Save San Francisco's Magic Theatre

Saving the Magic Theatre isn't just about retaining one of San Francisco's most valuable historic landmarks and cultural institutions--it's about saving modern theater itself. For 42 years the Magic Theatre has stood for what's new, ground-breaking, and yes, magical, about the stage and its stories, about the possibility behind the curtain.

The theatre's impact isn't just on the Bay Area. It extends into the national theater community and beyond. The Magic has acted as a haven for playwrights that rose to the forefront of the artistic world: Sam Shepard, Nilo Cruz, and Paula Vogel are among the four Pulitzer prize winners whose voices came to life here. The Magic Theatre is one of the places that makes San Francisco a cultural destination rivaling cities like New York and Chicago.

Now, due to the economic turbulence wreaking havoc across the world, the Magic might be forced to cancel the rest of its current season and close its doors for good. In order to continue with their current season, stop a staff shutdown, and keep on the right side of creditors, the Magic needs to raise $350,000 by January 9th--this upcoming Friday. The Magic has always prized artistic risk over money-making, and their admirable, barrier-breaking history proves just how much that choice has influenced contemporary theater. Beyond all this, the Magic employs over 200 artists annually and changes the lives of countless audience members with every performance. If we allow the Magic to shut its doors, we're turning our back on the artists that make the Bay Area such a vibrant place. 

Financial losses have hammered the Magic, and this 43rd year might be the theatre's far too early end. The theatre has already enacted drastic budget cutbacks and begun a rigorous campaign to increase revenue despite the recession.  This season is the inaugural year with new artistic director Loretta Greco, and the first two shows under her leadership, The K of D: An Urban Legend and Evie's Waltz, won much critical praise. Loretta Greco and the rest of the staff have been working without pay since December 19th. 

The rest of the season promises to be equally stunning, featuring new works by some of the most talented and creative writers around. Without the Magic, it's hard to imagine work by luminaries like Theresa Rebeck (Mauritius, slated to run April 18-May 21) or Craig Wright (Mistakes were Made, May 23-June 21) finding a suitable space to run in the Bay Area. Especially since three major Bay Area theaters have either closed on or been on the brink of closing in the last month. Shakespeare Santa Cruz was in a similar plight back in December, but thanks to over $400,000 in pledges that theater will make it through another season. 

The season has four plays left, and without our help these plays might never see an audience in the Bay Area. In a recent San Francisco Chronicle article, Loretta Greco says, "This $350,000 appeal, the third prong, is more grassroots. We're sending it to our colleagues and friends here and around the country. We've raised about $170,000 so far, and no gift is too small. That's where we are. We've got to get back in rehearsal."

You can help. No donation is too small. To contribute to the Magic Theatre and help keep its doors open CLICK HERE. Help us save the Magic and everything it stands for! 

Bail us out! How we can tell if the bailout's working

Congress has started tossing buckets of water overboard, but we still seem to be sinking. In the wake of the newly passed bailout bill, many people are left wondering if the bill really will help revitalize the economy. But before we get that far, it's important to know the answer to the question of what exactly the bailout is trying to achieve.

In last Sunday's San Francisco Chronicle, Kathleen Pender says of the bailout, "Although lawmakers tried to rebrand it an 'economic rescue bill,' experts say its real purpose is to create a more active and transparent market for mortgage-related securities and thereby help restore confidence in the financial system. It won't restore the balance in your 401k plan in short order or guarantee you won't get laid off." 

Using clear, easily digestible language, Pender deconstructs the bailout plan and helps us understand why it happened, what the plan's intention is, and how we can tell if it's working. 

This article is the best one I've read on the bailout, and it's a must-read for everyone worried about their finances in this difficult economic moment. 

CLICK HERE FOR THE FULL ARTICLE 

Is that House Really Worth That Much?

Even though new federal rules prohibit appraisers, realtors, and individual home sellers from tweaking home values higher, an article by Kenneth Harney in last Sunday's Chronicle implies that inflated appraisals are still the norm. 

The housing boom came into being in large part because of a faulty appraisal system--one in which the people selling or providing capital (those who stood to make the most profit) had the most control over price tags. This system resulted in skewed home values that influenced prices everywhere. The most pressure on appraisers comes from lenders, who want to make sure home values will be set at a price that limits their losses. New laws threaten severe punishments for appraisers who buckle---in some states they can lose their licenses, and the secretary of housing can even impose financial penalties on appraisers found guilty of inflating values.  

