Articles & News About Mortgage Loans

Government To Make Billions From The Mortgage Crisis

The mortgage crisis has had a negative impact on everyone, not just homeowners. Elected officials are working hard to pass legislation that is designed to prevent future banking debacles. Unfortunately, history has proven that when legislators over-regulate banks that it tightens the reins on lending. This is done by raising the bar on what it takes to qualify for a mortgage or installment loan. Predictably, it?s the middle class that will feel the pinch more than anyone. Specifically, it?s the middle-class, self employed small business owner that be injured the worst.

Most people are aware that you can reduce your taxes by deducting expenses and qualified charitable contributions. What most people don?t realize is that small business owners live and die by those deductions. Tax rates have risen on the self employed more than any other segment in our society. To counter these tax hikes, legislators created more ?loop-holes? write off?s and deductions for small business owners to use.

For this reason, small business owners rely on creative CPA?s to maximize their deductions in order to show less income and pay less taxes.There are nearly 23 million small businesses in America and over 35 million sole-proprietors and almost every one of them employ savvy CPA?s to keep them in the black. The draw-back is that by doing this most self employed borrowers are unable to prove enough income on paper when applying for a loan or a mortgage.

Traditional mortgage lending practices of yester-year required that borrower?s prove sufficient income when taking out a loan. Over the years, taxes have risen for small business owners at staggering rates, far above what they have for W2 employees. At the same time the self employed borrower's ?provable? income has dwindled proportionately. Under traditional banking rules most of the self-employed people wouldn?t be able to qualify for business loans or mortgages. This would ultimately force small business owners out of business and cripple our would economy.

This new business paradigm literally forced the banking industry to create lending products that catered to small business owners who could not prove all of their income. These products were called ?stated? income loans and did not require borrowers who had good credit to prove their income. These products originally required good credit and sufficient assets in order to qualify for them. Responsible guidelines and common sense underwriting kept default rates on these products in line with conventional mortgages. Unfortunately, as competition for this segment of borrowers stiffened between lenders the stringency to qualify for these mortgages softened, thus the mortgage crisis.

It is exactly this type of loan that our law-makers are trying to do away with through legislation. The new mortgage bill being bounced around has specific remedies for irresponsible lending. Meaning, if a bank loans you money and it can be proven in court (attorneys like this law by the way) that the bank was irresponsible in doing so they could be penalized. The definition of ?irresponsible? is did the borrower have the capacity to repay the loan, meaning did they prove enough income. This bill will kill stated income loans, period.

So where does this leave the responsible self employed borrowers who needed these loans to live and operate their businesses? This leaves them with higher taxes. Should this bill pass self employed borrowers will be forced to claim more income each year on their tax returns in order to qualify for car loans, mortgages and even business loans. This will negate any of the loop-holes and deductions they were promised in lieu of higher taxes.

This means the government will rake in billions in extra revenue as a result of this bill. For example, let?s assume that a small business owner claimed $40,000 in income last year after deductions and business expenses. If she was in a 40% tax bracket she would pay roughly $16,000 in taxes. Under the new banking guidelines that same business owner may have to claim $80,000 In order to qualify for mortgages, car loans and business loans. Assuming she?s in the same tax bracket, she would now have to pay $32,000 in taxes.

Multiply $32,000 by 23 million business owners and that?s one huge pay-day for Uncle Sam. You can bet that the Senators pushing this bill through congress are well aware of this left handed tax raise. You will never hear them mention it either, I wonder why?. You will hear about the naughty lenders that put good wholesome red blooded Americans in the street through predatory lending practices. You will never hear about the 20 million business owners who paid their mortgages on time and actually need these loans to stay in business.

Aubrey Clark is a staff writer for LendFast.com and writes on subjects ranging from where to find low interest rate credit cards to nationwide home mortgage loan company secrets.

Other Article Sites

findabook.com moneycd.info a-mortgage.info about-lemon-laws.info aboutstudentloans.info
all-about-publishing.info auctions-articles.info bestcollege-university.com bestispconnection.com
biblefolder.com blogger-website.com books-used.info brokers-guide.info buywindows.info cable-dsl.info
career-miner.com carpel-tunnel.info cashinaflash.info cashloanreviews.info casinobell.com chat-house.info
clearmycredit.info collegeloantips.info crones.info depression-articles.info dirnic.net dishguides.info
divers-below.com expodog.info financewizz.com fire-insurance.info getgood.info handleit.net it-idea.info
health-supplies.info hosting-right.com insidealert.com insurance-facts.info jobs-employment.info
justgood.info lookgold.net lowcost-travel.info money-source.info myhostzone.info numisblog.com
peoplesearchfinder.info pr-articles.info realeas.com refinancing-guides.info spyware-remove.info
telelot.info the-law.info toppaid.info travel-deals.info travelcorrect.com wedding-guide-site.com
your-blog.info your-credit.info

MORE ARTICLES:

Flexible Mortgage Tips
Outlined below are some useful flexible mortgage tips. The most prominent addition in recent years to the mortgage industry has been the flexible mortgage.

