually, underwriters will take into consideration the income trends in the business, as well.
• Other income Other income can be used for loan qualification. Income derived from rental properties, interest, dividends, pensions and social security can be used.

• Income to Debt Ratios After determining the monthly income of the borrower and any co-borrowers, the monthly housing expenses and the total monthly debt obligations, the underwriter calculates two ratios that are helpful in the loan underwriting process: Primary Housing Expense and Total Obligations to Income Ratio. Qualifying ratios are only one component of the underwriting process and many other variables are considered in the final decision.

• Funds to CloseWhen the proposed loan is being used to finance the purchase of a home, underwriters will determine the source of funds for the down payment and closing costs. The following are acceptable sources of funds for closing:

• Cash Cash in any depository institution or investment company is acceptable.
• Stocks, bonds, mutual funds, etc. Cash equivalent investments are acceptable forms of funds. They can be validated through statements from investment companies for the last two months.
• Sale of existing property Many times the source of funds for the down payment on a home comes from the equity in a property that will be sold. The sales price of the property being sold is indicated on the loan application and any existing loan is verified on the credit report or through a verification of previous mortgage.
• Gifts Gifts from family members for the down payment and/or closing costs are acceptable so long as there is no requirement for repayment. Some loan programs limit the amount of gift funds allowed.

• Credit AnalysisAnother part of the underwriting process is determining the creditworthiness of the borrower. Loan underwriters review the borrower's credit report to find evidence of debt repayment behavior. Some of the important areas that are reviewed are:

• Past and existing mortgage debt The past repayment history on mortgage debt can be a good indication of a borrowers attitude toward mortgage obligations. A good payment history on mortgage debt is very important in the credit analysis. Generally, payments received 30 days past the due date are reflected in the credit report as late. Lenders vary in strictness and some may not allow any late mortgage payments, while others will allow 1 or 2 in the last two years if there is a good explanation.
• Installment and revolving credit Other items on the credit report can also indicate a borrower's attitude toward credit obligations. Credit reports indicate the outstanding balance, current balance and terms of payment on the borrower's revolving and installment debt. Underwriters review these credit obligations to determine the borrower's patterns of credit use and repayment behavior. Generally, underwriters are not concerned over isolated and minor slow payments indicated on the credit report.
• Collections, repossession, foreclosures and bankruptcies Credit reports also indicate public records such as collections, repossessions, foreclosures and bankruptcies. Though these items may indicate past credit problems, they sometimes have valid explanations. Underwriters may require a letter of explanation on items noted in the public records. Many times consumers have re-established credit and have an excellent payment history on their current obligations.

When the loan went into underwriting, they wanted me to explain an old (and I mean old) bankruptcy I'd had, and how I got my credit score up so high, how I'd protect myself in the future, and what did I learn from the whole experience.

Being a writer, and rather dramatic person, I wrote a tear-jerker letter of how I came back from a psychologically damaging marriage with no money to my name, went to college at 42 to get my first degree, worked any and all jobs to get myself through college, and began chipping away at my credit cards until I raised my score from probably the mid-400s to the low 700s. It took a long time, but I did it, and it still one of my proudest accomplishments. I learned your entire life can hang in the balance in the face of bad credit.

• Underwriting the Appraisal Generally, underwriters are not professional appraisers and do not re-appraise the property. They will review the appraisal to assure that it meets the requirements of the investor and sometimes request additional information to substantiate the value. They may request that a second appraisal or review appraisal be performed. A review appraisal can be completed from a site inspection or review of the written appraisal. In both cases, another professional appraiser will perform the review.

• Compensating Factors The underwriters consider many variables in their analysis. No two borrowers have the same credit and income profiles and underwriters use all of the information in the loan file to render a decision. Many times, borrowers fall outside the guidelines, but have strong compensating factors that reflect low credit risk. Some compensating factors are history of savings, long-term job stability, and history of making monthly credit payments that equal or exceed the proposed payments, a substantial down payment or a large cash reserve after the close of escrow.

