PARAMOUNT MORTGAGE - LENDER'S BLOG

Most Americans believe that owning their own home is a part of the American Dream.

Respondents to a National Association of Realtors (NAR) and Harris Interactive consumer survey confirmed this belief. In the poll, an overwhelming 92% of home owners, and 71% of renters agreed that "owning a home was a better financial decision than renting."

However, the dream of home ownership has come under fire from both the media and congress.

With the "federal deficit ballooning to accommodate economic stimulus efforts, calls to change or even eliminate the long-standing" Mortgage Interest Deduction (MID) have grown louder, reports Brian Summerfield, Realtor Magazine.

John Tammy, Forbes.com writer said in a November 2010 post, "Why should those of us who choose not to own houses subsidize those who do?"

Barbara Kiviat, writer for Time Magazine echoed Tammy's sentiment writing, "Washington throws more than $100 billion a year in tax breaks and property-tax deductions" toward homeownership. She continued that this is not "particularly fair" because these "tax breaks are [not] efficient economic policy" for the country and ignores "tens of millions of Americans who rent."

President Obama's bipartisan 18-member National Commission on Fiscal Responsibility and Reform has put forth recommendations that chip away at the MID as it attempts to put together economic policies to balance the budget by 2015.

The Commission's published December 2010 report outlined MID benefits under the present law: "Deductible for itemizers; Mortgage is capped at $1 million for principal and second residences, plus an additional $100,000 for home equity."

The Commission's proposed changes convert the MID: "12% non-refundable tax credit available to all taxpayers; Mortgage capped at $500,000; No credit for interest from a second residence and equity."

Fortunately for homeowners, the proposed plan fell short of the 14 votes required to formally move the recommendations to Congress for consideration.

But, it did get 11 votes, prompting commission co-chairs Alan Simpson and Erskine Bowles to predict that part of their expansive 65-page proposal will eventually make it into future legislation.

"The fight to preserve and protect home ownership is just getting under way and will likely rage until there's a turnaround in economic conditions," states Summerfield.