Mortgage Magic

"New mortgage magic is merely sleight of hand" was a decent enough title to get me to read the following article...

A new kind of mortgage can, as if by magic, make a 30-year mortgage disappear in half the time.

That's what readers are telling me, just before asking if it is "too good to be true."

The new mortgage is from Australia. It's called a "line-of-credit mortgage." Instead of making a monthly payment from your checking account to a mortgage company, the line-of-credit mortgage becomes your checking account. Like your checking account, your paychecks are deposited to the account. The monthly cost of the mortgage, interest-only for some period, is automatically deducted from the account.

The paycheck deposits bring an immediate advantage. The amount of your mortgage is reduced by each deposit. Since your mortgage interest payment is a fraction of your monthly income, you get to save the interest cost on the difference — every month.

You can read the whole article over at the Houston Chronicle website and discover some of the magician tricks.

Debt Help

Bills.com has a pretty decent help section regarding debt.

Bills.com has all the debt help, resources, and information you need to start tackling your debt. We even have a Debt Help Savings Center that will help find the best solution for consolidating and paying down your debt. There are actually a number of debt help solutions available to you. Bills.com will help identify what options you have and which ones are best suited to help you tackle your debt. Browse through our articles, debt help guides, and debt relief tips and get all the information you need to get your finances back in order. Bills.com is the answer to effective debt help.

Here is a link to the Debt Help section...

Subprime Lending Woes

I read an article entitled "Subprime Lending Woes: How Declining Home Prices Can Have Tax Implications for Unlucky Owners" that was written by Bill Bischoff a couple of days ago. Here is the opening sentenece which should grab most reader's attention...

Current subprime mortgage lending woes, combined with lower home prices in many markets, can have negative implications for taxpayers who are forced to sell their personal residence or if their lenders foreclose.

He also gives us some easy-to-follow examples...

Example 1: Let's say you paid $190,000 for your personal residence, which you could currently sell for a net of $250,000. However, the first and second mortgages against the property total $280,000. If you sell, you'll have a tax gain of $60,000. Why? Because the net sale price exceeds the property's tax basis by that amount ($250,000 sale price minus $190,000 basis equals $60,000 gain).

Will the IRS cut you any slack since you're $30,000 in the red on the deal ($280,000 of debt compared to $250,000 sale price)? Unfortunately, the answer is no. The sad truth is you can have a tax gain without actually having any cash to show for it. Reason: Your mortgage debt doesn't affect your gain or loss calculation.

Click here for the whole article to see how you might be affected come tax time...

$75 Billion Mortgage Debt Fund

I was trolling the internet yesterday when I stumbled upon this article...

Citigroup, Bank of America and JPMorgan are on Monday expected to announce plans for a fund to buy mortgage-linked securities in an attempt to allay fears of a downward price-spiral that would hit the balance sheets of big banks.

A person familiar with the discussions said that US banks collectively were expected to put up credit guarantees worth about $75bn for the fund, named the Single-Master Liquidity Enhancement Conduit (SMLEC).

But bankers said the scheme would evolve with the market and may only be as large as demand requires. The SMLEC would be temporary and capped in value, and would not be backed by any state guarantee. A person familiar with the proposals said it was hoped that other banks would join the syndicate.

I have always had a problem with the word SYNDICATE for some reason...

Here is a link to the full article...

The Mortgage Forgiveness Bill of 2007

What is "The Mortgage Forgiveness Bill of 2007"?

One of the most controversial and paradoxical real estate and mortgage finance stories to hit the media in recent weeks was that of a newly crafted real estate tax bill – the so-called Mortgage Forgiveness Bill of 2007. The bill, which may help you hold onto your money if you face foreclosure but will likely hit you hard in the wallet if you own a second home, was drafted by Democrats and approved by the powerful House Ways and Means Committee.

Tell me more...

The New Bill Would Cut Out the Tax but Repay it by Curbing a Tax Break

If the Mortgage Forgiveness Bill of 2007 passes and becomes law, homeowners facing foreclosure won’t be responsible for paying taxes on debt forgiven by lenders. That is the main focus of the bill, and is great news for those homeowners.

But in order to make up for tax revenues that will be lost if the bill goes through, a major tax break for those who own second homes will be drastically trimmed.

Where did you get this info from?

Here

Drowning in Mortgage Debt?

Well I thought that it was a catchy title when I came across it over at StarNewsOnline.com. It covers some of the options that you can explore if you are in the hole...

The road to foreclosure can start with a late mortgage payment and end at the courthouse steps, where your house will be auctioned to the highest bidder.

But you don't have to go down that road, even if you have fallen seriously behind on your payments.

Your mortgage company can help in several ways, but the key to keeping your home and your credit rating is to act early, say lenders, counselors and attorneys.

The people to whom you owe thousands of dollars are in the lending business, not the property business. Especially in a housing market where prices are stagnant and homes are hard to sell, why would they want to be saddled with owning and keeping up your home?

Here is the full article...