• Final Credit DecisionAfter the underwriter has reviewed the entire loan package, there can be four outcomes:

• ApprovalIf the loan is picture perfect and the underwriter has no questions, the loan will be approved with no conditions.
• Approved with conditions (the most common response) There are two types of conditional approvals:
  (a) If the underwriter needs additional documentation before a final credit decision can be made, a "prior-to-document" conditional approval will be rendered. In essence, the loan documents will not be prepared until the condition has been satisfactorily met. An example of a "prior to document" condition could be a pay stub to validate the borrower's income.
  (b) If the loan can be approved, but a condition must be met prior to closing, a "prior to funding" conditional approval will be rendered. In this case, the loan documents will be prepared and sent to the closing agent, but the lender will not fund the loan until the condition has been met. An example of a "prior to closing" conditional approval could be proof of sale of existing home where the equity will be used as the down payment.
• SuspendedSometimes the underwriter will be unable to make a decision on a loan file because it is either incomplete or there are many unanswered questions. In these cases, the underwriter will ask for additional information from the borrower before an underwriting decision is made. An example of a suspension may be large gaps in the borrower's previous employment history and no tax returns to indicate the place of employment.
• Denial Underwriters will be unable to approve a loan if the loan file has substantial deficiencies and does not meet the minimum standards of the lender or the lender's secondary market investors.

It seemed an eternity that the loan was in underwriting - they'd come back for more information time and time again, and my lender would promise a certain date, then they underwriters (much like other government people we fear) would hold it up for some stupid little thing.

Underwriters may require a letter of explanation on items noted in the public records. Many times consumers have re-established credit and have an excellent payment history on their current obligations.

After closing was moved 3 times, I finally was told my final date. I was beside myself! I could get out of the hotel now! Try that for 7 weeks with three cats, two of whom hate each other. I almost gave up and made doilies out them.

Inspections, Expectations and Reality

I didn't know about all the inspections the house had to go through - I knew it had to have a "House Detective," but it had to have a "Sewer Detective" as well. It passed with only a few minor problems - the house was originally built in 1986, and the new addition in 2002. So of course you'd find things.

What made things worse was the owner had been a "fix-it-myself" type, and there were things that were dangerous, over- or under-wired, and just plain dumb in the house - some of which I repaired myself.

The sellers, unbeknownst to me, DO NOT HAVE TO REPAIR anything on the inspector's list. In the contract you sign, you can stipulate that repairs up to but not exceeding, a certain amount, be repaired by the owners. This is only a stipulation - if they refuse, you have 2 choices: accept it and fix them yourself, or walk away from the deal.

Since my stipulation was only $3,000, and they'd already thrown in a 60" wide screen TV and a $3,000 carpet allowance, I accepted their denial for fixing the house. Most of it was small, nothing structural, and electric, which I had a professional do.

Keys to the Kingdom

Finally, the underwriters were satisfied, the sellers were happy, their realtor was happy, and I was happy. I closed on my house August 15th, five days before my 51st birthday - what a gift!

It was a much more complicated than exciting process, but I learned a lot, made some mistakes (which I can fix after a year) and feel very proud I bought my own home - it is the American Dream, after all.

Summary and Caveats

With hard work, my eyes always on the prize, and Suze Orman's words ringing in my ears like a mantra -- "Pay off those credit cards!" -- I was able to buy my first real home.

Many years ago, after graduating college, I began to write a book on "How Every Child Can Graduate from a Four-Year University," having learned from the inside, and this is true if parents would the Pride Mobile and really listen to the school counselors when they talk about junior colleges as the entrance to a degree program. I graduated summa cum laude, after doing all my undergraduate work at the local junior college for 2/3 less than the four-year university costs.

Every person can, and should own their own home - it is more than a home; it is security, an investment and tax write-off. Do the work, and it can be your dream just as it was mine.

