[SK in CV]

Great catch on this.

[quote=XBoxBoy]Whoa! Wait a minute!!!

I’m either completely wrong or completely stunned. Here’s an article on the Wall Street Journal site that says: “Californians that claimed the mortgage interest rate deduction saved an average of almost $20,000 from their tax bill in 2008”

Then when you look at the chart it revels that the average DEDUCTION is $18,876 for California.

Now unless I’m mistaken, and been messin’ up on my taxes for years, a deduction is not the same thing as saving that amount off your tax bill. Doesn’t a writer for the Wall Street Journal know this???

Am I completely wrong??????????

Seems to me that a tax deduction for interest of $18,876 is worth at best 5 or 6k off your tax bill, and given you lose the standard deduction when itemizing (which you gotta do to take the interest) this author is waaaayyyyy off base with his claim.

XBoxBoy,

ps. for someone to save 20k off their tax bill wouldn’t that have to pay over 50k a year in interest? Does anyone think the average californian who’s paying a mortgage is paying over 50k a year in motgage interest?[/quote]

When I first read that, i’m thinking, wow, that can’t possibly be right. And it’s not. Crappy reporting. (Let’s give credit where it’s due. That crappy reporting was done by Conor Dougherty of the WSG Blog.) The average deduction is almost $20,000. Maximum tax savings would be about $7,600. About $635 a month for an average mortgage deduction in the highest tax bracket. ymmv.

[SK in CV]

Great catch on this.

[quote=XBoxBoy]Whoa! Wait a minute!!!

I’m either completely wrong or completely stunned. Here’s an article on the Wall Street Journal site that says: “Californians that claimed the mortgage interest rate deduction saved an average of almost $20,000 from their tax bill in 2008”

Then when you look at the chart it revels that the average DEDUCTION is $18,876 for California.

Now unless I’m mistaken, and been messin’ up on my taxes for years, a deduction is not the same thing as saving that amount off your tax bill. Doesn’t a writer for the Wall Street Journal know this???

Am I completely wrong??????????

Seems to me that a tax deduction for interest of $18,876 is worth at best 5 or 6k off your tax bill, and given you lose the standard deduction when itemizing (which you gotta do to take the interest) this author is waaaayyyyy off base with his claim.

XBoxBoy,

ps. for someone to save 20k off their tax bill wouldn’t that have to pay over 50k a year in interest? Does anyone think the average californian who’s paying a mortgage is paying over 50k a year in motgage interest?[/quote]

When I first read that, i’m thinking, wow, that can’t possibly be right. And it’s not. Crappy reporting. (Let’s give credit where it’s due. That crappy reporting was done by Conor Dougherty of the WSG Blog.) The average deduction is almost $20,000. Maximum tax savings would be about $7,600. About $635 a month for an average mortgage deduction in the highest tax bracket. ymmv.

[SK in CV]

Great catch on this.

[quote=XBoxBoy]Whoa! Wait a minute!!!

I’m either completely wrong or completely stunned. Here’s an article on the Wall Street Journal site that says: “Californians that claimed the mortgage interest rate deduction saved an average of almost $20,000 from their tax bill in 2008”

Then when you look at the chart it revels that the average DEDUCTION is $18,876 for California.

Now unless I’m mistaken, and been messin’ up on my taxes for years, a deduction is not the same thing as saving that amount off your tax bill. Doesn’t a writer for the Wall Street Journal know this???

Am I completely wrong??????????

Seems to me that a tax deduction for interest of $18,876 is worth at best 5 or 6k off your tax bill, and given you lose the standard deduction when itemizing (which you gotta do to take the interest) this author is waaaayyyyy off base with his claim.

XBoxBoy,

ps. for someone to save 20k off their tax bill wouldn’t that have to pay over 50k a year in interest? Does anyone think the average californian who’s paying a mortgage is paying over 50k a year in motgage interest?[/quote]

When I first read that, i’m thinking, wow, that can’t possibly be right. And it’s not. Crappy reporting. (Let’s give credit where it’s due. That crappy reporting was done by Conor Dougherty of the WSG Blog.) The average deduction is almost $20,000. Maximum tax savings would be about $7,600. About $635 a month for an average mortgage deduction in the highest tax bracket. ymmv.

[SK in CV]

Great catch on this.

[quote=XBoxBoy]Whoa! Wait a minute!!!

