New Tax Law Solutions to Mortgage Insurance!

Key Risk Benefit Pricing & Tax Reallocations. To effectuate a solution, risk and cost of risk mitigation must be shared more equally by all of the parties to the bargain. A comprehensive solution would also require:

New Tax Laws: Congress must extend and make permanent (beyond 2007) the new (2007) tax deduction for borrower paid MI. Congress must allow the borrower to deduct same if the cost of the MI was effectively transferred or absorbed by the borrower whether or not paid in cash by that party. New tax laws must allow borrowers to avoid forgiveness of debt on certain loan workouts, and the “uncertainty” of such taxes. Bulk rate MI should be implemented on a grand scale with shared tax deductions. Risk absorption should yield a tax deduction whether it’s cash based or not. These tax breaks are paid for by the taxes and liquidity concomitant in increased market wealth through new homeownership.