But there are things I learned that you should know:

1. "It's not the price of the horse, it's the upkeep." This saying is never truer than when it comes to owning a home - you now have water, sewer, trash, property taxes and homeowner's insurance to consider - not to mention that questionable water heater installed before California became a state.

2. Never overstate your income. Besides demonstrating a seriously bankrupt morality, it will get you in over your head, is illegal, and you'll lose that McMansion within a very short time. It is tempting (and I think one of the 7 Deadly Sins) to "enhance" one's income to be able to buy more home. And don't think your realtor won't be thinking, CHA-CHING. Pride can get you into a nice house, and hot water.

3. Location, location, location. Never buy a home thinking you'll live there forever. Chances are, if it's your first, you'll move in an average of five to ten years. Keep in mind:

• Resale Value - Is your home located in or near a growing city?
• Schools - Most people vie to be in the best districts -and will pay the price.
• Tax rate - Are you willing to give up City services for County tax rates?

I am thrilled with my home. I bought 9 miles from a city with an eye on gobbling up my area within five years - not to mention, in the meantime, I have an acre, space to work, fantastic neighbors, in a safe, quiet, and desirable location. May you be as blessed.

Foreign con artists have been trying for the last few months to defraud American consuemrs by sending them authentic-looking cashier's checks and asking them to wire some of the proceeds from the cashed checks overseas.

Business must be good because the scam artists are getting bolder. Missouri Attorney General Jay Nixon recently received a fake check for $5,000 payable to him. He warns that victims who cash the checks often are on the hook for thousands of dollars after banks discover the checks are fraudulent.

"These con artists don't seem to be particular about who they try to scam," Nixon notes.

Nixon says many of the scams of this type reported to his office appear to originate in Nigeria, including the phony check he received. While the check Nixon got was not prefaced by any previous contact, some of the perpetrators apparently have first met their victims in online chatrooms.

After they gain the victims' confidence, the perpetrators may ask the victims to cash a check for them in the United States and send a portion of the check overseas. The victims are told they can keep part of the check.

"The scam artists come up with all kinds of stories about where the extra money will go and, unfortunately, some people believe them," Nixon says. "Victims of this scam may lose thousands of dollars, and tracking down the overseas perpetrators is often very difficult."

The checks look very real, and use the logos of real banks in the United States, Nixon says.

"Several of these banks have reported millions of dollars in fake checks presented to them for payment," Nixon says. "By the time the fraud is discovered, in many cases the victims already have wired the money overseas."

An earlier variation of this scam involved defrauding people who were selling items online. The purported buyer - often from Nigeria - would send a cashier's check for more than the agreed purchase price and ask that the difference be wired back to the buyer. Again, the check looked real but was fake.

Anyone who receives cashier's checks under these circumstances needs to remember that banks will hold them accountable for the money if the check turns out to be a fraud.

Chief Administrative Law Judge Stephen J. McGuire upheld a Federal Trade Commission complaint charging Telebrands Corporation, TV Savings LLC, and their owner, Ajit Khubani, with unfair or deceptive acts or practices and false advertising.

The Fairfield, New Jersey-based operation marketed and sold the Ab Force ab belt -- an electronic muscle stimulation (EMS) device that causes the muscles to contract involuntarily.

The administrative complaint issued by the FTC in 2003 alleged that the respondents infomercials falsely claimed that users could achieve weight loss, fat loss, and inch loss, get well-developed abs, and that use of the belt is an effective equivalent to regular exercise.

The ruling follows an administrative trial to resolve the charges. Judge McGuire concluded that the respondents advertisements were likely to mislead consumers, acting reasonably under the circumstances, in a material respect. Judge McGuire noted that the record indicated that the advertisements at issue made false and misleading claims that:

• Use of the Ab Force causes loss of weight, inches, or fat;
• Use of the Ab Force causes well-defined abdominal muscles; and
• Use of the Ab Force is an effective alternative to regular exercise.

September 21, 2004
About 18,000 executive office chairs sold at Staples are being recalled. The legs on the base of the chair can break, posing a risk of injury to the user.

