Testing of mortgage calculators and mortgage calculations provided on and through websites for hundreds of banks, mortgage originators, and other financial institutions and financial service providers leads to a report being released by the Mortgage Institute For Financial Services Professionals, Inc. (www.mifsp.org) showing many of the largest national banks along with numerous mortgage originators and others as direct and indirect sources of seriously flawed mortgage calculators and calculations that significantly overstate and grossly misrepresent the consumers’ tax savings from the mortgage interest deduction. “We went to hundreds of websites and tested the mortgage calculators for banks from all fifty states with the largest market share of deposits in the largest metropolitan area in each state. Many of these calculators were shown to overstate the tax benefit of the mortgage interest deduction by as much as 300%,” says Leon Morris, RMP®, Executive Director of MIFSP. 

Morris believes faulty mortgage calculators encourage mortgage transactions (purchase, refinance, debt consolidation, cash-out, 2^nd mortgages, home equity loans, etc.) that unnecessarily cost consumers millions or maybe billions of dollars annually and raise the cost of homeownership under the guise of being tax-wise and beneficial to consumers.  “Many of the banks tout the successful conversion rate of capturing prospects and converting them into ‘interested and motivated’ mortgage applicants as a result of using these calculators. Using those calculators, someone making a rent versus buy decision who was counting on the tax benefit to offset the cost of homeownership could possibly start to find themselves in trouble from the outset. The calculators we tested usually posted a disclaimer regarding the accuracy, however, due to a bank’s name and reputation a consumer may not expect the calculator to be off by that much or that some basic tax considerations wouldn’t be taken into account.  The widespread errors found in our testing leads me to believe that this maybe the largest ongoing instance of an unfair and deceptive trade practice ever perpetrated upon the American people and American homeowners in particular.  Federal and state laws and regulations define unfair lending and unfair and deceptive trade practices so we are making our findings known to the Department of Justice, the Department of Housing and Urban Development, and the Federal Trade Commission,” says Morris.

The report entitled “Mortgage Interest Deduction More Hype Than Help” is available at www.mifsp.org.  “Faulty mortgage calculators hype the tax benefits of the mortgage interest deduction, and the providers are doing a disservice to consumers.  In an effort to promote mortgages, consumers are being misled about the tax benefits of having one. There’s lots of talk about the need for consumer education, but in order for consumers to make better decisions, they’ve got to be given better information; and when it comes to the mortgage interest deduction, they’re not only being miseducated, they’re being misled,” says Morris. 

About MIFSP:       MIFSP offers the only educational program in Mortgage Based^TM Financial Planning.

Contact:            Leon Morris

www.mifsp.org. 

Phone:             678.388.7823

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