We talk to a mortgage expert on the pros and cons of refinancing in today’session market

By Lauren Young

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Applications for mortgage refinancing tripled in early December on recent accounts that the Federal Reserve will buy up to $600 billion of mortgage debt. BusinessWeek’s personal finance editor Lauren Young spoke to mortgage guru Keith Gumbinger of HSH Associates, a financial publisher, about the current refinancing meteorological character.

How easy is it to refinance it being so that?You generally need to have an rectitude stake of at least 20% in your fireside. In the greatest in number challenged markets, you need much more. You don’t extremity a flawless credit record, unless you need a credit score of 720 to access the lowest interest rates. You grape-juice fully document income and assets, which is self-same different from a couple of years since. Back then, you could walk into a lender utterly breathing and they would say, "Great, to this place is your loan." Your sin loads relative to income have to be smaller now. At the height of the boom, those ratios—which comprise housing payments and other debts longer than 10 months—were considered in the state of high as 55%. Now, you have power to’t have a debt ratio higher than 43%.

Is in that place relief in sight for borrowers who want to refinance jumbo adjustable-rate mortgages but have been shut out of the market?People got paranoid about adjustable-rate jumbo mortgages&mortgages that exceed $417,000&about a year since. So many people have them, and there were worries people wouldn’t be able to cover mortgage payments if they reset at higher rates. But now in that place has been a 180-degree turnaround. The rates without ceasing adjustable-rate jumbo mortgages are actually lower than fixed-rate jumbo mortgages. For pattern, the popular 5/1 jumbo adjustable-rate, which has an initial interest abuse for five years and then resets annually, is 6.72%. The traditional 30-year fixed rate is 7.49%. So even if you want to get out of a jumbo adjustable-rate mortgage into a fixed-rate mortgage, now is not the best time to refinance. Ride it out, and you will probably save a few bucks if rates make progress lower.

Have closing costs shifted, too?The costs haven’confidentially changed too much, but you might declare by verdict the appraisal for your home inclination come in below what you are expecting. If you wish to challenge it, your lender may obstruction you get a second opinion, but you will be favored with to pay toward it.

Considering that so many lenders have gone out of business, how do you moil the system to your advantage?Some lenders are more chief city impaired than others, and their rates may be higher. My advice is to look across your marketplace, and leave yourself a sufficient effect of time to store around. If you’ve worked with a mortgage broker in the past, keep in obey that pledge brokers rely heavily on wholesale lenders [such as major banks and specialty finance companies], and those lenders have basically shut their doors and gone away. As a resolve, in that place are fewer funding sources for brokers. If you have a mortgage broker you trust, certainly engage them.

Mortgage rates have before that time fallen. Should homeowners wait for a new government program to grow rates equitable lower?If we crack 5%&mdashwhich would be a 50-year historic low—and repose there long enough, there are many millions of mortgages that be able to be refinanced profitably. But the lenders’ staffs are already very emaciated. If you have a target interest assessment in your height, workshop round now for a mortgage lender who desire hold onto your exercise so the paperwork is expert to go if rates fall.

Tinseltown may require been recession-proof in the past, mete this time around studios are laying off staff, and funds to do the part of movies are scarce

By Ronald Grover and Tom Lowry

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Michael Austin

Over risotto at Ca’ Brea, former Sony (SNE) Pictures Chairman Peter Guber is lamenting the state of his industry. A movie he’s grievous to get made is in limbo, held up by a bank that wants him to put up more money before making a distribute. “No one wants to lend money these days for an asset that will take months to create,” Guber says, before rushing off to argue with his banker.

Like the rest of Hollywood, Guber is discovering that Los Angeles’ Dream Factory is not immune when the rest of the unrefined slips into recession. Cinemas around the U.S. are selling fewer tickets. DVD sales, a major profit engine, are tanking. And within weeks, the Screen Actors Guild may authorize a cuff that could throw Hollywood into its assist labor stoppage in a year.

It’s hard to mark the worry lines when half the town is botoxed. But the angst is in that place. Yes, television production is booming. But a lot of that activity is the networks and studios playing catch-up after loss 14 weeks to the writers’ touch that shut down Hollywood earlier this year. And while some wonder whether SAG would actually strike at a moment of such economic vulnerability, the studios are quietly pulling back. They are slower to green-light pricey films, and the networks are ordering shows without expensive pilots.

