FHA Mortgage Guide

As much as the next presidential election will focus on the war in Iraq, it will increasingly be determined by economic issues.

An August study from the National Association for Business Economics found that “the combined threat of subprime loan defaults and excessive indebtedness has supplanted terrorism and the Middle East as the biggest short-term threat to the U.S. economy.” While 20% of NABE members surveyed listed terrorism and the Middle East as their top concern in August, 32% were worried about the subprime mess and “excessive household and/or corporate debt.”

There are projections which suggest that the foreclosure glut will increase well into next year. In addition, several of the presidential candidates have already begun to discuss the mortgage crisis.

Real estate financing is well on its way to becoming a major issue in the upcoming election. That’s good in the sense that all issues should be discussed, but not-so-good if the policy changes which result do not adequately address the problem or represent an over-correction.

Foreclosed homeowners are becoming a bigger voting block each day. At the very least look for Congress to quickly pass — and the President to quickly sign — tax relief legislation for those who have lost their homes.

The issue here is that when a home is sold for less than the outstanding mortgage balance, then money not paid to the lender may be regarded as “imputed” income. In other words, not income in the sense of getting a check, but income in the sense of debt relief.

It’s just silly to tax people on mortgages losses, given that they likely have few dollars to pay such a cost and have likely been foreclosed. While the principle behind this tax rule makes sense, in practice it’s not helping individuals who have lost their homes and the current rule is certainly not bringing much income into government coffers.

As MBAs tell us, this one is a no-brainer.

Check out these FHA resources for more information

This entry was posted on Monday, September 3rd, 2007 at 3:10 pm and is filed under , . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.