I’m either completely wrong or completely stunned. Here’s an article on the Wall Street Journal site that says: “Californians that claimed the mortgage interest rate deduction saved an average of almost $20,000 from their tax bill in 2008”

Then when you look at the chart it revels that the average DEDUCTION is $18,876 for California.

Now unless I’m mistaken, and been messin’ up on my taxes for years, a deduction is not the same thing as saving that amount off your tax bill. Doesn’t a writer for the Wall Street Journal know this???

Am I completely wrong??????????

Seems to me that a tax deduction for interest of $18,876 is worth at best 5 or 6k off your tax bill, and given you lose the standard deduction when itemizing (which you gotta do to take the interest) this author is waaaayyyyy off base with his claim.

XBoxBoy,

ps. for someone to save 20k off their tax bill wouldn’t that have to pay over 50k a year in interest? Does anyone think the average californian who’s paying a mortgage is paying over 50k a year in motgage interest?[/quote]

When I first read that, i’m thinking, wow, that can’t possibly be right. And it’s not. Crappy reporting. (Let’s give credit where it’s due. That crappy reporting was done by Conor Dougherty of the WSG Blog.) The average deduction is almost $20,000. Maximum tax savings would be about $7,600. About $635 a month for an average mortgage deduction in the highest tax bracket. ymmv.

[SK in CV]

[quote=FormerSanDiegan]

The interest deduction on a 800K loan is something like 48K per year (at 6%). For someone making 250K per year, that amounts to a deduciton worth somewhere in the neighborhood of 19K.

I personally believe that 19K per year increase in costs is relevant to people who make ~ 250-300K. This will reduce the amount households in the 200-400K income can afford to pay for housing and thus will significantly impact the price of housing in the categories that these people buy.

Regardless of the mechanism, it is naive to believe that the Government will recover the amount of dollars they anticipate by enacting this change. People will react and adapt to the changes in a way that reduces the overall take of the government.

I don’t disagree that in the long run the removal of this subsidy would make the economy more efficient, it’s just that the reaosn for doing so (to generate more revenue for the Government) may not come to pass.[/quote]

No disagreement. It will affect the lifestyles of people in that income bracket. Phased in over a 10 year period, they’ll learn to live with it. I think the net effect on housing values will be slight. We’ll see larger downpayments. More shorter loans. People in that income bracket should be able to pay off a loan much faster than 30 years.

And I think you may have misunderstood something I said, maybe I didn’t explain it well enough. This would be a good revenue-neutral tax change. Rates could be lowered to account for the elimination of the deduction. (As opposed to phasing out the deduction only for higher income taxpayers, which would be a revenue increase.)

[SK in CV]

[quote=FormerSanDiegan]

The interest deduction on a 800K loan is something like 48K per year (at 6%). For someone making 250K per year, that amounts to a deduciton worth somewhere in the neighborhood of 19K.

I personally believe that 19K per year increase in costs is relevant to people who make ~ 250-300K. This will reduce the amount households in the 200-400K income can afford to pay for housing and thus will significantly impact the price of housing in the categories that these people buy.

Regardless of the mechanism, it is naive to believe that the Government will recover the amount of dollars they anticipate by enacting this change. People will react and adapt to the changes in a way that reduces the overall take of the government.

I don’t disagree that in the long run the removal of this subsidy would make the economy more efficient, it’s just that the reaosn for doing so (to generate more revenue for the Government) may not come to pass.[/quote]

No disagreement. It will affect the lifestyles of people in that income bracket. Phased in over a 10 year period, they’ll learn to live with it. I think the net effect on housing values will be slight. We’ll see larger downpayments. More shorter loans. People in that income bracket should be able to pay off a loan much faster than 30 years.

And I think you may have misunderstood something I said, maybe I didn’t explain it well enough. This would be a good revenue-neutral tax change. Rates could be lowered to account for the elimination of the deduction. (As opposed to phasing out the deduction only for higher income taxpayers, which would be a revenue increase.)

[SK in CV]

[quote=FormerSanDiegan]

The interest deduction on a 800K loan is something like 48K per year (at 6%). For someone making 250K per year, that amounts to a deduciton worth somewhere in the neighborhood of 19K.

I personally believe that 19K per year increase in costs is relevant to people who make ~ 250-300K. This will reduce the amount households in the 200-400K income can afford to pay for housing and thus will significantly impact the price of housing in the categories that these people buy.

Regardless of the mechanism, it is naive to believe that the Government will recover the amount of dollars they anticipate by enacting this change. People will react and adapt to the changes in a way that reduces the overall take of the government.