Kenneth Harney San Francisco Chronicle Article: Appraisers Still Getting Pressure on Prices

C.A.R Market Matters, August 21st

Welcome to the Market Matters Advisory, your weekly guide to responding to the market. 

San Francisco Chronicle

Real estate chaos hits appraisal industry

As a result of the current market and a return to proper underwriting guidelines, appraisers are finding it increasingly difficult to get lenders to accept appraisals. Some lenders are even declining low appraisals and scrutinizing loan applications more carefully than in previous real estate cycles. whereas most lenders used to evaluate a home appraisal's credibility based on comparisons generated from their desk, now some banks are requesting that appraisals be verified by on-site visits to the property, as well as the nearby homes listed as comparables.

MAKING SENSE OF THE STORY FOR CONSUMERS

Since real estate markets are local and prices can greatly fluctuate from one area to the next, experts recommend that sellers and REALTORS work with local appraisers that have knowledge of that region.

Similar to utilizing a REALTOR versus a sales agent, it is recommended that sellers work with an appraiser that is a member of the Appraisal Institute or the American Society of Appraisers, the appraisal industry's two largest trade groups. Appraisers that are members of these organizations are required to complete more coursework than those just licensed by the state.

Because some lenders are declining appraisals, some mortgage brokers recommend that buyers leave their financing contingencies in place until the lender has signed off on the appraisal.

FULL STORY

US News and World Report

How the Housing Law Affects Reverse Mortgages

The recently signed federal housing bill has many provisions, including changes to reverse mortgages, which are loans against a house that the borrower is not required to pay back as long as they live in the home. Some of the amendments include raising the amount that seniors, age 62 and older, can borrow using a federally backed reverse mortgage; and lowering the cost of receiving the home's equity. Some aging experts advise consumers to be cautious before refinancing into a reverse mortgage.

MAKING SENSE OF THE STORY FOR CONSUMERS

Although seniors can access their home equity by refinancing into a reverse mortgage, many of these loans come with a variety of fees. Once the fees are paid, borrowers may choose to receive a lump sum payment, monthly payments, a credit line, or a combination based on the home's value. A provision in the housing bill reduces the maximum fee to 2% on the initial $200,00 of a home's value and 1% on the remaining balance, with a maximum set at $6,000. Some lenders charge less fees, so similar to finding a traditional mortgage, consumers should shop around and negotiate with their lender on these fees. In some cases, closing costs, service fees, mortgage insurance premiums, and interest rates can also be negotiated.

Most reverse mortgages are Home Equity Conversion Mortgages (HECM), which are backed by the Federal Housing Administration. In order for a borrower to qualify for a HECM, they must discuss the loan with a loan counselor employed by a non profit or public agency approved by the U.S Dept of Housing and Urban Development. This ensures borrowers understand all of their options and make the right decision. 

Some borrowers may not understand that although the loan does not have to be repaid, as long as they remain in the home, they are still responsible for property taxes, insurances, utilities, fuel, and maintenance, and other homeowner expenses. If some of these items are not kept up to date, the borrower risks the lender calling the loan due. It is important to note that reverse loans must be paid back with the proceeds, along with any remaining equity, if the home is sold.

FULL STORY

Los Angeles Times

Good news for California Housing

Home sales in Southern California increased in July compared with a year ago, while foreclosures decreased in month-over-month comparisons, according to a recent report. The California Legislature also is working with consumer and lending groups on a bill that would protect consumers from predatory lending and establish guidelines and restrictions on brokers and lenders.

MAKING SENSE OF THE STORY FOR CONSUMERS

Although the foreclosure rate is approximately double what it was a year ago, in month-over-month comparisons, it is 8% lower, indicating that foreclosures could be reaching a plateau. In a report released by RealtyTrac, default notices, which are the first phase in foreclosure proceedings, declined 4% from June. 

If signed, the bill will prohibit lenders from offering a pick-a-payment loans to subprime borrowers; establish limits and timeframes on prepayment penalties to subprime borrowers; amd prohibit brokers from leading subprime borrowers into loans with higher interest rates if they can qualify for one with a lower interest rate.  The bill also would prohibit lenders from paying a financial incentive to brokers for steering borrowers into loans with prepayment penalties or higher interest rates. Additionally, mortgage brokers would be required to place the consumer's financial interests above their own.