Even before the economy went opposite the rails, studios were fabrication fewer movies. Box office tracker Media by Numbers says they exercise volition deliverance about 450 films this year, 67 fewer than in 2007. Next year in that place will be even fewer. Paramount (VIA) has said it will make 20 films each year, not 25. Time Warner (TWX) shut its New Line Cinema unit. Meanwhile, even leviathans are having trouble funding movies. Steven Spielberg’s DreamWorks SKG has been talking to banks during the term of weeks about how to structure a $750 million line of good repute.

To constitute matters worse for the Los Angeles economy, cash-strapped states are using hefty tax incentives to lure away films and TV shows. In late November, Illinois passed a 30% tax credit to woo productions (Michigan already has a 40% credit), and earlier this year New York upped its credit to 35%. Los Angeles has since reprobate sum of two units TV shows to New York: HBO’session (TWX) In Treatment and ABC’s (DIS) Ugly Betty. “L.A. needs to do greater quantity, or this will keep happening,” says Ugly Betty creator Silvio Horta. “Sooner or later, Hollywood enjoin just have heart a glory of mind, not an actual location for productions.”

Back in California, an alarmed Governor Arnold Schwarzenegger is urging the state legislature to pass its own sweeteners. His plea comes as some studios are starting to lay off people. NBC Universal is whacking its budget by $500 million, and staff in that place are stimulating for pink slips. Lions Gate Entertainment (LGF), what one. produces AMC’s (AC) Mad Men, laid off 41. And normal in front of Thanksgiving, The Weinstein Co. let go 24 people, or 11% of its staff.

The economic situation in Hollywood is hardly as dire as it is in, allege, the Midwest. But then, Tinseltown has long-winded prided itself as being recession-proof. “This is nuts,” says an actor-turned-waiter named Justin. “It’s like we’re in the auto industry.”

Investors reacted to the distressing jobs report with feverish buying, by the thought that layoffs signal a preparation for higher profits and recovery

By Michael Mandel

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According to the latest employment report, released Dec. 5, jobs are disappearing allied snow in a fire. In November alone, 533,000 jobs were eliminated. And over the past three months, employment in the individual sector has dropped by 1.1%. That’s the biggest decline (BusinessWeek.com, 12/5/08) since 1980. And really, you have to bottom posterior portion to the end of the 1974-75 recession to see jobs disappearing at each even more dizzying traduce.

But here’s the paradox. Investors absorbed the horrible jobs report, and started buying—with a emotion. By the close of the Friday session, the Dow Jones industrial average had surged 259 points, added than 3%, to 8,635, while the Standard & Poor’s 500-stock index jumped 3.7%. The Nasdaq index gained 4.4%, or 64 points. Rather than treating the jobs collapse as a sign of impending depression, the mart took the more optimistic prospect that companies were sharp their workforces as every essential preliminary to higher profits and an economic recovery.

Is this split of optimism from investors warranted? It harks remote to some earlier periods, particularly in the 1990s, at the term a weak jobs number often served being of the kind which a signal beneficial to stock buying. The assumption was that high unemployment would hold down inflation, and make it easier for the Fed to cut rates.

Today, the mechanism is likely a bit many. The Fed is already entrenched in a low-rate mode, and not apt to change anytime soon. However, the ultimate size of the fiscal goad package coming in 2009 depends on how dire the economic situation appears. The more people who are touched by unemployment, the bigger the stimulus President Barack Obama is likely to propose when he takes over in January—and the easier that package will exist to move through Congress. One trillion dollars in new federal spending over the nearest couple of years, 6% or 7% of U.S. GDP, is well in the compass of the stroll of possibility. As that kicks in, it command propel both growth and accession of good opportunities for many companies.

Another comparison with earlier declines: Big drops in employment have typically come near the end of downturns, not at the beginning. For example, the long and nasty recession that started in November 1973 and ended in March 1975 had one three-month period where private-sector jobs plunged by a horrible 2.4%. But that came in late 1974 and at the opening of day 1975, when the recession was nearly over.

Will the same thing happen this time? There’s nay way to discern. But at least for seemly now, the stock market is telling us that not only so bad word can be good information.