The recalled executive office chairs include the 795-0115 model with black leather and the 795-0228 model with black fabric. Underneath the seat cushion the name Novimex Fashion Ltd. can be found on the large label and the model numbers and date codes can be found on a smaller label. Only chairs with a date code prior to April 1, 2004, are included in this recall.

Staples stores nationwide sold the chairs from March 2004 through July 2004 for about $100.

Consumers should stop using the chairs immediately and contact Gruga U.S.A. to receive a free replacement base repair kit.

Consumer Contact: Consumers should call Gruga U.S.A. toll-free at (888) 833-4148 between 7:30 a.m. and 4:30 p.m. PT or e-mail the company at customerservice@novimexfashion.com.

The recall is being conducted in cooperation with the U.S. Consumer Product Safety Commission (CPSC).

Scams are taking hundreds -- and in some cases, thousands -- of dollars from consumers hoping to win a government grant or a small-business loan. New York is among the regions hard hit by the scam.

"All of these offers are bogus. The loans don't exist and neither do the millions of dollars in 'free money' that is supposedly available from the government," said Teresa A. Santiago, Chairwoman and Executive Director of the Consumer Protection Board ("CPB").

Jan Pisanczyn, Regional Director of the Small Business Development Center at the State University College at Brockport, joined Santiago in issuing the warning.

"The only 'free money' is the cash that's going into the pockets of the scam artists," said Pisanczyn. "Unfortunately, the allure of free money has always been a strong draw to most people."

"In many cases, people are not listening carefully when telemarketers, websites and television advertisers offer people help in obtaining a government grant," said Santiago. "Consumers who pay these fees only receive pamphlets or books that list government agencies and programs. Even after people apply for these non-existent grants, many people still don't realize that they have been taken in scam."

Jeffrey Boyce, Deputy Commissioner for Small Business Services at Empire State Development, encourages entrepreneurs to visit the state's web site - www.nylovessmallbiz.com - to find out about legitimate government resources to help their small business get started or expand.

Santiago says a Canadian-based crime ring has been placing advertisements in newspaper classified sections that claim to offer loans for small businesses. But she says the loans are never delivered.

"Instead, victims of this scam are instructed to send thousands of dollars via Western Union to pay for insurance on the loan," said Santiago. "By using Western Union, the scam artists are able to collect the money without leaving any trace of their true identity or location."

This long-running loan scam continues to suck people in partly because it uses the names of actual American companies such as "Mortgage Expo" and "Empire State Financial Services." The name 'Margaret Taylor' is often used in this scam. Consumers may find these names on the Internet and think they are dealing with a legitimate company.

Santiago says there's been explosion in the number of government-grant and loan scams in recent weeks and in the number of victims hurt by them. "There is a virtual epidemic of telemarketers, websites and classified ads being used by scam artists to swindle people here in New York and throughout the country," she said.

One scam involves a Florida telemarketing company identified as "Consumer Grants USA." It uses telemarketers and a variety of fraudulent company names such as the "Government Grant Information Guide," "National Grant Center" and "Federal Government Grant Processing Center."

Often using telemarketers with Indian accents, this company "guarantees" an $8,000 grant from the government if consumers are willing to pay a $257 fee. These grants can be used "to improve your house, buy a new house, double-up your business and overall clean-up your bills," a telemarketer recently told an investigator for the Consumer Protection Board.

Their misleading sales tactics include posing as government officials and lying about the company and its true purpose. In addition to $8,000 "guaranteed " grants from the government, the company has also claimed to offer scholarship and disaster-relief assistance in other telemarketing calls.

Santiago says consumers are fooled into thinking that the telemarketer knows part of their checking account number. When the consumer gives the rest of the account number, the $257 is quickly removed from their account. Because the transaction is electronic, banks say they cannot stop the transaction unless the consumer closes the checking account completely.

Eventually, consumers learn that they will get nothing more than a booklet listing government grants -- and not an actual grant -- for this "one-time" fee of $257.

