Dayton Daily News from Dayton, Ohio on March 2, 1987 · 13
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Dayton Daily News from Dayton, Ohio · 13

Dayton, Ohio
Issue Date:
Monday, March 2, 1987
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Jayton Daily News and Journal Herald 13 Hutton subsidiary purchasing stock to acquire courier Purolator board agrees to takeover PeirSCDJMlI. am boom 6oe the faoise Mon.,Mar.2, 1987 FMIlSaJlIKCe Tax change sparks surge in home equity borrowing By Darwin Sator .BUSINESS WRITER . . . Rhett says to Scarlett: "You have always taken ; ;care of your house, now let your house take care of you." ;T; That is an excerpt from a Wright-Patt Credit ; Union radio commercial for home equity loans, and -jit is the essence of the advice many lenders are tgiving these days. ( The advice about Tara could be good or bad. But either way, a lot of students this year will be attending college "on the house," because the 1986 Tax Act gives parents at least two new reasons to ;borrow against the homestead to pay college bills. "The deduction for Interest on guaranteed student .., loans is being phased out, and home equity loans -will continue to be deductible. That might make it , worthwhile to convert one to the other, not even factoring in the lower interest rate the home loan ..probably carries. " A lot of other people will be taking out a second mortgage at rates below 10 percent to pay off cred-1 it card, auto, home improvement and educational loan balances carrying rates of 12 to 21 percent. Consumer loan interest also Is being phased out by the 1986 Tax Act, but if that debt is converted to a " home equity loan, the interest in all likelihood will be lower, and still deductible. .,, Those are just a couple of reasons for the local . .boom in home equity borrowing that lenders say is well under way. , " Paul Young, Gem Savings Association vice president, estimated that since the first of the year Gem " has been making home equity loans at a rate three , or four times last year's rate. ' At Central Trust N.A. of Dayton, William Haun-ert, senior vice president, said home equity loan '"activity since October is 100 to 200 percent higher than during the same period a year ago. "And it has been basically because of the tax law change," he said. New thinking According to the National Second Mortgage Association, 9 million American families have tapped the equity in their homes, and last year loans totalled $65 billioncompared with $20 billion only eight years ago. Their parents and grandparents probably would have been shocked at the idea of "financing a shopping spree by putting a lien on the house. After all, they would say, if the borrower defaults, the lender can foreclose on Tara. But the tax law revision is changing a lot of minds. Byron Starr, general manager of the Wright-Patt Credit Union, said open-end loans secured by home equity grew from 534 loans totaling $10 million at the end of December to 615 loans totaling $11.6 million as of Feb. 21. Starr added, however, that he personally does not like the product. "I think they're wrong in setting up the tax program this way," he said. "It's something we've always preached against." Gem Savings' Young said that "although the primary reason is tax deductibility, the product itself is good. As in the past, a lot of people are using the equity In their homes to pay college tuition or make an investment, such as an Investment In a small business or in stock." They also are paying for vacations and home improvements and consolidating debt. ' . . . But Young said more people are adding new debt than are consolidating old debt to keep the interest . deduction. "That," he said "is because only 38 percent itemize their taxes and the other 62 percent really aren't affected by the tax law." By eliminating a lot of deductions, the new tax rules will result in even fewer taxpayers Itemizing. Old notions Advertisements placed by local lending institutions attack the time-honored notion that burning the mortgage should be one of an American family's most important goals. First National Bank of Dayton is saying, "If you're a homeowner, you've got the combination to our vault . . . good deeds should be rewarded . . . give yourself some credit," Society Bank of Dayton ads call a home equity loan "a brilliant deduction" and invite customers to "Just write a check against your credit line when you need a loan for any reason." Customers of other institutions can borrow on their home equity with credit cards. One possible pitfall with a home equity loan is that interest rates are nearly always variable and many don't have caps meaning the sky's the limit. So if interest rates skyrocket and the bottom drops out of the economy, Tara could be in trouble. Texas legislators felt so strongly about the dangers that they prohibited home equity loans. A few lenders, however, do have caps. Gem City has a cap of 18 percent, which is a typical consumer loan rate nowadays, and currently it is charging just two points over the prime rate, which is now 7.5 percent, meaning a total of 9,5 percent. Wright-Patt Credit Union currently is charging 9.7 percent, or the 26-week Treasury bill rate plus two points. One of the few lenders offering a fixed rate in the Dayton area is First Union Home Equity Corp., one of the largest second mortgage companies in the country, with two area branches. First Union offers an 11.5 percent fixed rate on its approved lines of credit and is currently charging a variable rate of prime plus one, or 8.5 percent. Branch manager Linda L. Surber said a lot of First Union's home equity borrowers are paying off credit card balances and auto loans and making home improvements. While lenders in some parts of the country are offering teaser rates for the first few months and giving away premiums like TV sets and cameras, most area lenders are limiting themselves to cutting the cost of obtaining a loan. Gem, for instance, Is waiving its