What if the United States got rid of or changed the home mortgage interest deduction in the next round of tax reform?
For decades, that deduction has been considered sacrosanct, but as we move closer to tax reform in an era of budget cuts, ideas have been percolating to change or eliminate it.
Economists and tax analysts have long criticized the deduction — which permits American homeowners to deduct the interest on up to $1.1 million in debt — on both fairness and efficiency, but it was believed to be too entrenched in the tax code and the American psyche to change.
The double-whammy of the deficit and the bursting of the housing bubble have put the mortgage interest deduction in play, and a recent proposal by the Congressional “Gang of Six” is among those that have considered reducing it.
There’s no getting around it: In much of the country, this is a terrible time to unload your home.
Roughly 11 million mortgages are now “underwater” and over a million properties are in foreclosure proceedings. Even after all the carnage, home prices in 20 U.S. cities just dropped by the most in 18 months.
The debt negotiations are getting down to the wire. Republican and Democratic lawmakers are scrambling to broker a deal to raise the country’s $14.3 trillion debt ceiling before Tuesday, when the Treasury will no longer be able to borrow funds to meet all of its obligations. That’s why major credit rating agencies are considering a downgrade of U.S. debt.
What does that mean for consumers? Here are some answers we compiled from Reuters Money experts:
The devilish deficit dance going on in Congress right now has been a convenient distraction for big U.S. banks. They’ve not only escaped new taxes for now, but they also are relishing their taxpayer bailout by earning robust profits.
Except for Bank of America, the major U.S. banks are doing just fine, thank you. Yet for all of the abundant generosity and forgiveness of the American people, have banks lent out enough money to Americans to make a difference to the economy at large?
Even if you realize how indebted to our homes we’ve become, the numbers in a new report from the Joint Committee on Taxation are mindboggling: Mortgage debt at the end of 2010 reached nearly $10.1 trillion, and accounted for 88.4 percent of total household income.
That’s down slightly from the peak, in 2007, of 101.1 percent of household income, but it’s “roughly 40 percent higher than 2000, 50 percent higher than 1990, and 230 percent percent higher than 1960,” according to the report.
Elizabeth Warren, it’s not you they hate. It’s what you represent. You want to be an honest cop when so many before you in Washington have looked the other way and pretended that the banking industry could police itself.
I can’t think of a better reason why this presidential adviser shouldn’t be the new chief of an unfettered Consumer Financial Protection Bureau.
If you need and want one, there’s no harm in that. Yet if you think it’s an investment that will actually appreciate, you’re taking a sucker’s bet.
During the bubble years, the “greater fool” theory prevailed. When you bought a home, you were confident that someone would buy it for a higher price than you paid. “Flippers” prospered from this mass psychology.
You’re young, ready to start a family and make the most significant investment of your life — the purchase of your first home. You’ve saved for a sizable down payment, but have you assessed your debt health?
The Great Recession has driven home the perils of plastic dependency, yet the average credit card debt per household in the U.S. is $14,750, according to CreditCards.com. And, in March alone, there were 144,657 consumer bankruptcy filings, up 41 percent from February’s total of 102,686.
Elizabeth Warren, a Harvard law professor and the engineer behind the new Consumer Financial Protection Bureau (CFPB), laid out her blueprint for making the new consumer agency accountable to consumers during a speech on Friday.
Prior to the financial crisis that began in 2008, oversight for consumers was scattered among seven tangled government agencies “with gaping holes in oversight,” Warren told attendees at the Society of American Business Editors and Writers 48th Annual Conference at Southern Methodist University in Dallas. “A single regulator with a clear mission is more accountable,” she said.
Looming foreclosure can be one of the scariest times for any family down on its luck. So, it stands to reason that crooks would design scams to target that vulnerability and try to squeeze whatever money these people who can’t pay their bills can scrape up.
The state of California has issued a warning about a scam that involves getting these vulnerable homeowners to pay fees up front with the idea of winning a lawsuit that will get them their homes free and clear. The cost to participate in this heavily marketed scam is $5,000.