Home mortgage interest deduction - Is it in DANGER?

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Okay I admit it, I cruise through talk radio stations (minus sports selections) while driving. Today, I had one hour in the car and Rush Limbaugh caught my attention (for at least 15 minutes) with his prediction that the home mortgage interest deduction is in danger of being eliminated by this administration. Hearing this and knowing how my business friends think, well - if I was a dog my ears would have been standing upright with my head cocked to one side!

He gave a synopsis that made sense. According to Rush the news today of how much our country is SPENDING, in giving tax deductions, is a signal that the administration would like to eliminate the POPULAR home mortgage interest deduction from the tax code. I immediately came home and googled my request and VOILA' , I see that there is merit to this prediction.

I have been wondering how long it would be before the tax code was overhauled to effectively raise taxes and now I know... it's just a matter of time before the interest deduction slips away into the night along with other beneficial motives to spend money in directed areas such as eduation. Here are some articles that might give you a bit more information about the changes coming down the pike and not just about the home interest deductions! These articles are about the changes coming in 2011

THE GREAT TAX DEBATE

Home Mortgage Interest Deduction: ezine article

RushLimbaugh.com (subscription)

Stack of Stuff Quick Hits Page

RushLimbaugh.com (subscription) - ‎6 hours ago‎

Get ready, 'cause they're gonna eliminate the mortgage interest deduction

Big tax changes in the works Student loan interest may affect thousands of families. Charitable deductions from IRA's. Many of the tax changes are listed here.

FANNIE AND FREDDIE: Future uncertain

THE HILL: Tax Cuts Mortgage

and there is more

Get Rid of Tax Breaks for Homeowners? No Way!

Video: News Update: Geithner: Housing system needs government support

SmarTrend News

Wonkbook: Geithner gives Fannie and Freddie clues; major health care regs ...Washington Post (blog)

Fannie Mae, Freddie Mac and Missing Real Estate Agents Housing Watch

Wall Street Journal

all 1,308 news articles »

Experts: US can no longer afford housing tax breaks

SO WHAT DO YOU THINK????? With talk of bailing out those with underwater mortages, tax hikes coming and the huge deficit - what are your plans? Which way should the country go? Do we still want to encourage home ownership?

Foreclosure, Short Sales, Strategic Walkaway: It all hurts everyone!

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Today, Neil Garfield had GREAT post that is confirming what I have been pondered for months. Housing modification loans MUST start reflecting drops to fair market value(FMV).

In my never to be humble opinion, ALL Loans should be immediately adjusted to reflect FMV without making any mortgagee jump though loopholes to make right the payment structure. Call me radical but I go further than most - I don't think one single person in America should have take hours to fill out new paperwork, submit - get rejected, play games and wait a year for a modification. Just fix the paperwork at the bank and assign new value, payment etc. Let homeowner sign it if they like or go to the table to negotiate. Lower everyone's payments fast for every single homeowner in America! A girl can dream!

As Neil indicated it is not a gift to address the fair market value in modification process. Strategic walkaways are not only a trend but many bankers I've talked to seem to see nothing wrong with it. The current situation is going to cause ALL HOME VALUES to drop, in my opinion. And increase walkaways and short sales and possibly more foreclosures as homeowners previously treading water are now drowned with the banks holding their heads underwater.

It concerns me that socially we "accept" strategic walkaways, shortsales , forced bankruptcies and yet do nothing to really address the homeowners that want to salvage their homes. Isn't it ironic that the banks are shortselling to about 1/4 of the value of the home when a homeowner is willing to pay off the home eventually?

Read Neil's blog (and excerpt follows) and get the impact of how LOWERING Principle amounts could help ALL of America. If you are in trouble or foresee trouble with your financial situation, then make sure to check out NACA or check out the mortgage-challenge group for help in fighting foreclosure.

Housing Market Slows as Buyers Get Picky

Posted on June 17, 2010 by Neil Garfield

Editor’s Note: Housing prices will continue to decline until median income starts to flatten out. All signs indicate that we are in for another 10%-20% drop as conventionally measured. Remember that housing prices do NOT take into consideration selling expenses and concessions at closing. All things considered, housing prices should be at least 8% under what is reported.

With that 8% reduction, more homes are underwater than what has been reported. In fact, more homes are underwater than what their owners think they are.

Given another 10%+ reduction, the number of homes underwater will increase substantially as many are considered “near” break-even but are actually substantially underwater. This in turn will increase resistance to selling as wellas current resistance to buying, knowing that th >>>>>KEEP READING

Value of a foreclosed home

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There is great debate over values right now, and truthfully no one can really say what a home is worth with so many factors that affect cost being difficult to nail down. Here is an excerpt from an article from the government repo homes site on October 6,2009:

"The US is yet to recover from the economic crisis. People are faltering on loans after job loss – a phenomenon that has made foreclosures very common. Certain regions are riddled with foreclosures. Now the question that arises is what could be the value of a house in a region that has many foreclosed homes. In the eyes of a banker who is out to recover losses from bad mortgage, it may appear to be a valuable showpiece.
It may be pointed out here that Obama’s Making Homes Affordable program could not work out only because the lenders delayed loan modification. Most of the banks are so preoccupied with foreclosure filings and selling homes that they really do not have time for mortgage modification."

(In some ways, I suspect that the bank employees themselves who are responsible for doing loan modifications are just sloppy, lax and get paid either way. Who knows what imperatives they are handed from higher-ups. They're people. They see their own situation, rather than ours as home owners who have to figure out where to go and how to hang onto beloved pets we're committed to, if we lose this most basic necessity, the roof over our heads. They're insulated from the anguish, because to them we are numbers who represent profit and loss on paper, not human beings with needs.)

What a home could command in price three years ago, is irrelevant. Now we can't even use comps to get a per-sq-ft cost basis, because the recent sales are all over the map. A home down the street -a brick with three bedrooms, two baths and a fenced yard, - just sold at auction for less than $35,000. It was listed at $130,000 in 2008, when the owner lost his job and tried to sell.

Banks are cutting off their own noses to spite their faces on these foreclosures, because the government will buy them a new nose to replace it, so no worries if they lose billions.