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Getting to know ... Ramaj L. Balley, senior vice president, First Magnus Financial Corporation

National Mortgage Professional
May 22, 2007

Mortgage insurance will be deductible in 2007David Lunadefault and foreclosure, home purchase loans or refinances, full tax write-off The 109th Congress finally assisted homeowners with a long-time thorny issue - mortgage insurance (MI). Traditionally, homeowners with less than a 20 percent commitment in their homes were required to have MI in order to protect the lender in case of default and foreclosure. MI was paid for by the borrower and was not tax deductible. However, prior to 2007, President Bush signed a bill allowing MI paid during 2007 to be deducted from taxable income. It applies to any home purchase loans or refinances made in 2007 and is not retroactive. Individuals with annual incomes of $100,000 or less are eligible for a full tax write-off of their MI premiums (please consult your tax advisor to confirm your borrowers specific eligibility). If the MI premium is more than $600, the lender should automatically provide a form that can be used for the MI deduction. This deduction applies to all of the following: -Mortgage insurance premiums; -Private mortgage insurance; -The U.S. Department of Agriculture Rural Housing Service; and -The U.S. Department of Veterans Affairs funding fee. Industry comments have been very positive: "Making the cost of mortgage insurance tax deductible helps those who need it most: low- and moderate-income Americans - primarily first-time homebuyers - who are financially responsible but simply don't have the means to amass a 20-percent down payment. We congratulate Congress for taking this important step to address a key barrier to homeownership that so many Americans face." Steve Smith CEO, The PMI Group Inc. President, Mortgage Insurance Companies of America "Mortgage insurance has long provided a safe and smart way for families to afford a home. With this new deduction, it becomes all the more sensible at a time when both interest rates and housing costs are on the rise." Patrick Sinks, President MGIC David Luna is past chair of the Utah Residential Mortgage Regulatory Commission and past president of the Utah Association of Mortgage Brokers. He may be reached at (801) 756-8226 or online at www.utahmortgageeducation.com.
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