Bill Kamboukos

Second Half Of Funds Should Be Aimed At Main Street

$700 Billion TARP Funds To Now Be Used For Consumers

With today marking the inauguration of Barack Obama, new is that his presidency will focus more on helping consumers, local governments and businesses than banks as his administration deploys the second half of the $700 billion rescue fund, said Lawrence Summers, the president- elect’s top economic adviser.

“The focus isn’t going to be on the needs of banks; it’s going to be on the needs of the economy for credit,” Summers said on CBS’s “Face the Nation” program. Obama’s team will manage the Troubled Asset Relief Program “in a very different way,” he said.

In fact, Summers’ remarks indicate banks and their executives face tougher scrutiny in seeking money from the bailout after the Obama administration takes office Jan. 20. The TARP may be redirected to address “housing to prevent foreclosures,” “automobile loans, consumer credits, small business, municipalities,” he said.

On the other hand, Treasury Secretary Henry Paulson committed most of the initial $350 billion of the TARP to capital injections in exchange for warrants and preferred equity. Summers said banks will be subject to more oversight in their use of the funds.

“There’s going to be a very different level of rigor in the evaluation of institutions, the plans that are designed, and the expectations for institutions,” Summers said. “Institutions that are healthy, that don’t need it just to survive, are going to be expected to lend above their baseline levels as part of this program.”

Following up, Treasury Secretary-nominee Timothy Geithner and his advisers will be “carefully” monitoring Wall Street bonuses of banks that have participated in the TARP, Summers said.

Bank Take Overs

Summers also said, “What’s not going to happen is the funds that could be supporting increased lending are going to be used to finance acquisitions that may serve a bank but don’t serve the country”. The new administration will also prevent banks that accept government funds from pursuing acquisitions to the detriment of increasing lending, he said.

Summers said the results of TARP so far have been “unsatisfactory,” a sentiment echoed by another Obama adviser speaking today in a separate interview.

“It’s clear that it has to be administered in a much different way,” David Axelrod Obama’s chief political adviser, said in an interview on ABC’s “This Week” program. “The point is to get credit flowing again to businesses and families across the country -- that hasn’t happened with the expenditure of the first $350 billion.”

$825 Billion On The Way?

Summers said he is confident Congress will pass a spending plan, coupled with tax cuts, similar to the $825 billion package that Obama has offered. Such a stimulus has been forecast to create 3 million to 4 million jobs, he said.

“I expect the program will pass within in a month,” Summers said. “He is going to do what is necessary to get us out of this economic hole.”

As the U.S. economy showed further signs of buckling, according to reports last week, it is clear there is still work to be done.

“There’s almost no question that the economy is going to decline for some time to come,” said Summers, who served as Bill Clinton's last Treasury secretary. “Our errors are not going to be of standing back.”

For more information on legislation that may affect you as a potential or current home owner, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

Plans to Help Aid The Mortgage and Real Estate Market:

Government Aid Programs On The Forefront

With many new plans on the table to help stabilize the economy in 2009, there is increased momentum in Washington to allocate some of the $700 billion in TARP funds to continue to help stabilize the mortgage and real estate market as well.

In fact, Treasury Secretary nominee Timothy Geithner is working on plans to revamp the way TARP is used to make foreclosure prevention a bigger priority. Congress has made it known that it likely won't release any more TARP funds until some of the money is earmarked for housing.

President-Elect Obama has been shy on details but has said that within a month or two he would unveil "a sweeping effort to address the foreclosure crisis so that we can keep responsible families in their homes."

What Items could be in a new plan?

TARP funds for homeowners: Barney Frank, House Financial Services Chairman, is writing a bill that would impose conditions on the use of any more TARP money and in a memo to colleagues called for "substantial efforts" to be made to reduce foreclosures.

Frank said that his bill will call for $40 billion or $50 billion from TARP funds to be used for foreclosure mitigation. And he's calling on the Treasury to implement a plan by April 1.

That plan essentially may be a version of a plan proposed by FDIC Chairwoman Sheila Bair. Bair's plan would systematically modify loans and provide a government guarantee to protect investors in the event a homeowner re-defaults after the loan has been modified.

The plan also must reduce the costs and write down requirements for lenders and borrowers of the Hope for Homeowners program, which began in October but has helped virtually no one.