"Books, tapes and conferences are typical in these scams. They sell you information that is easily obtained in any library or directly from the government. But worse, they lie about the government offering 'millions' -- and, in some scams, even 'billions' of dollars -- in government grants," said Santiago.

AmeriDebt is running up some big debts of its own. The latest is a $15 million claim filed by the Internal Revenue Service as part of its crackdown on supposedly not-for-profit debt management firms.

The Ameridebt claim stems from the IRS's expectation that the firm will lose its tax-exempt status. IRS Commissioner Mark Everson says that to qualify for tax-exempt status, a credit counseling firm must limit its services to low income customers or, as its primary activity, provide education to the public on how to manage personal finances.

The Washington Post reported recently that the IRS is investigating 50 credit counseling companies for allegedly taking advantage of debt-ridden consumers while funneling fees to affiliated for-profit ventures.

The Federal Trade Commission filed a multi-million dollar lawsuit against Ameridebt last November, charging it with using deceptive practices that masked high fees and hid its connections to for-profit enterprises. Illinois, Missouri, Texas and Minnesota are also suing the company.

Following the state lawsuits, AmeriDebt laid off more than half its 50 employees, gave up some of its Maryland office space and said it would stop accepting new clients.

Over 1,000 West Virginia consumers got black smudges on their credit reports after defaulting on payments to Kirby vacuum's finance company. Now, those smudges are being swept up.

West Virginia Attorney General Darrell McGraw said his office has reached a settlement with United Consumer Financial Services Company of Westlake, Ohio, that removes all negative information it had reported to the three major credit bureaus about 1,157 West Virginia consumers. The customers allegedly defaulted on loans for purchases of Kirby vacuum cleaners.

McGraw says United Consumer Finance, a wholly-owned subsidiary of The Scott Fetzer Company, exclusively finances the high-priced Kirbys that are marketed through a nationwide dealer network that targets consumers with high-pressure, in-home sales presentations.

The settlement also relieved the affected West Virginia consumers from all further obligations to pay the charged-off accounts, an amount estimated to exceed $1 million.

McGraw's Consumer Protection Division began investigating the company in 2002 after learning that it had hired at least two unlicensed collection agencies to collect delinquent accounts in West Virginia. McGraw's office also found that United Consumer failed to furnish consumers with proper notice of their rights before reporting the defaulted accounts to credit bureaus, an action that harmed consumers' credit ratings.

The settlement alleges that United mailed unsigned computer-generated letters to consumers who allegedly defaulted on their accounts during the 1990s and up until May, 2002. This practice ended after the Attorney General initiated his investigation.

McGraw asserts that the required letter, which advises consumers of their important right to "cure" default, must be signed by a company official and must also include a notarized certificate confirming under oath that the letter was placed in the mail on the date indicated.

Actual proof of the date of mailing is important because the law requires that consumers be given 10 days from the date of the letter to cure the alleged default. Although UCFS denied that its notices were defective, the company agreed to reform its future notices in the manner requested by the Attorney General.

The settlement also charges United Consumer entered into contracts with Harris & Harris, now known as Business Credit Services, Inc., of Chicago, Illinois, and Receivable Recovery Management Corporation of Great Falls, Virginia, in 1993 and 1994, respectively, to collect delinquent accounts in West Virginia. The companies were not licensed and bonded to collect debts in West Virginia as required by the State Tax Department.

Although United Consumer denied that it was responsible for the companies' unlawful collection practices, it agreed to verify that all companies it hired to collect delinquent accounts in the future would be properly licensed and bonded.

Secretary Thompson said the enhancements to the Medicare-endorsed drug discount program give seniors another tool to save even more money on their prescription drugs and will create more incentives for drug companies to lower their prices as they compete for consumers.

"We are creating greater competition among drug companies and making the price of prescription drugs more transparent - giving seniors more power to compare prices and choose the lowest-cost medicine that's right for them," Secretary Thompson said. "It's another example of President Bush taking decisive action to drive down health care costs for Americans."