I don’t disagree that in the long run the removal of this subsidy would make the economy more efficient, it’s just that the reaosn for doing so (to generate more revenue for the Government) may not come to pass.[/quote]

No disagreement. It will affect the lifestyles of people in that income bracket. Phased in over a 10 year period, they’ll learn to live with it. I think the net effect on housing values will be slight. We’ll see larger downpayments. More shorter loans. People in that income bracket should be able to pay off a loan much faster than 30 years.

And I think you may have misunderstood something I said, maybe I didn’t explain it well enough. This would be a good revenue-neutral tax change. Rates could be lowered to account for the elimination of the deduction. (As opposed to phasing out the deduction only for higher income taxpayers, which would be a revenue increase.)

[SK in CV]

[quote=FormerSanDiegan]

The interest deduction on a 800K loan is something like 48K per year (at 6%). For someone making 250K per year, that amounts to a deduciton worth somewhere in the neighborhood of 19K.

I personally believe that 19K per year increase in costs is relevant to people who make ~ 250-300K. This will reduce the amount households in the 200-400K income can afford to pay for housing and thus will significantly impact the price of housing in the categories that these people buy.

Regardless of the mechanism, it is naive to believe that the Government will recover the amount of dollars they anticipate by enacting this change. People will react and adapt to the changes in a way that reduces the overall take of the government.

I don’t disagree that in the long run the removal of this subsidy would make the economy more efficient, it’s just that the reaosn for doing so (to generate more revenue for the Government) may not come to pass.[/quote]

No disagreement. It will affect the lifestyles of people in that income bracket. Phased in over a 10 year period, they’ll learn to live with it. I think the net effect on housing values will be slight. We’ll see larger downpayments. More shorter loans. People in that income bracket should be able to pay off a loan much faster than 30 years.

And I think you may have misunderstood something I said, maybe I didn’t explain it well enough. This would be a good revenue-neutral tax change. Rates could be lowered to account for the elimination of the deduction. (As opposed to phasing out the deduction only for higher income taxpayers, which would be a revenue increase.)

[SK in CV]

[quote=FormerSanDiegan]

The interest deduction on a 800K loan is something like 48K per year (at 6%). For someone making 250K per year, that amounts to a deduciton worth somewhere in the neighborhood of 19K.

I personally believe that 19K per year increase in costs is relevant to people who make ~ 250-300K. This will reduce the amount households in the 200-400K income can afford to pay for housing and thus will significantly impact the price of housing in the categories that these people buy.

Regardless of the mechanism, it is naive to believe that the Government will recover the amount of dollars they anticipate by enacting this change. People will react and adapt to the changes in a way that reduces the overall take of the government.

I don’t disagree that in the long run the removal of this subsidy would make the economy more efficient, it’s just that the reaosn for doing so (to generate more revenue for the Government) may not come to pass.[/quote]

No disagreement. It will affect the lifestyles of people in that income bracket. Phased in over a 10 year period, they’ll learn to live with it. I think the net effect on housing values will be slight. We’ll see larger downpayments. More shorter loans. People in that income bracket should be able to pay off a loan much faster than 30 years.

And I think you may have misunderstood something I said, maybe I didn’t explain it well enough. This would be a good revenue-neutral tax change. Rates could be lowered to account for the elimination of the deduction. (As opposed to phasing out the deduction only for higher income taxpayers, which would be a revenue increase.)

[SK in CV]

Insightful comment.

[quote=FormerSanDiegan]What I find interesting about this proposal is that on the surface they expect to get additional revenue, based on people’s mortgages today. However, if this tax law changed, don’t you think those affected would make changes ?

For example, one could choose to rent a similar property, and hold their existing house as a rental. A rental property is taxed as a business and the mortgage interest is a business expense. Getting rid of business expenses will be a much harder sell than limiting primary residence mortgage interest deduction.

If this change is made, people will adapt and there will be other unintended consequences. For example, higher end property values could decline significantly, resulting in lower property taxes and less money in Local/state Government coffers. SO, it’s likely that the long-term net result would be equivalent to the Federal Government taking funds from state/local governments.
It’s even possible that the net effect after taking into account people’s obvious response to lower their tax burden would be fewer dollars net going into government hands.[/quote]

I kind of disagree on your conclusion about higher end property values suffering. They may fall a little, but they will find an equilibrium without anything like the drop of the last few years.