FULL STORY

In Other News...

Reuters

Home Builders Stay Grim in August

Housing Starts and Permits Tumble in July

Press Enterprise

Foreclosures push Inland Home Sales Up, Median Prices Down

SF Chronicle

Home Values Hold in Few Places in Bay Area

Talking Points

Here's what to tell consumers

Many mortgage brokers are finding that consumers do not fully understand the home loan process and as a result, make mortgage mistakes. Some common mistakes that borrowers make are: not cleaning up their credit; failing to search out first-time home buyer programs; paying junk fees; and not planning for closing costs.

Borrowers can increase their chances of being approved for a home loan by requesting their credit report and FICO score at least six months prior to applying for a loan. This allows the consumer to dispute errors and pay any outstanding debt.

Borrowers should also seek out a first-time buyer program because they often offer better interest rates and terms, and some even are tailored to people with poor credit or can assist those that do not have enough saved for a down payment. 

To avoid paying junk fees, such as those charged for "document preparation," for example, a borrower can use a mortgage broker or call a variety of lenders to compare loans, interest rates, and fees.

Some borrowers are shocked when they realize that they must bring cash to the closing table, typically anywhere from 2 to 7% of the home's selling price. To avoid this "sticker shock" experts recommend that borrowers get a good-faith estimate from their lender early in the loan process. 

C.A.R e-blasts are published by the CALIFORNIA ASSOCIATION OF REALTORS, a trade association representing nearly 200,000 REALTORS statewide. 

Palo Alto Home Values Still Going Strong

Even Bay Area homes have been tainted by the recent real estate market woes--but only some of them. There are still few areas in the nine-county zone where home values are appreciating, according to a recent article in the San Francisco Chronicle by Caroyln Said.

Home values hold in few places in Bay Area

Prices are still going up in beautiful areas like Sausalito, and in places where technology reinforces the economy. That means good news for Cupertino and Palo Alto home owners and potential buyers, and bad news for "exurbs" like eastern Centra Costa County (where a glut of new homes were built in the last few years). It's the same old problem--too many houses on the market and not enough buyers drive prices down. But places that still have something to offer, like jobs for instance, usually retain property values because those properties are (and will be) in demand.

Everywhere But Here

All across the country home values have been free-falling. It's a matter highly covered by the media, and something many people have experienced first hand. But an article in the San Francisco Chronicle written by James Temple says that most homeowners believe the value of their property has either stayed the same or risen during the year. 

ARTICLE--Homeowners delusional on value of property

62% of homeowners, in fact. According to Zillow (a real estate web site) the market price on 77% of properties has fallen while only about 24% have gone up or at least held tight. 

How can so many people think the crisis hasn't touched them? When you consider how large a part a home plays in a family's assets, it's easier to see why people can delude themselves. No one wants to admit their biggest investment has lost 25% of its value. 

If you're planning on staying in your house for the next five years or longer, all this really shouldn't affect you that much. If you are trying to sell, however, it's important to educate yourself on the current market in your area and take stock of changes. Think about how you might need to readjust your idea of what the house is worth, and try to be realistic. 

A reassuring quote from the article for us Silicon Valley dwellers---

"The Zillow survey of 1,361 homeowners, conducted by Harris Interactive, didn't break out figures for California or the Bay Area specifically. Malcom Kaufman, a Realtor with McGuire Real Estate who focuses on San Francisco, said local sellers are generally more informed and realistic about the condition of the market."

Buy Now. Or at Least Before June 30th 2009

Buying a house is always a big decision. Especially if you've never owned one before, and especially when the housing market is unstable. Anyone who's been trying to wait out the storm should check out the new home purchase tax credit created by the massive housing bill Congress just approved--for some buyers, it may make the decision seem a whole lot easier.  

According to Kenneth Harney in a recent San Francisco Chronicle article called How Home Purchase Federal Tax Works, first-time buyers and buyers who haven't owned a house within three years may be eligible for up to a $7500 credit against their federal taxes for 2008 or 2009. They are only eligible for the credit if they go into closing on their home before the end of June, 2009. 