That program offers full government backing for lenders that agree to write down a mortgage to below a home's appraised value. But the loss to lenders can be greater than that reduction because many troubled homeowners are also "under water" due to falling home prices - meaning they owe more on their home than its current market value. So as the law was initially passed, to participate in Hope for Homeowners, lenders in many cases would have to lock in a sizeable loss.

"We wrote it too restrictively. ... [Now] we'll make it more user-friendly," Frank told reporters on Friday.

Bankruptcy law reform: Senate Banking Chairman Christopher Dodd, and Sen. Richard Durbin, said that Citigroup has agreed to support a proposal that the lending industry has strongly opposed that would allow bankruptcy judges to write down the primary mortgages of homeowners filing for bankruptcy.

The bank's support of the proposal is based on the condition that the change only apply to existing mortgages and that homeowners filing for bankruptcy notify their lenders 10 days before to give them a chance to modify the mortgage.

Other lenders and housing industry interests -- including the powerful National Association of Home Builders -- have also started to lower their resistance to so-called bankruptcy cram downs.

The long-held argument against cram downs is that they would cause rates to rise because mortgage securities investors would demand a higher interest rate to compensate for the risk that a judge could rewrite mortgage contracts on terms disadvantageous to the investor.

Larger home buyer tax breaks: The National Association of Home Builders has been pushing for all home buyers to get a temporary tax credit for buying a primary residence worth up to 10% of the purchase price. A tax credit is a dollar-for-dollar reduction of one's tax liability.

Currently, only first-time buyers may get a temporary tax credit worth up to $7,500 for a limited period of time. But that credit functions more as an interest-free loan from Uncle Sam because the home buyer has to repay it over time.

Neither Dodd nor Senate Finance member Charles Schumer endorsed the idea of an actual tax credit. Dodd said a tax credit would not help prevent foreclosures but could spur economic growth.

And Schumer said there was "broad support" among members of the Senate Finance Committee to make tax policy changes to support housing, particularly existing homes as opposed to newly constructed ones.

Lower Interest Rates: Group such as the National Association of Realtors, among others, has pushed for the Treasury Department to take a more active role in driving mortgage rates down by buying securities backed by 30-year fixed-rate mortgages from Fannie Mae and Freddie Mac.

Frank has suggested that in order to use TARP funds, Treasury must commit to using some money to "stimulate demand for home purchases ... including through ensuring the availability of affordable mortgage rates for qualified home buyers."

A plan already in place at the Federal Reserve has already had the effect of lowering rates on the 30-year fixed to record lows. The Fed is buying up to $500 billion in mortgage-backed securities backed by Fannie and Freddie, a move that bolstered confidence in the mortgage giants' ability to continue to buy and back loans in the secondary market.

Another idea that has been floated recently is to have Uncle Sam use money to buy down points on home buyers' mortgages to lower interest rates

For more information on current programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

New Year For Mortgage & Real Estate:

Many Changes Implemented And On The Horizon

Now that the holidays are over and 2009 has finally begun, it is time to take a look at many new changes on the forefront for the mortgage and real estate marketplace. With 2008 finally in the rearview mirror, we are certain to still see greater Government intervention and changes that may make 2009 a brighter year than the last. With that being said we will begin to take a look at some of the key factors in 2009, this week we look at changes to FHA mortgages.

FHA Financing

2008 was certainly a year that saw a revival of the FHA mortgage and 2009 will be a year where FHA loans will continue to play a major role in the mortgage marketplace.

As previously mentioned in recent articles, the minimum down payment on an FHA mortgage has now been increased to 3.5%, from 3.0%. While not a tremendous change, this can affect home buyers who are on the verge of purchasing a home. For instance, a buyer looking at a $200,000 home will now need an additional $1,000 for down payment.

As well, FHA loan limits in many metropolitan areas have now been reduced. Locally in Arizona, the loan limits in Maricopa and Pinal County have been reduced to $271,050, which represents a major change from the $346,250 limit that we saw in 2008. This will force loans with higher balances to use conventional financing.

In addition, there have been some changes to refinance options for homeowners. First, there is an option potentially available for homeowners who are in an existing FHA loan to refinance into a new FHA loan without an appraisal. This is significant considering the recent drop in interest rates, as it may allow borrowers the ability to refinance with a lower payment, without an appraisal. This will only be available for homeowners with an existing FHA mortgage and all other standard qualifications will still apply.