The "Lower Cost Rx Comparison Tool" -- accessible at www.Medicare.gov or by calling 1-800-MEDICARE -- will help consumers compare lower-cost prescription drugs by category (cholesterol lowering drugs, blood pressure medicines, allergy medications, etc.) that are similar to the drugs they currently take and are used to treat the same conditions. Secretary Thompson called for the new transparency to be added to the Medicare discount drug Web site so that seniors would have an even clearer picture of drug costs so they can make more informed choices about their medicines in consultation with their doctors.

"Many widely-used drugs for common health problems often have similar effects, but rarely do consumers have good information on how their prices compare," said Centers for Medicare & Medicaid Administrator Mark B. McClellan, M.D., Ph.D. "Only physicians can decide what drug is best for their patient. We want to help patients and their physicians find the least costly way to get the health benefits that prescription drugs can provide -- including an informed discussion about whether a less expensive, similar drug is right for them."

Dr. McClellan noted that this new assistance is part of a set of further enhancements in the opportunities to get drug savings through the Medicare drug card program. "Recent independent studies have confirmed that drug cards provide real savings, often over 20 percent on brand-name drugs alone, and now there are even more ways to save. It's all accessible just by calling 1-800-MEDICARE anytime or going to medicare.gov on the Internet," he said.

Medicare beneficiaries interested in using the new comparison tool can simply go to the "prescription drug and other assistance program" section of www.medicare.gov and enter the medications they are currently taking. A customized report will be generated for each of their medications, including less expensive versions of the same drug and brand name and/ or generic versions of similar but less expensive drugs that are available to treat the same condition.

For example, Zocor, a top-selling medication used for treating high cholesterol costs an average of $89.38 per month for the 20 mg. tablets. Using the new comparison tools, a beneficiary will find several lower cost options, including another brand name drug, Altoprev, that costs $57.19 per month for the 40 mg. tablets, an annual savings of $386.32. (It is important to note that different drugs may have different dosing requirements -- which is one reason why this new tool is intended to help doctors and patients make decisions that are informed by cost savings as well as benefits, not to replace those decisions.)

Medicare beneficiaries can take the information they get from the Lower Cost Rx Comparison Tool and discuss it with their doctors. Beneficiaries using the comparison tool will also learn that drugs in a class or category (such as statins, ACE inhibitors, proton pump inhibitors, etc.) to treat similar conditions but may have different side effects. This information should also be discussed with the doctor.

"The new Medicare benefits are saving seniors money on their drugs," Secretary Thompson said. "We are going to remain aggressive in using the new law and new technology to further drive down costs for seniors. We're helping seniors become more informed consumers so they can get the best price and service to meet their needs."

A rigorous medical review process was used to develop the new lower-cost comparison tool. Physicians and pharmacists review all medical content on a monthly basis to ensure the information is up to date. Prices quoted on the site are updated weekly. The comparison tool includes drugs in classes for which substitutions between different drugs should present the lowest number of clinical challenges to patients and providers.

The classes include:

• For lowering blood pressure: ACE Inhibitors, Angiotensin Receptor blockers (ARBs), and Angiotensin Receptor Blockers (ARBs)/Diuretic Combinations,
• For treating the symptoms of allergies: Low and Non Sedating Antihistamines/Decongestant Combinations, and Low and Non Sedating Antihistamines, for treating the symptoms of allergies;
• For lowering cholesterol: HMG-CoA Reductase Inhibitors or "statins"
• For treatment of pain and inflammation: NSAID Cox II inhibitors
• For treatment of stomach irritation and ulcers: Proton Pump Inhibitors.

The tool includes a total 52 drugs, representing about a quarter of all Medicare drug spending.