High expectations surround this new home purchase tax credit. In theory, it seems like it could work wonders. Congress has set no limit on the number of people who can qualify, and the credit should work to kick housing sales back up while finally clearing out unsold real estate inventories across the country. There are no regulations on the kind of house. It can be any price, in any location, old, new, with five bathrooms or one and a half.  As long as the buyers fit the profile and it's in closing before June, 30, viola! Your tax bill will be up to $7500 lighter. 

If you owe the IRS any money from income taxes, the credit could wipe out what you owe and grant you a hefty refund. Harney writes, "The new home purchase tax credit is what the government calls refundable: If your tax bill is less than the credit amount, you get the difference back from the Treasury."

Current home owners are not eligible for the credit. It applies only to first time buyers, or people who sold their homes more than three years ago and now rent. High earning buyers (with adjusted gross incomes over $150,000) will see their credit maximum scaled down in increments. 

There is a payback, however. Beneficiaries of the tax credit are required to pay the credit back over a number of years, even as many as 15. If you sell the house before your repayment period is up, you won't have to pay the credit from the proceeds. Harney writes, "In other words, the federal government is taking on all or much of the risk that the value of your new house won't increase over time." 

Think of it as a loan, albeit an interest free one. And you can only take out $7500. 

California Association of Realtors, Market Matters

Bottom's up: This real-estate rout may be short-lived

Home sales and prices may be down, foreclosures may be mushrooming and the blowback from the subprime mortgage crisis may be threatening banks and secondary mortgage lenders, but there are some early signs the real estate market is trending in a more positive direction -- although you may not know it if you rely on the mainstream media for your real estate news.

MAKING SENSE OF THE STORY FOR CONSUMERS

· Recent data suggest real estate market pessimism may be overblown. Even economist Karl Case, father of the S&P/Case Shiller Home Price Index, admits many industry pundits and members of the media are ignoring key facts – as demonstrated by their focus on negative year-over-year price figures rather than more recent monthly data. An example: Home prices actually increased slightly in eight of 20 Case Shiller markets between March and April. Instead, the focus of most media reports was on year-over-year figures, which continue to support the notion that the market may not have hit bottom, let alone begun to improve.

· Transaction-related indices may be skewed at present by a far larger than normal share of subprime-derived default and distress sales. In the San Francisco Bay Area, for example, more expensive homes (those priced over $721,548) have dropped in price by only about 10.7 percent from their peak, compared with homes priced under $473,711, which have tumbled by 40.9 percent.

· Even new housing construction numbers suggest an improvement, according to Case. He notes that housing starts, which fell to 975,000 in April from 2.27 million in January 2006, have fallen by similar percentages three times during the last 35 years. Case observes that each previous time this has occurred the market has staged a surprising upturn within a quarter. Only a slide into a recession would temper his optimism about the potential for a similar recurrence of this trend.

To read the full story, please click here

Fed stiffens restrictions on mortgage lenders

The Federal Reserve is clamping down on what it called "deceptive acts and practices" by some mortgage lenders that it says helped lead to the subprime mortgage crisis. The new rules, which apply to all banks and other lenders and specifically target subprime loans and borrowers, will take effect Oct. 1.

MAKING SENSE OF THE STORY FOR CONSUMERS

· The new rules "are intended to protect consumers from unfair or deceptive acts and practices in mortgage lending, while keeping credit available to qualified borrowers and supporting sustainable homeownership," said Federal Reserve Chairman Ben Bernanke.

· The new rules will prohibit loans to borrowers who can't repay the loan from income and assets other than the home's value and will require lenders to verify the borrower's income and assets. Prepayment penalties are banned for the first four years of any adjustable rate subprime loan and for the first two years on other subprime loans. Lenders also must establish escrow accounts for property taxes and insurance for all first-lien loans

· Also banned are seven misleading advertising practices, including use of the word "fixed" to describe a rate or payment that changes at any time during the loan term. Other prohibited practices include loan comparison advertising (unless all payments and rates are disclosed), foreign-language ads where disclosures are presented in English, and encouraging appraisers to misrepresent a home's value. The rules also will require lenders to credit payments on the date of receipt, prohibit pyramiding of loans, and require a good faith estimate of costs and payments on any loan application for a home secured by its value (including home equity loans and refinancings) within three days. Further, borrowers cannot be charged any fees other than to obtain a credit report before receiving that estimate.

