Line Of Credit

North American Vaccine Inc. said yesterday that an unidentified suitor has made a bid for the financially struggling Columbia biotechnology company.North American also disclosed that the potential buyer guaranteed a $5 million revolving bank credit line that was critical to its meeting $2 million in bond interest payments due yesterday. The remaining credit can be used to fund operations.Spokesman Thomas Newberry said North American would not identify the bidder. He said the company is in exclusive negotiations with the possible buyer, though the proposal is not binding on either side yet.The company's announcement yesterday made it clear that the suitor is not BioChem Pharma Inc., a Canadian pharmaceutical company that is its largest shareholder.

Environmental Elements Corp. said yesterday that its primary bank, Mercantile-Safe Deposit and Trust Co., agreed to increase the company's credit line to $12 million, from $7 million.EEC is a Baltimore-based supplier of industrial air pollution control systems.The company will use the additional credit as working capital to support its recent growth, said E. H. Verdery, EEC's chairman and chief executive. EEC recently doubled its number of new contracts and is pursuing others in international markets, he said.

The Baltimore Development Corp. said yesterday that it has granted a $400,000 line of credit to enable Parks Sausage Co. to keep operating while its owners search for an investor or buyer to save the financially troubled sausage-maker.John Sundergill, acting president of the city's quasi-governmental economic development agency, said the city agreed to the 90-day line of credit to give Parks enough time to evaluate offers and resolve its financial crisis."We're very concerned about Parks' survival . . . and preserving jobs for all those people," Mr. Sundergill said.

Washington -- You may think you already get plenty of pitches to take out a home equity line of credit at tax-deductible, &L single-digit teaser rates. But hold on: You haven't seen anything yet.A new national study says that with nearly $4 trillion in available equity, American homeowners never have looked so appealing to a rapidly growing, competitive group of banks, credit card companies, mortgage bankers and industrial giants such as Ford Motor, General Motors and General Electric.Home equity lending is so hot, according to study author George Yacik of SMR Research Corp.

More debt more easily.That's what many banks touting home equity lines of credit seem to be saying in 1995, acknowledging the fact that they must work harder to gain business because the growth of such loans has hit a plateau in the 1990s.The problem has been that housing values in many parts of the country dropped. In addition, many homeowners became preoccupied with mortgage refinancing instead.There is, however, finally some indication of an increase in home equity lending this year, based on an annualized gain of 12.5 percent in the past quarter.

Many banks advertise "free" home-equity credit. Although some offers are legitimate, others may have hidden fees and extra charges lurking behind that claim. Here are some areas the homeowner should question when shopping for a home equity loan or line of credit:* Fees: What exactly is free? If obtaining a home-equity loan is free, is there a charge to apply for the line of credit? If a bank waives its application fee, do you still have to pay for points, origination or discount fees, the appraisal, the title search and the title recording?

Ten days into the job, new Chief Executive Richard P. Crystal announced yesterday that Merry-Go-Round Enterprises Inc. has obtained a $90 million line of credit, offering breathing room for the fashion retailer mired in Chapter 11 bankruptcy."

Financial flexibility is a wonderful thing, so long as you don't hang yourself with it.Use of home equity lines of credit is on the rise, now encompassing one out of every 12 American homeowners. Heavy promotions offering special deals to sign up should push that figure higher.Borrowers have grown accustomed to this ready source of cash. So much so that 62 percent of the available credit from the nation's home equity lines is currently loaned out, according to a consumer survey by the University of Michigan.

Unable to quickly mend some of its credit fences in the apparel industry, Merry-Go-Round Enterprises Inc. officials yesterday said its inventory has fallen to less than 75 percent of its normal level, ensuring that sales for this month and part of March will be harmed."

Sparked by low interest rates, home-equity debt has become immensely popular, skyrocketing to a half-trillion dollars.Using your home as collateral can indeed get you a loan more quickly for a more reasonable rate. Furthermore, you'll likely be allowed to deduct the interest on your taxes. However, it also increases your chance of losing your home one day and may provide more temptation than is best for your financial well-being."I have a bias against home-equity borrowing, because I don't like to see people pay for expendable items -- such as clothes or a car that loses value -- with a long-term loan," warned Sally Jo Button, a certified financial planner with Button Financial in Denver.