On the other side of the spectrum, the FHA will implement stricter guidelines on cash out refinances. As any cash out refinance transaction with a loan to value over 85% will require two independent appraisals. This is undoubtedly a tool for the FHA to make sure they are taking more precaution with this type of higher risk loan.

These are just some of the many changes that will affect the mortgage and real estate market. As always, we will continue to keep you updated on the most relevant events a weekly basis throughout the new year

For more information on current mortgage programs, rates and more, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

Is It Time For Another Home Buying Boom?

Potential Buyers Have Many Factors In Their Favor Heading Into 2009

As we head into 2009, there is still a great deal of uncertainty on the horizon in the economic landscape. However, quietly we are seeing an environment created that has many favorable factors to potential homeowners. So the question left to be asked is, will 2009 create a rebound in home buying and thus potentially the housing market? Only time will tell, for the mean time, we do know the following factors will help encourage homeowners to choose 2009 to purchase.

Interest Rates Near Record Lows

The recent down turn in interest rates has seen interest rates hit near record lows, near 5%. This has created an environment of more buying power for potential homeowners, as monthly payments have become more affordable. Couple this with a program such as Strategic Mortgage's below market finance program available from select sellers and you could potentially purchase a home with an interest below 5%.

Decreased Home Prices

In addition to low interest rates, low home prices have created a buyer's market that is favorable for potential homeowners as well. We are now in a market with homes that are priced very competitively. Not to mention all of the value in purchasing bank owned foreclosures and short sale properties as well.

Many Home Loan Programs Still Available

Despite much information to the contrary, if you are home buyer looking to purchase a home to live in, there are still many good loan programs available. You may need to have a small down payment or a family member who can gift you the amount for down payment, but there are still many quality loan programs available for home buyers.

Tax Benefits

The final key benefit available to potential buyers in the current market is that of tax benefits. First, we have the first time home buyer tax credit which will run until June 30, 2009. This will provide a $7,500 tax credit for first time buyers who purchase a home before the deadline and the credit can be claimed when filing 2008 taxes. This is a great way to recoup down payment or provide extra funds to make improvements to a recently purchased home.

In addition, numerous others tax benefits to home ownership are present in regard to home buying. As mortgage insurance remains tax deductible through 2009. As well as the power of mortgage interest writeoffs can help many homeowners with good paying job save plenty of money, even if the pay the same or more for their mortgage, as they formerly did for rent.

All of these factors have created an environment that is very favorable to potential home buyers in 2009. As such, as we approach 2009 we may very see a rebound in home buying.

For more information on home buying and all mortgage related questions, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

Is It Time For Another Home Buying Boom?

Potential Buyers Have Many Factors In Their Favor Heading Into 2009

Interest Rates Near Record Lows

The recent down turn in interest rates has seen interest rates hit near record low, near 5%. This has created an environment of more buying power for potential homeowners, as monthly payments have become more affordable. Couple this with a program such as Strategic Mortgage's below market finance program available from select sellers and you could potentially purchase a home with an interest below 5%.

Decreased Home Prices

In addition to low interest rates, low home prices have created a buyer's market that is favorable for potential homeowners as well. We are now in a market with homes that are priced very competitively. Not to mention all of the value in purchasing bank owned foreclosures and short sale properties as well.

Many Home Loan Programs Still Available

Despite much information to the contrary, if you are home buyer looking to purchase a home to live in, there are still many good loan programs available. You may need to have a small down payment or a family member who can gift you the amount for down payment, but there are still many quality loan programs available for home buyers.

Tax Benefits

The final key benefit available to potential buyers in the current market is that of tax benefits. First, we have the first time home buyer ax credit which will run until June 30, 2009. This will provide a $7,500 tax credit for first time buyers who purchase a home before the deadline and the credit can be claimed when filing 2008 taxes. This is a great way to recoup down payment or provide extra funds to make improvements to a recently purchased home.

In addition, numerous others tax benefits to home ownership are present in regard to home buying. As mortgage insurance remains tax deductible through 2009. As well as the power of mortgage interest writeoffs can help many homeowners with good paying job save plenty of money, even if the pay the same or more for their mortgage, as they formerly did for rent.

All of these factors have created an environment that is very favorable to potential home buyers in 2009. As such, as we approach 2009 we may very see a rebound in home buying.

For more information on home buying and all mortgage related questions, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com