Additionally, I suspect if the change ever does get passed, it will include a phaseout of the interest deduction, not an elimination. Previous discussions described the phaseout only affecting taxpayers in higher tax brackets. We’ve had a few of those discussions on this board. It probably would not include a corresponding drop in overall rates and would be a net revenue increase.

There is another option which I personally prefer. And that would be a phase-out of the home mortgage interest deduction entirely, similar to the elimination of the credit card interest deduction 20 some years ago. That was phased out over 4 years if I recall correctly. 1st year, only 75% of credit card interest was deductible, next year 50%, 3rd year 25%, 4th year zero.

Because home mortgage interest deductions tend to be pretty significant, the phase-out would probably have to more like 8 to 10 years, and could be made net revenue-neutral by lowering tax rates accordingly. Those with average mortgage interest would not be dramatically affected. Those with minimal mortgage interest would have a tax savings, those with very large mortgage interest would have a tax increase.

While even 10 years is much shorter than most people have a mortgage, it is a long enough period for taxpayers to plan for an earlier payoff.

It would serve a number of purposes.

1. Help to stabalize home prices. Prices would no longer suffer the volatility they currently do based on interest rates. Rates would still be a factor, but not near as significant as they are currently.

2. Reduce private debt. Homeowners would have a tax incentive to pay off their mortgages.

3. Discourage the HELOC ATM syndrome. Encourage and reward financial responsibility.

4. Put renters and homeowners on an even playing field tax wise. There will still be the exact same non-tax reasons to buy a home, stability, permanence, control.

I’m sure there are plenty of other good reasons for it. Other than it being a significant change, I can think of no reasons it’s a bad idea for the economy as a whole.

[SK in CV]

Insightful comment.

[quote=FormerSanDiegan]What I find interesting about this proposal is that on the surface they expect to get additional revenue, based on people’s mortgages today. However, if this tax law changed, don’t you think those affected would make changes ?

For example, one could choose to rent a similar property, and hold their existing house as a rental. A rental property is taxed as a business and the mortgage interest is a business expense. Getting rid of business expenses will be a much harder sell than limiting primary residence mortgage interest deduction.

If this change is made, people will adapt and there will be other unintended consequences. For example, higher end property values could decline significantly, resulting in lower property taxes and less money in Local/state Government coffers. SO, it’s likely that the long-term net result would be equivalent to the Federal Government taking funds from state/local governments.
It’s even possible that the net effect after taking into account people’s obvious response to lower their tax burden would be fewer dollars net going into government hands.[/quote]

I kind of disagree on your conclusion about higher end property values suffering. They may fall a little, but they will find an equilibrium without anything like the drop of the last few years.

Additionally, I suspect if the change ever does get passed, it will include a phaseout of the interest deduction, not an elimination. Previous discussions described the phaseout only affecting taxpayers in higher tax brackets. We’ve had a few of those discussions on this board. It probably would not include a corresponding drop in overall rates and would be a net revenue increase.

There is another option which I personally prefer. And that would be a phase-out of the home mortgage interest deduction entirely, similar to the elimination of the credit card interest deduction 20 some years ago. That was phased out over 4 years if I recall correctly. 1st year, only 75% of credit card interest was deductible, next year 50%, 3rd year 25%, 4th year zero.

Because home mortgage interest deductions tend to be pretty significant, the phase-out would probably have to more like 8 to 10 years, and could be made net revenue-neutral by lowering tax rates accordingly. Those with average mortgage interest would not be dramatically affected. Those with minimal mortgage interest would have a tax savings, those with very large mortgage interest would have a tax increase.

While even 10 years is much shorter than most people have a mortgage, it is a long enough period for taxpayers to plan for an earlier payoff.

It would serve a number of purposes.

1. Help to stabalize home prices. Prices would no longer suffer the volatility they currently do based on interest rates. Rates would still be a factor, but not near as significant as they are currently.

2. Reduce private debt. Homeowners would have a tax incentive to pay off their mortgages.

3. Discourage the HELOC ATM syndrome. Encourage and reward financial responsibility.

4. Put renters and homeowners on an even playing field tax wise. There will still be the exact same non-tax reasons to buy a home, stability, permanence, control.

I’m sure there are plenty of other good reasons for it. Other than it being a significant change, I can think of no reasons it’s a bad idea for the economy as a whole.

[SK in CV]

Insightful comment.

[quote=FormerSanDiegan]What I find interesting about this proposal is that on the surface they expect to get additional revenue, based on people’s mortgages today. However, if this tax law changed, don’t you think those affected would make changes ?

