Mortgage Interest Deductions: A Comeback for Seconds?

At a time when industry news is rife with stories about lack of useful guidance from the Consumer Finance Protection Bureau (CFPB) about enforcement, another government agency has stepped up with a bulletin that provides homeowners with clarity regarding the deductibility of interest on second and home equity line of credit (HELOC) loans. The Internal Revenue Service (IRS) released Publication 936 on January 31, 2018 and it explains the circumstances under which interest on seconds and HELOCs can still be deducted.

Though the loans must still be made on “qualified homes” and the mortgages must remain within the maximum amounts allowed for single and married filers, Publication 936 brings encouraging news for lenders and mortgage loan officers (MLOs) regarding how home equity loans, HELOCs, and second mortgages will be treated under the new tax plan. MLOs and their Realtor partners should take this under consideration in their marketing outreach.

Home valuation and equity position reviews are reliable post close marketing topics; however, the new tax law also adds a compelling conversation starter for your sphere of influence and buyer prospects. This highly-publicized legislation and its implications offer a great opportunity to contact people with truly valuable information that establishes and reinforces you as an expert. MLOs and Realtors who don’t want to read, break down and risk interpreting the IRS’ explanation can reach out to accountants to gather specific quotes and their take on the law, and initiate new referral partnerships in the process.

Second mortgages and HELOCs aren’t the most coveted types of business for most companies and MLOs; but home values, appreciation and the ability to tap into equity are gateway topics that stimulate phone calls, meetings and referrals.  The ability to provide current, relevant information on a topic that’s made national news is a rare opportunity for companies, MLOs and their current and desired referral partners to shine as trusted experts. Put the Tax Cuts and Jobs Act to work for you!