usual up-front fee, at least until March 31. Other lenders, Including First National, Central Trust and Society, have been waiving closing costs and application fees for a limited time typically a savings of $150 to $200. introductory rates are being advertised. Central Trust has been offering 8,5 percent (prime plus one), guaranteed for 90 days, for a $50,000 line of credit secured by home equity. The rate jumps to prime plus 1.5 percent for $25,000 to $49,999 and to prime plus 2 percent for $5,000 to $24,999. The borrower accesses his line of credit simply by writing a check. Tempting ; Other exceptionally tempting terms are offered. For example, Central Trust does not require payment on the principal of the loan. "You can pay back as little each month as the interest due on your outstanding balance," a Central Trust ad says. The only rigid qualification for a CentraLine of Credit home equity loan is a minimum household income of $25,000. Haunert acknowledged that the pay-back policy is unusual but said Central Trust Is comfortable with it because it screens prospective borrowers carefully and takes expendable income, as well as home equity, into consideration. Haunert said Central Trust grants a lot of home equity loans for home improvements, college expenses and other short-term uses, but makes surprisingly few debt-consolidation loans. "That Is because during the review we do not exclude any of the existing debt," he said. "They have to be able to handle the existing debt and show us additional expendable income for further credit." Paul Young said Gem Savings sometimes advises customers against taking out a second mortgage. "We don't want people to necessarily spend all of the equity in their home on trivial purchases," he said. MWt r 1 t r 3S, 7. fr ill irq MS fX. t A tit Y'J ' Iff 7s TED FITTSSTAFF ARTIST Have a funny one about your PC? Send it in ; ByT.R.Reid i and Michael Schrage 1 I Our biggest regret in writing about ' personal computers is the lack of hu- mor on the subject. While there is no shortage of funny people in personal I computerdom, there is a dearth of per- sonal-computer jokes. ; This bothers us for two reasons: It deprives us of material to make these missives more entertaining, and it indi-; cates that perhaps we all take this sub- ject too seriously. What better way to judge a subcul-I ture than on its humor? Pet owners I have good jokes, lawyers have jokes, ; parents have jokes why should PC ; owners be so bereft of punchlines? To remedy this, we are sponsoring iJbe First Annual PC Joke Contest. The TjjOrpose of the event is to encourage PC humor, so that the next time your neighbor asks how your PC is doing, you don't tell yet another long-winded story about how you love your hard disc. Instead, you pop out a joke that leaves 'em in stitches. Aren't you fed up with the image of PC owners as humorless nerdoids? Here are the rules: Entries have to be jokes with beginnings, middies and ends (commonly known as punch lines). Puns (such as "Fiche and chips, how 'bout a byte?" and "I like your floppies") do not qualify as jokes. Blending computernyms with punch lines may be OK but reveals a paucity of comedic entrepreneuriaiism. Light-bulb-type jokes are acceptable, but don't send in ones everyone knows already. (Such as. "How many pro grammers does it take to screw in a light bulb? None it's a hardware problem.") Riddles ("Why did the computer cross the road? To get another bus.") are OK but need to be much better than the example. Ethnic, sexual or derogatory jokes not fit for newspapers are ineligible even if you think they are hilarious. Let taste and conscience be your guide. Entries may be outputted with laser, dot-matrix or daisy-wheel printers. In other words, they must be legible. If you choose to write your joke by hand, you better have won penmanship awards. You may enter as often as you like (don't ask why). The decision of the judges the firm of Caprice, Whim & Serendip (us) is final, and all jokes become property of the column (although we won't create a ttand-tip routine based on your entries). As with all contests, this is void where prohibited by law. The top three jokes (if they are of sufficiently high caliber) will be published in this nationally syndicated column and the winning jokesmiths heralded as "funny people." For those who get a thrill seeing their names in newspapers around the country, this could be your contest. Besides, handing out prizes would make this serious and you can'thavea serious joke contest In the unlikely event of a tie, the winner will be determined by the earliest postmark. Should that not be possible, the winning entry will be determined by a computer-generated coin toss. Entries must be postmarked no later than April 1 (April Fools' Day) and sent to us at The Washington tasf, 1150 15th St., NW.. Washington, D.C. 20071. NEW YORK (AP) The board of Purolator Courier Corp., the small package express delivery company that lost $57.6 million last year, has agreed to a takeover by a wholly owned subsidiary of the E.F. Hutton Group Inc. Purolator will merge with PC Acquisition Inc., a corporation organized specifically for the takeover by E.F. Hutton LBO Inc., the subsidiary, according to E.F. Hutton LBO President Warren Isdall. After Saturday's agreement, Isdall said E.F. Hutton was prepared to invest up to $279 million to purchase stock and refinance debts for Purolator. Discussions on the takeover began at the end of December, he said. Purolator stock closed Friday at 35 on the New York Stock Exchange, up 3 from the previous day's close. Isdall said all Purolator stockholders would be offered $35 a share for their stock, and said E.F. Hutton intends to purchase 83 percent of the company's common stock. Once the merger is completed, the company will continue operating under the name of Purolator Courier Corp. and PC Acquisition will be dissolved, he said. There will be no change In management at Purolator and Chief Executive Officer