To read the full story, please click here:

Bush offers plan to save Fannie, Freddie

Eroding confidence in the nation's two largest mortgage finance companies led President Bush to ask Congress to approve a rescue plan that would provide billions of dollars in investments and loans to the two companies. Separately, the Federal Reserve said it would make funds available to Fannie Mae and Freddie Mac on a short-term basis, if necessary. The dual rescue efforts came over the weekend after stock prices for the two quasi-governmental companies plunged late last week, potentially jeopardizing a planned debt offering by Fannie Mae and sending shock waves through the nation's equity markets.

MAKING SENSE OF THE STORY FOR CONSUMERS

· The White House plan calls on Congress to raise the national debt limit and to allow the Federal Reserve to determine how large a cash reserve the two companies must have on hand. The proposals are expected to be attached to a housing bill that will be voted on by Congress as early as this week.

· Both Fannie Mae and Freddie Mac have existing credit lines of $2.25 billion that were set 40 years ago by Congress when Fannie Mae held about $15 billion in outstanding debt. It now has about $800 billion in debt; Freddie Mac debt totals about $740 billion.

· Despite concerns that the program will protect shareholders and investors while asking taxpayers to foot the bill, Treasury Secretary Henry M. Paulson, Jr. reiterated that the failure of either Fannie Mae or Freddie Mac would have a devastating impact on the world economy because their debt is held by investors around the globe.

To read the full story, please click here:

In Other News…

Bloomberg.com

Foreclosures rose 53% in June, bank seizures tripled

To read the full story, please click here:

CNNMoney.com

Calm down: Beyond the Fannie and Freddie panic

To read the full story, please click here

Riverside Press-Enterprise

Inland condo projects shut down as single-family home foreclosures flood market

To read the full story, please click here

Sacramento Bee

Feds' aid for mortgage giants is said to aid Sacramento market

To read the full story, please click here

San Francisco Chronicle

No sign of slump in S.F. rental market

To read the full story, please click here

Talking Points

Here's what to tell consumers

· The nation's banks are in less danger of failing today than they were during the savings & loan crisis of the late 1980s and early 1990s, when more than 1,000 financial institutions failed and taxpayers funded a bailout totaling more than $125 billion. How does the current crisis compare? To date this year, only six lenders have failed and the Federal Deposit Insurance Corporation (FDIC) has only 90 banks on its "watch" list, compared with 575 banks in 1994. However, former FDIC Chair William Isaac recently called bank failures a "lagging indicator" rather than a "leading indicator" and predicted there will be more bank failures this year as lenders cope with subprime lending losses.

· Banks and loan servicers may be beginning to catch up with troubled loan workouts, but the numbers of borrowers who require assistance continues to rise. During the first six months of this year, Countrywide says it modified the terms of 86,000 loans, and Bank of America, which recently acquired Countrywide, reports that counselors are completing more than two workouts for every completed foreclosure. Hope Now, an alliance of lenders, says it conducted 70,000 loan modifications in May, although an estimated 85,000 families lost their homes that month. Even if loans are modified borrowers still may not be able to make their mortgage payment if they have lost a job, for example. According to a working group of the Conference of State Bank Supervisors, 32,000 loans that were modified in recent months already are delinquent again. That may be because few loan modifications actually result in lower monthly payments due to a cut in the principal loan balance. In California, only 1.3 percent of loan modifications involved such a reduction.

· IndyMac Bancorp's new management, the Federal Deposit Insurance Corporation (FDIC), has halted foreclosures and said it is focusing on modifying existing loans to make them more affordable for IndyMac borrowers. The bank has about $15 billion in mortgage loans in its own portfolio and manages servicing for another $185 billion in mortgages owned by other institutions. FDIC officials said they were examining troubled loans contained in the broader servicing portfolio loan by loan to determine whether they can be modified. However, borrowers serviced by IndyMac who need help may want to move quickly: The FDIC hopes to sell the troubled thrift and its assets within 90 days. IndyMac reopened under federal oversight on Monday after regulators closed its doors on Friday. Last year, it ranked as the tenth-largest mortgage lender and eight-largest mortgage servicer in the county.