There has been numerous articles concerning the mortgage interest tax deduction. Yesterday’s article discussed the financial aspect. However, today’s article discusses the political arguments.
Why Does The Mortgage-Interest Tax Deduction Still Exist?
by Alex Blumberg npr.com
If you have a mortgage on your home, you can deduct the interest from your taxes. It’s a popular, well-entrenched policy. But according to one policy adviser to a U.S. senator, “the mortgage-interest deduction, from a purely policy perspective … makes no sense.”
It’s a view that’s supported by a mountain of academic research: The mortgage-interest tax deduction benefits the rich more than the poor, has little effect on home ownership and isn’t even really a bargain for homeowners because it raises home prices.
So do policy advisers tell members of Congress to fight the mortgage-interest tax deduction?
“If you’re relatively green in Washington, I suppose that happens. And I suppose you’re laughed at,” said the adviser, who preferred not to give his name for fear of losing his job. “The mortgage-interest deduction is a sacred cow.”
Placentia Overview
| Median home price is $409,000. Based on a rental parity value of $500,000, this market is under valued. |
| Monthly payment affordability has been worsening over the last 4 month(s). Momentum suggests worsening affordability. |
| Resale prices on a $/SF basis declined from $214/SF to $213/SF. |
| Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months. |
| Median rental rates increased $66 last month from $2,031 to $2,098. |
| Rents have been rising for 12 month(s). Price momentum suggests rising rents over the next three months. |
| Market rating = 7 |
Proprietary OC Housing News home purchase analysis 
17380 GREEN PINE Way Yorba Linda, CA 92886
$640,000 …….. Asking Price
$253,000 ………. Purchase Price
11/4/1988 ………. Purchase Date
$387,000 ………. Gross Gain (Loss)
($20,240) ………… Commissions and Costs at 8%
============================================
$366,760 ………. Net Gain (Loss)
============================================
153.0% ………. Gross Percent Change
145.0% ………. Net Percent Change
3.9% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$640,000 …….. Asking Price
$128,000 ………… 20% Down Conventional
3.80% …………. Mortgage Interest Rate
30 ……………… Number of Years
$512,000 …….. Mortgage
$120,014 ………. Income Requirement
$2,386 ………… Monthly Mortgage Payment
$555 ………… Property Tax at 1.04%
………… Mello Roos & Special Taxes
$160 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
………… Homeowners Association Fees
============================================
$3,100 ………. Monthly Cash Outlays
($381) ………. Tax Savings
($764) ………. Equity Hidden in Payment
$164 ………….. Lost Income to Down Payment
$180 ………….. Maintenance and Replacement Reserves
============================================
$2,299 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$7,900 ………… Furnishing and Move In at 1% + $1,500
$7,900 ………… Closing Costs at 1% + $1,500
$5,120 ………… Interest Points
$128,000 ………… Down Payment
============================================
$148,920 ………. Total Cash Costs
$35,200 ………. Emergency Cash Reserves
============================================
$184,120 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..
We're sorry, but it seems that we're having some problems loading MLS # S699324 from our database. Please check back soon.
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$499,000 522 IWANAGA Pl |
0.26 miles 4 bd / 3 ba 2,240 Sq. Ft. |
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$560,000 1443 MUNOZ Pl |
0.32 miles 5 bd / 2.75 ba 2,750 Sq. Ft. |
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$590,000 1438 DIXON PL Pl |
0.34 miles 4 bd / 3 ba 2,400 Sq. Ft. |
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$485,000 1436 EVANS Ln |
0.39 miles 4 bd / 3 ba 2,340 Sq. Ft. |
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$629,900 1402 East DIXON Pl |
0.4 miles 5 bd / 2.75 ba 2,861 Sq. Ft. |
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$599,900 17821 PINERIDGE Dr |
0.5 miles 4 bd / 1.75 ba 2,000 Sq. Ft. |
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$624,900 1313 GARTEN Dr |
0.53 miles 5 bd / 2.75 ba 2,805 Sq. Ft. |
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$769,900 17952 SUN KNOLL Dr |
0.57 miles 6 bd / 3 ba 2,740 Sq. Ft. |
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$620,000 1813 East KENNEDY Dr |
0.59 miles 4 bd / 2.5 ba 2,527 Sq. Ft. |
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$652,990 136 North HARDING Pl |
0.62 miles 4 bd / 4 ba 2,853 Sq. Ft. |
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Lenders are starting to chip away at shadow inventory. We still have a long, long way to go.
Non-Performing Bucket Shrinking for Private Label MBS: Amherst
Reperforming and nonperforming loans decreased $6.1 billion to $528.6 billion in May compared to the previous month of April for private label mortgage backed securities (MBS), according to a report from Amherst Securities Group.
The decrease came after a reduction of $6.4 billion in the non‐performing bucket and a $0.3 billion growth in the re‐performing bucket, reflecting elevated liquidations and a slowdown of new defaults, Amherst stated in the report.
Liquidations totaled $8.7 billion in May, falling from last month’s $8.9 billion.
Compared to previous one-year periods, liquidations are declining but remain elevated. According to the report, the increase in foreclosure activity late last year led to liquidations 8 months later.
For the last 12 months starting with May 2012, liquidations averaged $8.2 billion, lower than the $9.4 billion average monthly liquidations for the twelve months ending May 2011, and $13.7 billion for the twelve months ending May 2010.
The average number of months liquidated loans stayed in the pipeline was 27.4 months (17.1 months in delinquency, 7.8 months in foreclosure, and 2.5 months in REO).
Short sales took the shortest number of months to liquidate in May at a little more than 20 months, while REOs took longer than the 27.4 month average and had a timeline averaging above 30 months.
Month-over-month, non-performing loans decreased to $310.9 billion from $317.3 billion. Fewer loans are actually moving into the non-performing category through default than moving out of the non-performing bucket through liquidation or a modification.
Loan modifications totaled 15,672 in May, down from 21,082 in April.
Since February, principal modifications have become the most popular modification type, and accounted for 41.6 percent of all loan modifications last month, according to the report. Rate modifications made up 32.8 percent of all modifications, and capitalization mods 25.6 percent.
Compared to May 2011, principal modifications comprised 25.6 percent of all modifications, rate modifications were 48.4 percent, and capitalization mods were 26 percent.
The problem with sacred cows politically is that killing them pretty much insures lots of politicians losing their jobs – particularly if those pols belong to party A that stubbornly refuses to raise taxes or party B that often says they need to raise taxes but actually doesn’t when they have something to say about it. IOWs it’s not going to happen.
If the party A captures both houses – look for lots of mainstream articles on why it’s a super gilt edged critical national priority to raise taxes – including getting rid of the mortgage deduction.