William Taggart will remain in his post, Isdall said. QrjTlhis is very defi-11 nitelyajointef-ii fort. But the people who manage and run the corporation will be the same.' "This is very definitely a joint- effort," Isdall said. "But the people who. manage and run the corporation will be the same." Purolator stockholders will be offered the option to reinvest in the new corporation at a reduced rate following the purchase of their stock, Isdall said. ' ' Purolator lost $57.6 million last year on revenues of $841.4 million arid" blamed the loss on poor performance at Its U.S. Courier Division, which nan-, dies domestic package transport. ' ,., ' Fourth-quarter losses were $21.3, million on revenues of $210.8 million, ' per-share loss of $2.84. The 1986 per-share loss was $7.54. pr Late last year, Purolator was;the subject of acquisition rumors involving. Emery Air Freight Corp. of Wilton, Conn., which denied it had any interest. Fairfield GM workers must move to keep jobs FAIRFIELD (AP) Workers at a General Motors Corp. plant are apprehensive about the possibility of moving to Indiana for jobs at GM's Marlon plant. "Obviously, nobody wants to uproot," said David Doty, a committeeman for United Auto Workers Local 233, which represents workers at the Fairfield stamping plant. "I'd say nobody here wants to go there any more than the people there want us to come." Marion plant Manager James Wle-mels said between 50 percent and 60 percent of the work done at the Fairfield plant could move to Marion by 1989. That shift could mean a transfer of hundreds of workers from Fairfield, Doty said. John Davison, a spokesman for the Fairfield plant, said 1,650 hourly employees are working there, with another 500 laid off. The plant is scheduled to close by the spring of 1989. Marion has 2,821 hourly employees, with 332 others laid off, Wiemels said. But because of the possible transfer of Fairfield workers, those out of jobs in Marion wouldn't necessarily be called back even with the extra work load, he said. Under the national agreement between GM and the United Auto Workers, employees with seniority in their home plants come with the work if it is transferred. "It's my opinion that you're talking about hundreds of (hourly) workers and their families," said Davison, who plans to retire when the plant closes. Davison said the duties at the Fairfield plant are scheduled to be spread among at least nine other plants across the country. Doty said he and fellow employees are trying to come to major decisions, even though they have not been given information about how many people might be eligible for transfer to Marion or the other plants. "It's a hard-nosed decision to make," Doty said. "Obviously, I don't want to leave, but I don't want to give up 20 years' seniority with General Motors, either." Calvin Hessler, financial secretaiy for Local 233, said at least 300 workers at the Fairfield plant have more than 30 years with the company. He said their seniority would qualify them for transfers. The Fairfield plant was on a list GM' released in November of 11 operations nationally scheduled to be closed by 1990. Also targeted for closing is the' GM plant in the Cincinnati suburb of Norwood, which employs 4,300. workers. . Fairfield plant management and the union must submit the number of people they think should go with the work. Then, representatives in Marion respond by submitting the number of new people they think are entitled to come. The final decision rests with UAW and GM headquarters, Davison said. The Marion and Fairfield operations stamp metal parts for various types pf GMcars. Artificial intelligence seminar set A local professional group of computer system managers will host a two-day seminar on artificial intelligence at the end of March. The seminar coincidentally follows an announcement Monday that the Air Force will fund an Artificial Intelligence Applications Center near Wright-Patterson Air Force Base. Artificial Intelligence the ability of a computer system to use humanlike reasoning to make decisions "has tremendous growth potential in the Dayton market," said Sharon Bee-be-Owen, president-elect of the Association for Systems Management's Mega- Goodyear receives Air Force contract Goodyear Aerospace of Akron has been awarded a $29.4 million Air Force contract to produce a training simulator for the new F-15E dual-role fighter plane. The contract is managed by the simulator systems office at Wright-Patterson Air Force Base. It is the company's third contract to build an F-15E simulator, bringing the total to $144 million, according to a Goodyear Aerospace announcement. The F-15E is the latest version of the McDonnell Douglas aircraft. It is designed for ground attack as well as air-to-air combat missions. city chapter. , Computers able to render decisions "! in areas from locomotive maintenance to medicine will become more common . as defense needs drive the growth of artificial intelligence, she said. But, she added, the field is new and evokes images of Hal, the computer ' that went berserk in the film 2001: A Space Odyssey. "Nobody knows a-whole lot about it," she said. ! The seminar, Artificial Intelligence and Expert Systems, is a "straightfor-j ward introduction" to the field de- signed for "technical and non-technical ? professionals and their management,"! according to a seminar brochure. It will be Monday and Tuesday, March 30 and' 31, at Stouffer Dayton Plaza Hotel. For registration information, contact Mrs. Beebe-Owen at 226-0521 or the; Association for Systems Management's t education department, (216) 243-6900. Are Your Long Distance Telephone Calls Over $150.00 Per Month? If so Would You Like To Have A Flat Rate of $120.00 Per Month? For Mora Information Contact emus sssi'sss 513-229-SSS3 8 A.M. to 5 P.M. . American Building n Third and Main Streets Office Leasing Information Third Main Realty Co. M.UphSpee, Rector (513) 222-8679

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