The Best Way To Get The Right Mortgage
Are you thinking of buying a home? If so, then there are many things that you need to research first. For example, do you know what a mortgage is and do you know all the details of getting a mortgage? The more you know before you get into it, the easier the whole process will be for you.

Mortgage Industry Job Site Launched is a Ray of Light in the Shadow of the Liquidity Crisis
Free job posting and resume listing available now.

Buying Mortgage Leads - Three Things to Consider
The time comes for all mortgage brokers and loan officers to consider spending some of their hard earned money by testing the waters of mortgage leads.After all, leads are the name of the game.

Learn The Basics Of A Mortgage
Learning more about the basics of mortgages can help consumers better understand the home loan process and possibly keep some from getting into trouble.

Check Mortgage Insurance Protection Cover Out Online
Checking out mortgage insurance protection cover is imperative before you rush into taking it out There are many factors you have to be aware of if you are to ensure suitability for your circumstances

Bad Credit Mortgage Solutions Provided by The Mortgage Genius : Chris Reshetar Turns to the Services of i3 Solutions, Inc. for Credit Score Optimiza
i3 Solutions today announced that Chris Reshetar ? The Mortgage Genius ? was able to close more bad credit mortgage loans then ever before by utilizing i3 Solutions? S.O.S. - Score Optimization System, the latest technology in the credit repair industry.

Pros & Cons Of Working Directly With A Mortgage Lender
When investigating real estate financing, the average consumer does not have the time, experience or resources necessary to adequately evaluate the plethora of loan programs that exist. For this reason, the majority of buyers seek the assistance of a mortgage broker. The role of the broker is to act as liaison between the borrower and multiple lenders, and to present the features of the available loans. However, a small percentage of borrowers choose to do the leg work themselves, rather than rely on a broker, and they face some different challenges.

Mortgage Leads, Choosing the Best Option
When it comes to buying mortgage leads, there are many good companies out there for you to research, and many avenues to travel down when considering which lead type will work best for you.While working as a loan officer, I dealt with my fair share of mortgage lead companies.

Mortgage Prepayment Penalties - Just Say No
One of the most common terms found in a new home loan is a prepayment penalty. This type of penalty says that if the borrower pays off the loan early, commonly during the first five years of the loan, then the borrower will be responsible for paying an additional amount of money, typically about six months interest on 80% of the mortgage balance.

Mortgage Leads, Where They Come From
If you are a loan officer or mortgage broker, and you are thinking about buying mortgage leads, one thing that will be important to know, is where these mortgage lead companies obtain their mortgage leads from.

3 Things Job Seekers Are Doing Wrong: Free Webinar for the Mortgage/Finance Job Market
Because of the sub-prime mortgage meltdown, a growing number of mortgage and finance professionals are hitting the streets, looking for jobs. Yet, these layoff victims largely lack the most important career skill of all: How to market themselves. The moves most mortgage and financial professionals have made to advance their careers to this point are probably exactly the wrong things they should do to find work in the current job market," cautions recruiting professional David Perry, managing director of Perry-Martel International and Guarnateed Resume president Kevin Donlin.

Your 2nd Investment Mortgage Property
Lots of people are looking at acquiring a 2nd investment mortgage property, either for rental purposes or second homes. With so many people looking for a place to rent, the rental business has known a huge growth during the last few years. Of course, in some situations, a 2nd investment mortgage property can be use more efficiently as a 2nd home than a rental property.

What Is A Home Loan Refinance Mortgage Broker?
When it comes to getting a home loan refinance, sometimes it helps to go through a mortgage broker. This can be especially helpful if you have bad credit. Most mortgage brokers can help you with a bad credit home loan refinance. If you have good credit, a mortgage broker has access to a variety of lenders. You can go to one place and find the best possible loan for your situation, rather than shopping around for a home loan refinance that has the terms that you want.

Refinancing Solutions Provided By Canadian Mortgage Brokers
Home owners face a perennial refinancing decision each time the term on their existing home mortgage expires Do you renew your mortgage with your existing bank or lender, or should you shop around to see if better rates and terms are available from another lender