For example, one could choose to rent a similar property, and hold their existing house as a rental. A rental property is taxed as a business and the mortgage interest is a business expense. Getting rid of business expenses will be a much harder sell than limiting primary residence mortgage interest deduction.

If this change is made, people will adapt and there will be other unintended consequences. For example, higher end property values could decline significantly, resulting in lower property taxes and less money in Local/state Government coffers. SO, it’s likely that the long-term net result would be equivalent to the Federal Government taking funds from state/local governments.
It’s even possible that the net effect after taking into account people’s obvious response to lower their tax burden would be fewer dollars net going into government hands.[/quote]

I kind of disagree on your conclusion about higher end property values suffering. They may fall a little, but they will find an equilibrium without anything like the drop of the last few years.

Additionally, I suspect if the change ever does get passed, it will include a phaseout of the interest deduction, not an elimination. Previous discussions described the phaseout only affecting taxpayers in higher tax brackets. We’ve had a few of those discussions on this board. It probably would not include a corresponding drop in overall rates and would be a net revenue increase.

There is another option which I personally prefer. And that would be a phase-out of the home mortgage interest deduction entirely, similar to the elimination of the credit card interest deduction 20 some years ago. That was phased out over 4 years if I recall correctly. 1st year, only 75% of credit card interest was deductible, next year 50%, 3rd year 25%, 4th year zero.

Because home mortgage interest deductions tend to be pretty significant, the phase-out would probably have to more like 8 to 10 years, and could be made net revenue-neutral by lowering tax rates accordingly. Those with average mortgage interest would not be dramatically affected. Those with minimal mortgage interest would have a tax savings, those with very large mortgage interest would have a tax increase.

While even 10 years is much shorter than most people have a mortgage, it is a long enough period for taxpayers to plan for an earlier payoff.

It would serve a number of purposes.

1. Help to stabalize home prices. Prices would no longer suffer the volatility they currently do based on interest rates. Rates would still be a factor, but not near as significant as they are currently.

2. Reduce private debt. Homeowners would have a tax incentive to pay off their mortgages.

3. Discourage the HELOC ATM syndrome. Encourage and reward financial responsibility.

4. Put renters and homeowners on an even playing field tax wise. There will still be the exact same non-tax reasons to buy a home, stability, permanence, control.

I’m sure there are plenty of other good reasons for it. Other than it being a significant change, I can think of no reasons it’s a bad idea for the economy as a whole.

[SK in CV]

Insightful comment.

[quote=FormerSanDiegan]What I find interesting about this proposal is that on the surface they expect to get additional revenue, based on people’s mortgages today. However, if this tax law changed, don’t you think those affected would make changes ?

For example, one could choose to rent a similar property, and hold their existing house as a rental. A rental property is taxed as a business and the mortgage interest is a business expense. Getting rid of business expenses will be a much harder sell than limiting primary residence mortgage interest deduction.

If this change is made, people will adapt and there will be other unintended consequences. For example, higher end property values could decline significantly, resulting in lower property taxes and less money in Local/state Government coffers. SO, it’s likely that the long-term net result would be equivalent to the Federal Government taking funds from state/local governments.
It’s even possible that the net effect after taking into account people’s obvious response to lower their tax burden would be fewer dollars net going into government hands.[/quote]

I kind of disagree on your conclusion about higher end property values suffering. They may fall a little, but they will find an equilibrium without anything like the drop of the last few years.

Additionally, I suspect if the change ever does get passed, it will include a phaseout of the interest deduction, not an elimination. Previous discussions described the phaseout only affecting taxpayers in higher tax brackets. We’ve had a few of those discussions on this board. It probably would not include a corresponding drop in overall rates and would be a net revenue increase.

There is another option which I personally prefer. And that would be a phase-out of the home mortgage interest deduction entirely, similar to the elimination of the credit card interest deduction 20 some years ago. That was phased out over 4 years if I recall correctly. 1st year, only 75% of credit card interest was deductible, next year 50%, 3rd year 25%, 4th year zero.

Because home mortgage interest deductions tend to be pretty significant, the phase-out would probably have to more like 8 to 10 years, and could be made net revenue-neutral by lowering tax rates accordingly. Those with average mortgage interest would not be dramatically affected. Those with minimal mortgage interest would have a tax savings, those with very large mortgage interest would have a tax increase.

