The Record from Hackensack, New Jersey • B1

Business SECTION Lynd hurst-based Citizen Watch taps two up-and-coming athletes as its face of the future. B-3 BEST NORTH JERSEY RATES B-2 NATIONAL BRIEFS B-4 BRIEFLY Mortgage risks worry regulators THE MARKETS New guidelines aim to inform buyers loans drawing scrutiny DOW 500 16.08 3.00 Close: Close: 11,866.69 1,353.22 RECORD 70 NASDAQ 0.51 15.39 Close: Close: 174.38 2,306.34 banks do a better job informing borrowers of the risks, and take a more conservative approach in evaluating a borrower's creditworthiness. The key provision is that loans Home the borrower interest on period, after payment dramatically. nalized Friday, applies only to banks and their subsidiaries, but non-bank lenders may soon face similar guidance from state regulators. The Conference of State Bank Su Interest-only loans: Allow to pay only the the loan for a set which minimum amounts increase By RICHARD NEWMAN STAFF WRITER Banking regulators are increasingly concerned about consumers' ability to withstand payment shock when rates go up on adjustable-rate mortgages.

Regulators also fear that borrowers may not have been adequately informed of the risks inherent in option ARMs and interest-only loans, which have surged in popularity over the past two years. New guidelines issued last week by federal regulators require that Option ARMs: Allow the borrower to decide how much to pay each month. On many of these loans, the principal owed can actually increase when the borrower opts to make a small payment. AT 10, BABIES 'R' US HAS Dow continues its record climb NEW YORK Wall Street rose modestly Thursday, nudging the Dow Jones industrial average to its third straight record high close as investors welcomed upbeat retail sales and jobless claims figures. The Associated Press The Market in Review B-5 THE RECORD 70 Local gainers losers Gainers Close Chg Chg RussBerrie 15.89 0.45 2.92 United Retail 19.07 0.47 2.53 AEPIndust.

42.36 1.00 2.42 Losers Close Chg Chg Innodata 1.81 I.D. Systems 21.53 Verizon Comm. 36.91 "a safe bet" that the guidance will include an indexed underwriting requirement, Michael Stevens, the CSBS' director of regulatory affairs, said in an interview on Friday. "I would anticipate that we will see wide adoption," he said, adding that the model will probably be distributed before the end of the month. Bankers, who lobbied hard against the underwriting requirement, say it is only fair that other lenders be held to the same standards.

"We are very pleased with that," See MORTGAGES Page B-8 FDIC: J. economy continues to decline Weak job growth, home sales cited By JEFFREY GOLD THE ASSOCIATED PRESS NEWARK Further evidence that economic growth in New Jersey has declined came Thursday as a federal banking agency found continued deterioration in the state's jobs and home sales. Employment grew by just 0.9 percent in the second quarter, trailing the national average of I. 4 percent, the Federal Deposit Insurance Corp. reported.

The rate in central and southern New Jersey was above 1.5 percent, but losses in northern New Jersey due to factory closings and layoffs dragged the average down. Jobs growth has been largely flat for the past two years, in part because of weakness in the telecommunication and pharmaceutical sectors. See DECLINE Page B-2 Manhattan sees office vacancies hit bottom Expansions push rates to 5-year low By DAVID M. LEVITT BLOOMBERG NEWS NEW YORK Manhattan office vacancy rates fell to their lowest levels in five years in the third quarter, pushed by the expansion of financial-service and law firms as the stock market booms, says a report from real estate brokerage Cushman Wakefield. Lower Manhattan led the growth, with office vacancies there falling to 9.1 percent from I I.

2 percent at midyear, and 1 1.5 percent a year ago, Cushman Wakefield, the second-largest U.S. commercial brokerage, said in its report Wednesday. Midtown vacancies fell to 6.5 percent from 6.9 percent the quarter before. In Midtown See MANHATTAN Page B-2 be approved based on the borrowers' ability to make payments using an indexed rate that more accurately reflects the stores and annual sales of more than $1 billion. Having learned from its parent company's mistakes, it is teaching Toys Us about winning loyal customers.

Babies President Deborah Derby, who was appointed to the top job in May, sees her mission TL v- k-- Spotlicjht Retailing pervisors in Washington will soon issue model guidance similar to the guidance from federal banking regulators, and it's EXPANSION Strategic 'Babies' steps Since its birth 10 years ago, Babies Us has enjoyed a strong increase in stores and sales by following these strategies: Focus on a narrow market niche, but own that niche Compete against yourself ask, "How can we do things better?" Provide "baby authority" knowledge as well as products longer-term cost of the loan not just the initial teaser rate. The requirement, which was fi ITS EYE ON ecutive vice president of human resources, legal, and corporate communications for the parent company. She foresees adding stores at a rate of about 20 a year for the near future. Toys Us no longer releases sales figures for Babies, but the division enjoying double-digit revenue growth during the years before Toys went private in 2005. "I think my challenge will be continuing that growth going forward," Derby said.

Possible answers, she said, See RETAILING Page B-8 they see it. CHRIS PEDOT ASTAFF PHOTOGRAPHER Babies Us President Deborah Derby in front of a mural at the Paramus store. She plans to keep adding about 20 stores a year. Growth spurt I The Record 70 B-3 ASK THE FOOL Refinancing may still be wise Q. Is it too late for me to refinance my mortgage? W.C., Mesa, Ariz.

It depends on the interest rate of your current mortgage, among other things. For many people, it's not too late at all. For more on home financing, go online at fool.com homecenter or quickenloans Write to us! Send your Trivia entries, Dumbest (or Smartest) Investments (up to 1 00 words) and questions for Ask the Fool to: Foolfool.com. Sorry, we can't provide individual financial advice. More Your Money B-2 Gas gauge New Jersey average, regular gasoline: Thursday $2,210 Month ago Year ago $2,712 $2,826 Source: AAA Fuel Gauge Let's just say on By JOAN VERDON STAFF WRITER If the first-time mom is happy, everybody's happy.

That's the business mantra at the Babies Us corporate offices in Wayne. The division of Toys Us has grown from start-up to success story by keeping a laser-like focus on one narrow market niche -first-time mothers, from the time they learn they are pregnant until their child is 18 months old. Babies Us, which turned 10 this year, isn't a retail runt anymore. It has close to 250 they know a as making Babies' sales continue to expand like a toddler on a growth spurt, as the division gets older. "We've continued to grow very aggressively for the last 10 years and I think we plan on continuing to grow very aggressively in the future," said Derby, who was previously ex- great deal when was ROYAL BANK A ML RICA 213 Main Street- Ft.

Lee 5.50 13 month CD ANK 13 1550 Lemcrne Ave Ft. Lee 301.944.4:00 Rate shawn annual percenlage yield (AFT SSQ0D min. to openearn APY. Penalty for early withdrawal, safe vahd or publiculion. MEMBER FDlC.