The Price Compare services available at 1-800-MEDICARE and www.medicare.gov now also include specific information about the breadth of drugs covered by each drug card, to provide more help to beneficiaries who are interested in whether a card would provide discounts on other drugs that they might need in the future. All cards provide discounts on all of the top 100 drugs used by seniors that can be included in the drug card program (benzodiazepines are excluded). All cards also provide discounts on more than 60 percent of all drug products marketed in the United States that can be included in the drug card program, and 73 percent (48 out of 66) of the national cards provide discounts on more than 80 percent of drug products. This coverage compares favorably to "open formulary" commercial prescription drug plans.

Other enhancements to the Price Compare features of the drug card program include:

• Letting beneficiaries know that they may be able to qualify for the Medicare replacement drug demonstration program, which can provide substantial help with potentially lifesaving self-administered medicines for beneficiaries with diseases that can also be treated by physician-administered drugs covered under Medicare Part B;
• Providing a beneficiary's annual savings by drug card after a beneficiary provides their current drug costs;
• Providing new features that allow beneficiaries to focus their choices only on a particular pharmacy, as well as on only certain drug card sponsors that are available at the beneficiary's preferred pharmacy.

To take advantage of all of these new opportunities to save, beneficiaries can call 1-800-MEDICARE at any time, day or night. They can also visit www.medicare.gov, clicking on the Prescription Drug and Other Assistance Program section.

An investigation by Spitzer's office found that the company had engaged in potentially misleading or false advertising with sales prices that involved little or no discounting of merchandise.

"Retailers have a fundamental obligation to be truthful and accurate with their advertising," Spitzer said. "A sales price' or a discount price' should mean that the item costs less than it usually does."

Jos. A. Bank uses direct mail, email, internet, print, radio and television advertising and in-store promotions to market its men's clothing line. In promotional material, Jos. A. Bank claimed that its merchandise was being offered for sale at a discounted price that was lower than its regular price. In addition, the company said that items would be on sale for a short period, thus creating the false impression that prices would soon revert to a higher price.

In fact, many items were almost continually on sale during the last 18 months. For example, the company's Signature, Executive and Trio suit lines were on sale for all but a few days during the period. Less than one percent of these suits were sold at the so-called regular price.

In settling the case, Jos. A. Bank has agreed not to promote any item at a discount from a regular price unless the item has previously been offered at a higher price for a reasonably substantial period of time. Spitzer said that this provision would help guard against misrepresentation of regular prices as sales prices.

Jos. A. Bank also agreed to pay $425,000 in civil penalties and $50,000 in costs to the State of New York.

The Hampsted, Maryland-based retailer operates 12 stores in New York and more than 200 stores nationwide.

The Attorney General's office will continue to monitor the company's advertising and is conducting a broader review of advertising practices in the retail industry.

Under the terms of the settlement, Advocat will spend $600,000 to install sprinkler systems in Arkansas nursing homes. In addition, Advocat will pay $400,000 into the Arkansas Medicaid Program Trust Fund over the next two years. The settlement also includes $300,000 that Advocat is spending on improving staff training and patient care in its Arkansas facilities.

Beebe filed lawsuits earlier this year alleging mistreatment and neglect of patients at Advocat nursing homes in Conway, Hot Springs (2 facilities), Malvern, Sheridan and Eureka Springs. Additional investigations were also conducted regarding practices at nursing homes in Camden, Newport, Pocahontas, Des Arc, Mena, Walnut Ridge and Ash Flat.

The resulting allegations included failure to provide necessary care, rehabilitation, treatment, supervision and medical services. The state also alleged that nursing-home staff members failed to carry out prescribed treatment plans and failed to report health problems or to report them in a timely fashion. No individual staff members were named in the lawsuits.

"These lawsuits were not meant to financially damage Advocat; they were meant to improve the nursing-home care they provide to Arkansas residents," Beebe said. "The last thing we need is fewer nursing homes operating in our state. What we do need is to ensure quality care from the centers we already have."

In addition to allegations of mistreatment and neglect, the state lawsuits also alleged that some facilities submitted fraudulent billings to the Arkansas Medicaid Program for care that was either inadequate or never provided. Advocat does not admit or acknowledge any violations in their Arkansas nursing-home facilities.