While even 10 years is much shorter than most people have a mortgage, it is a long enough period for taxpayers to plan for an earlier payoff.

It would serve a number of purposes.

1. Help to stabalize home prices. Prices would no longer suffer the volatility they currently do based on interest rates. Rates would still be a factor, but not near as significant as they are currently.

2. Reduce private debt. Homeowners would have a tax incentive to pay off their mortgages.

3. Discourage the HELOC ATM syndrome. Encourage and reward financial responsibility.

4. Put renters and homeowners on an even playing field tax wise. There will still be the exact same non-tax reasons to buy a home, stability, permanence, control.

I’m sure there are plenty of other good reasons for it. Other than it being a significant change, I can think of no reasons it’s a bad idea for the economy as a whole.

[SK in CV]

Insightful comment.

[quote=FormerSanDiegan]What I find interesting about this proposal is that on the surface they expect to get additional revenue, based on people’s mortgages today. However, if this tax law changed, don’t you think those affected would make changes ?

For example, one could choose to rent a similar property, and hold their existing house as a rental. A rental property is taxed as a business and the mortgage interest is a business expense. Getting rid of business expenses will be a much harder sell than limiting primary residence mortgage interest deduction.

If this change is made, people will adapt and there will be other unintended consequences. For example, higher end property values could decline significantly, resulting in lower property taxes and less money in Local/state Government coffers. SO, it’s likely that the long-term net result would be equivalent to the Federal Government taking funds from state/local governments.
It’s even possible that the net effect after taking into account people’s obvious response to lower their tax burden would be fewer dollars net going into government hands.[/quote]

I kind of disagree on your conclusion about higher end property values suffering. They may fall a little, but they will find an equilibrium without anything like the drop of the last few years.

Additionally, I suspect if the change ever does get passed, it will include a phaseout of the interest deduction, not an elimination. Previous discussions described the phaseout only affecting taxpayers in higher tax brackets. We’ve had a few of those discussions on this board. It probably would not include a corresponding drop in overall rates and would be a net revenue increase.

There is another option which I personally prefer. And that would be a phase-out of the home mortgage interest deduction entirely, similar to the elimination of the credit card interest deduction 20 some years ago. That was phased out over 4 years if I recall correctly. 1st year, only 75% of credit card interest was deductible, next year 50%, 3rd year 25%, 4th year zero.

Because home mortgage interest deductions tend to be pretty significant, the phase-out would probably have to more like 8 to 10 years, and could be made net revenue-neutral by lowering tax rates accordingly. Those with average mortgage interest would not be dramatically affected. Those with minimal mortgage interest would have a tax savings, those with very large mortgage interest would have a tax increase.

While even 10 years is much shorter than most people have a mortgage, it is a long enough period for taxpayers to plan for an earlier payoff.

It would serve a number of purposes.

1. Help to stabalize home prices. Prices would no longer suffer the volatility they currently do based on interest rates. Rates would still be a factor, but not near as significant as they are currently.

2. Reduce private debt. Homeowners would have a tax incentive to pay off their mortgages.

3. Discourage the HELOC ATM syndrome. Encourage and reward financial responsibility.

4. Put renters and homeowners on an even playing field tax wise. There will still be the exact same non-tax reasons to buy a home, stability, permanence, control.

I’m sure there are plenty of other good reasons for it. Other than it being a significant change, I can think of no reasons it’s a bad idea for the economy as a whole.

[SK in CV]

[quote=bearishgurl]SK in CV, the lender I dealt with was a private lender with private investor-“partners” who primarily bought 2nds at a discount and made bridge loans to people to assist them in purchasing a property before they could qualify to buy it. He actually had several repeat customers that recommended his services to others needing it.

[/quote]

I apologize if you thought I was disparaging you and your work. It was the industry itself. The model you describe was pretty standard. Investors buying entire loans, or fractionalized interests in the loans. Sometimes properly recorded, sometimes not. Sometimes the lenders had the proper licenses to sell securities, sometimes not. The borrowers in deep trouble. Costs were rarely under 10 pts, often much higher. 2 to 4 year, interest only loans at high rates, usually 5-7% or so more than conventional rates. All sorts of bad things happened. Loans got oversold. Loans were re-upped, in a falling market with new points just added on. In-house appraisals said whatever the lender wanted them to say. By ’94 just about every one of them were either in trouble or out of business. Great business to be in, in a rising market. But since wall street got into subprime lending, it was pretty much non-existent over the last 6 years.

[Author]

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