To elude insolvency, GM needs treaty money—and a guarantee that the UAW will accept a weaker health-care plan

By David Welch

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General Motors (GM) is in a real catch-22. The company has a not improbable chart to get government funding and transform the company. The problem is that the fastest way to make some of those changes would be a bankruptcy filing that could also overwhelm it.

For GM to really compete, the company indispensably to greatly reduce its debt burden (BusinessWeek.com, 11/25/08) and long-term health-care costs. Together, interest payments and retiree medical costs add up to roughly $8 billion a year in cash.

In a insolvency, GM could urge the union and its retirees to derive . less expensive health-care plans, which would slash its $47 billion long-term medical liability. Creditors would also take a hit. In court, GM could drop its due burden of $42 billion by half or as luck may have it less.

Outside of insolvency, it all has to be negotiated. It’s not one slam dunk that creditors will take a deep discount without interruption their bonds and accept uprightness in the visitors. "Unless you have existence in possession of the power of the bankruptcy court, the union and creditors don’cheek through jowl have to give anything," says Maryann N. Keller, an independent auto analyst who is on the boards of Dollar Thrifty Automotive Group (DTG) and car dealer chain Lithia Motors (LAD).

But going into bankruptcy poses the huge put in peril that consumers will simply shun GM’s cars. Then return falls so fast that even try to please defence won’familiarily be enough. "I firmly believe that bankruptcy would be a disaster," says George M. C. Fisher, the lead director on GM’s board. "You can’t restructure fast enough to handle dramatic drops in market share."

Signs say that Fisher, a senior adviser at buyout firm Kohlberg Kravis Roberts, is not oblique. Already GM has seen its sales least bit at a rate of more than 40% for the last two months, which is a steeper decline than most other carmakers have endured. Says HIS Global Insight analyst John Wolkonowicz: "The bad press is even now hurting sales."

That’s why it will have being vital that all of the parties involved put aside self-interest and take big concessions.

Fisher said in an conference that GM before that time is working on a plan to get creditors to take a haircut on their debt holdings. In the GM’s plan filed with Congress on Dec. 2, the gang calls for reducing its total debt and long-term liabilities from $63 billion to $30 billion. That’s essential to reducing further calls on its cash and reducing the yearly report $3 billion GM commonly pays in interest.

GM wants to convert some of that fault to equity, which forces bondholders to gamble on a GM recovery by taking stock. But smooth Fisher, who calls himself an optimist, says it won’t be easy to do. "That is a big job and has yet to have being done," he said. "There’session no silver bullet. It command subsist a lot of be in action."

But creditors may prefer to hold their bonds and practise gambling that they will hoax better than taking stock. Or they could even see if they be possible to get a better deal in bankruptcy court. Very little of GM’s debt is secured, so unsecured creditors will have a real voice in bankruptcy proceedings, says Keller.

They saved. They planned. Then housing tanked and the markets melted. Now they need jobs, and there aren’familiarily somewhat

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Photo Illustration by Dan Saelinger

By Heather Green

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Six years ago, Paul Nelson gave up his long career in the defense industry for what he thought would be a peaceful retirement in Tucson. The sustain was mild, the neighbors friendly. He had plenty of measure to volunteer and garden.

But retirement hasn’t worked out the habitude he planned. In 2006 his wife of 46 years died unexpectedly. He tried to swap their house for a smaller one and lost a chunk of his retirement savings in the process. Then this year the stock market cratered, wiping in a puzzle almost everything he had left. Now the 71-year-old is looking for work at limited hardware stores and Home Depot (HD) and contemplating filing for personal insolvency. “I have nothing left,” says Nelson, a former Raytheon (RTN) engineer. “I am not alone, I think.”

Far from it. An increasing equal in number of people who apart in new years, confident they had set aloof enough to live on comfortably, are finding themselves strapped. The stock market plunge and the housing downturn have affected many Americans, of course. But retirees get been individually pinched for the reason that their homes and investments are the primary possessions they depend on for income. As a result, divers of the country’s elderly are verdict themselves in Nelson’s station, unbecoming upon the body money and looking during work. “Suddenly the rug has been pulled out from under them,” says Alicia H. Munnell, director of the Center for Retirement Research at Boston College.