The letter starts off ordinarily enough, with a typical salutation in the form of "Dear Mr. Gilbert." But its next sentence is set off in boldface type as its own paragraph: "Congratulations, you are pre-approved for a Home Equity Line of Credit." It's not jarring to you, I suppose. You don't see a thing appalling or outrageous about this letter. Perhaps you, like the officer of the bank who signed the letter, believe that Mr. Gilbert is qualified for a home equity line of credit. Let me let you in on a little secret.

Two years ago, Bank of America gave Brian DeCunzo and his wife an unsecured line of credit for $40,000 - two-thirds of the couple's annual income. The Hampstead landscaper used about $23,700 of the line to pay off loans and consolidate other debt. That was then. Bank of America recently lowered the credit limit to $24,300. Suddenly, it appears the couple is maxed out and their credit has suffered as a result, DeCunzo says. A bank official told the couple their credit limit was cut because their debt level had gone up, but DeCunzo says they have less debt now than when they opened the account.

Sure, you get a tax deduction for the interest you pay on your mortgage, but that doesn't mean you aren't heartsick about all that interest. Should you try to pay your loan off early and cut out a chunk of the interest due? If you make half your mortgage payment every other week, that's 26 half-payments - or 13 full ones rather than 12, shaving a month each year. But it's not worth it if your lender charges you a fee to do so, says Bankrate.com's Greg McBride. You're better off making an extra payment once a year or adding 1/12th of that amount to each monthly payment.

A former Mercantile Bankshares Corp. vice president was sentenced yesterday to one year and one day in federal prison after being convicted of two counts of mail fraud in connection with a scheme to bilk the company out of more than $900,000 according to the Maryland U.S. attorney's office. Thomas W. Small, 53, of York, Pa., also will have to serve five years of supervised probation and pay back $913,000 taken from the Baltimore-based company between March 1997 and August 2003, when he was vice president in charge of information technology.

Bill Me Later Inc., the Timonium company that offers a credit-card-free way to shop online, announced yesterday plans to expand its Maryland employee count by about 25 percent and add office space in Hunt Valley as it moves into a new stage of growth. The company said it's in the process of hiring 70 "customer service, help desk and transaction management operations" people to work in the 26,000-square-foot Hunt Valley space. Bill Me Later currently employs about 265 people. The company, founded in September 2000, also has plans to open information technology offices in San Francisco and hire 25 people to operate them.

With help from the Abell Foundation, the Maryland Zoo in Baltimore has received a $1.2 million bank credit it needs to get through the next two months without firing employees and stiffing vendors, officials said. Zoo officials do not expect to spend the entire line of credit from PNC Bank because revenues have improved since the March birth of an elephant -- whose name will be unveiled at his public debut Saturday. And officials are optimistic that a baby camel's visit in May will continue to boost attendance.

How's this for loan terms? You borrow $100 for two weeks and you're charged an annual interest rate of 884 percent. No, this isn't a payday loan. This is basically the deal you get from banks and credit unions when they give you a short-term loan to cover an overdrawn account. A few years ago lenders would return a check or deny an electronic transaction if you didn't have enough money in your account. Now they make an overdraft loan -- often without your consent -- and charge a hefty fee averaging $34, according to a recent study by the Center for Responsible Lending.

When my wife, Georgina, and I paid off our $100,000 mortgage early 19 years ago, we saved $97,468.70 in interest. We did it simply by enclosing a second check with our regular mortgage payment each month. If your goal is to pay off your mortgage early, you can do as we did without having to fall for gimmicky strategies that overstate your savings or hide your cost. And there are plenty out there. "Would you like to pay off your mortgage in 15 or even 10 years without having to change your current lifestyle?"

Whether you call it a rainy-day fund, an emergency fund or a cash cushion, making plans to have significant cash available when bad things happen is fundamental to financial planning. But what exactly constitutes an emergency fund? The most conservative definition - and most repeated advice - is cash equal to three to six months of living expenses sitting in a safe account earning minuscule interest. But for many people, that could be overkill, said Sheryl Garrett, founder of the Garrett Planning Network, a group of financial advisers who provide money advice at hourly rates.

SAN FRANCISCO -- Oakland resident Dominique Pfaff had a little extra time before boarding a flight to her native France this summer, so she used her credit card to get 100 euros in pocket money from a foreign-exchange service at San Francisco International Airport. She knew there'd be some kind of conversion fee involved, but she didn't find out until her Bank of America statement arrived in August that she'd been hit with a $10 "cash advance fee." Also, there was a $1.43 finance charge because she hadn't yet paid off the cash advance.