Preheat oven to 350°F (175°C).

In a large bowl, combine the cubed bread and raisins.

In a 1-quart saucepan, combine the milk and 1/4 cup butter. Cook over medium heat until the butter is melted, about 4 to 7 minutes.

Pour the milk mixture over the bread and let it stand for 10 minutes.

Stir in the sugar, eggs, vanilla, and nutmeg until well mixed.

Pour the mixture into a greased 1 1/2-quart casserole dish.

Bake for 40 to 50 minutes or until the center is set.

*Directions for Sauce:*

In a 1-quart saucepan, combine all the sauce ingredients except the vanilla. Cook over medium heat, stirring occasionally, until the mixture thickens and comes to a full boil, about 5 to 8 minutes.

Stir in the vanilla.