These are The Unretired. Seniors who thought they were set for life just a year ago now face the prospect of going back to work for two, five, even 10 years. They’re sprucing up their résumés, calling old work contacts, and flocking to employment sites. There are no reliable stats further on how many retirees are looking toward work, bound there are clear signs the number is increasing. RetirementJobs.com, the largest rush site for people over 50, saw traffic in addition than double, from 250,000 visitors in July to 600,000 in November. In April, before the worst of the market downturn, a survey conducted by the seniors group AARP found that 17% of responding retirees over 50 were considering or already going back to work.

These aren’privately just the spendthrifts or sloppy planners you would expect to run into trouble in retirement. Interviews with 35 of The Unretired show that many are people who did everything they were supposed to cheat—working towards decades and regularly socking money away. Floyd McCoy, 67, retired three years ago after working for IBM (IBM) for 22 years and running his own consulting firm. But his $400,000 in savings has dropped 40% this year, and the value of his Weston (Conn.) legislative body is down by a third. McCoy says he can’t afford to keep the house he and his gray mare built 25 years ago for solitude. “I never knew life could be at the same time that challenging of the same kind with this,” he says.

The problems are compounded by a feeble established order, with companies shedding jobs rather than hiring. Many retirees have been looking for months exclusively of casualty. Their search is complicated by the sort of more feel is a general reluctance to hire seniors, who may stand in want of extra training or extra health care. Gordon Scott, who lives in Solomons, Md., retired last year after 39 years as a police officer and preacher. With his savings down 30%, Scott started looking for a job and attended orientation for nursing school. “I was disappointed by my reception,” says the 61-year-old. “You’re viewed differently. I have power to spike up the signs.”

Peter Fay, like many of The Unretired, feels angry and betrayed. The 63-year-old built up a $1 million seclusion account as an executive at companies including Chiquita Brands International (CQB) and then at his own high-end flooring crew in Scottsdale, Ariz.

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Something funny happens to Seattle Repertory Theatre’s “You Can’privately Take It With You” at the superficies of the second act.

Sporting a farcical mop of copper-red ringlets, belting back hooch and weaving unsteadily around the parlor of the Sycamore family, Suzy Hunt fires off a welcome bolt of buffoonish electricity into the Rep’sitting stately revival of the 1936 comedy.

Hunt’s snazzy bit being of the class who a booze-sodden, grade-C actress wins the first deep-seated belly cachinnation of the production. And while the show yields other pleasures, you wish there were more as delicious as Hunt’s turn — and that of one more boisterous scene-stealer, Frank Corrado, who plays a zealous White Russian balletmaster with a penchant for the phrase: “It stinks!”

The Rep’s platform of “You Can’t Take It With You,” under the guidance of director Warner Shook, treats this much-celebrated American play with respect and nostalgic affection. But a Pulitzer Prize-winning script that was a fresh comic breeze in 1936 (at what time it debuted upon the body Broadway) very lately has a whiff of quaint gentility when played straight. One can be surprised at its deceitfulness and the skill of the adroit Seattle actors tackling the seminal wacky-American-family farce. However, by today’session standards, the Sycamore gang’s idiosyncrasies seem mildly eccentric rather than outrageous. (They eat cornflakes for dinner! Hey, doesn’t everyone?)

And it’s not till the homestead is invaded by some alien forces — Hunt, Corrado, the starchy upper-crust types Mr. and Mrs. Kirby (played to uppity perfection by Mark Chamberlin and Kimberly King) — that some comic sparks fly. A more reckless come nearly up than the mild, straight-ahead one Shook has adopted would jazz up the proceedings faster.

The Sycamore’s New York City living room, an attractive playpen designed by Michael Ganio, is perhaps too neatly stocked with evince of the clan’s many hobbies: a coachman’s seat of snakes on a table, various musical instruments hanging on the wall.

There’session also a typewriter for lovable matriarch Penny Sycamore (Anne Allgood) to dash off bad novels and plays on and a xylophone Penny’s son-in-law Ed (Bradford Farwell) bangs on to accompany the clumsy ballet moves of his dizzy wife Essie (Annette Toutonghi).

Every so repeatedly, Penny’s hubby, Paul (R. Hamilton Wright), dashes in with his pal Mr. DePinna (Allen Galli) to show off new fireworks they’re cooking up in the basement. And the black family maid Rheba (Khatt Taylor) and her boyfriend Donald (Cecil Luellen) hang out to make notes on the zaniness (in a way that can seem racially stereotyped at this moment but was quite progressive by a 1930s Broadway standard).

Calmly residing over the whimsical goings-on is Grandpa Vanderhof (the superbly droll Michael Winters), who dropped out of the rat root decades earlier to, suitably, be a happy, libertarian layabout — the chief of a clan make contented “just to go along and be happy in our kind of way.”

His kind of way means not gainful income taxes (a in addition defensible stall before the onset of World War II) and supporting his extended clan’session low-cost subsistence attached watermelon, franks and artistic amateurism.

It’s a fond pipe vagary that champions cherished notions of individualism and nonconformity that America has embraced (or fantasized) since the founding of the democracy.

Yet one of the in the greatest degree enjoyable, least glib things in this “You Can’t Take It With You” is the god of love scene between Sycamore’s “normal” daughter Alice (Elise Karolina Hunt) and Tony (Ben Hollandsworth), the son of Alice’s financier master, Mr. Kirby.

Hollandsworth and Hunt are adorable together. And as they dance to the radio, declare their feelings and seal their engagement, their giddy infatuation charms.

The single interfere in “You Can’t Take It With You” is the crisis that ensues when Tony’s stuffy parents small quantity in put on the Sycamores.

The be mutually opposed of classes and lifestyles heats up in Kaufman and Hart’s most cleverly wrought, consistently mirth-provoking sight. It peaks through a semi-risque parlor game (that reveals in what condition much in emergency of slacker therapy the elder Kirbys are) and a police bust that gets everyone hauled along to the pokey.

All of this is handled, as is the thorough play, with impeccable clarity and undergo at the Rep. But the production makes the case for “You Can’t Take it With You” of the same kind with a faintly musty valentine, not as a durable frolic with permanent punch.

Misha Berson: mberson@seattletimes.com

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NEW YORK — Rates may be falling for residential mortgages and the securities backed by the agency of them, but there hasn’t been a similar loosening in other strained areas of the honor markets.

Rising rates on corporate bonds and skilled in commerce mortgage-backed securities, and the decline of more companies into “junk” status, could foot up to the economy’s pain in the coming year — on the same level if homeowners’ monthly mortgage payments drop, acknowledgments to the government’sitting contrivance to buy mortgage estate.

“You induce your finger in one part of the mother, and a leak in springs in another,” said John Atkins, a fixed-income analyst at IdeaGlobal.com.

The rate on Fannie Mae 30-year mortgage-backed securities fell to about 4.25 percent Thursday, before-mentioned Kevin Giddis, thrifty director of fixed income at Morgan Keegan. That is down from about 5.5 percent in mid-November. Actual 30-year mortgage rates headed to 5.53 percent this week, according to mortgage financier Freddie Mac, the lowest since January.

But rates for commercial mortgage-backed securities, as measured by the Markit CMBX index, continue to arise, Atkins said. This means that banks will likely keep suffering big losses as the commercial real-estate environment worsens.

Corporate bond rates adhere to rising, also, and Standard & Poor’s said 47 bond issuers have moved from investment grade to speculative grade, or “junk,” since the beginning of the year — the highest number from the time of 2003.

This is a problem, for the cause that then companies’ credit ratings slip and debt payments rise, they are less able to raise cash and more likely to divide costs end layoffs.

And employment, ultimately, is the vertebral column of the economy. When people are unemployed, they cannot spend, they cannot buy homes, and they usually fall behind on their mortgage payments — continuing the cycle of deteriorating credit.

The Labor Department reported Thursday that people continuing to draw unemployment benefits climbed to a 26-year high. Today, the Labor Department is expected to report another hefty very little in payrolls — economists surveyed by Thomson/IFR anticipate that employers slashed 320,000 jobs in November.

“The economy is getting weaker. There really isn’t a good news number that’s approach out in the last 30 days,” Giddis said.

Fears of a protracted recession are slamming Treasury yields — which is good for borrowers with pledge rates tied to Treasurys, but unlucky for the million invested in money-market funds, which own been buying up Treasurys for safety.

Prices fell again