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Jack M. Guttentag
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Jack M. Guttentag is Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania. He served as chief of the Domestic Research Division of the Federal Reserve Bank of New York; was a member of the senior staff of the National Bureau of Economic Research; and was managing editor of both The Journal of Finance and The Housing Finance Review. Prof. Guttentag has been advising consumers and the media on mortgage-related issues since assuming emeritus status in 1997. Comments and questions can be left at

Entries by Jack M. Guttentag

Homeownership Is Not For Everyone

(1) Comments | Posted November 20, 2015 | 5:53 PM

Some people are not cut out for home ownership. I call them NOHOs. What distinguishes them is not their income, their family structure, their mobility, or where they live -- rather, it is how they live.

Homeowners live with at least one foot in the future, and have learned how...

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Another Look at Lease-to-Own House Purchases

(0) Comments | Posted November 12, 2015 | 1:07 AM

A lease-to-own house purchase (henceforth LTO) is a lease combined with an option to purchase the property within a specified period, usually three years or less, at an agreed-upon price. In recent years, I have written several articles on the topic, and they are among the most read of the...

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How to Select the HECM Reverse Mortgage Lender With the Best Deal

(1) Comments | Posted November 2, 2015 | 6:55 PM

My article last week was the first installment of a two-part series on how a senior can safely navigate the highly dysfunctional reverse mortgage market. I suggested that step one is to choose the combination of reverse mortgage features that best meets your needs, which can be done effectively using...

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How to Select the Best Type of HECM Reverse Mortgage

(1) Comments | Posted October 28, 2015 | 10:16 PM

The HECM reverse mortgage is a beautifully designed financial instrument that can meet a wide variety of senior needs. Unfortunately, HECMs offer so many options that selecting the best option can be a challenge. The challenge has two parts: part one (the subject of this article) is to determine which...

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Simple Interest Mortgages Are Anything but Simple

(0) Comments | Posted October 23, 2015 | 10:48 AM

"I represent a couple facing the foreclosure of their home...My clients' loan is currently being calculated as a daily simple interest loan which is causing them to be in default...Attached is a copy of the note, deed of trust, and a payment history..."

Your clients had terrible payment habits,...

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Is a HELOC Better Than a HECM?

(0) Comments | Posted October 16, 2015 | 10:58 AM

Where they overlap in meeting the needs of consumers, I could find only one situation where the HELOC might work better than a HECM. In all other situations where both could be used, the HECM worked better for the borrower. In addition, the HECM can be used for purposes that...

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How Do You Shop For a HELOC?

(0) Comments | Posted October 8, 2015 | 2:26 AM

"Do I shop for a HELOC in the same way as I would shop for another mortgage?"

No, shopping for a HELOC is very different from shopping for a standard mortgage. If you know the information you need, shopping is easier, but if you don't know what you need and...

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Don't Expect to Be Made Wealthy by Someone Who Doesn't Know Your Name

(0) Comments | Posted September 30, 2015 | 10:24 AM

Some time ago, I discovered that I was not getting all the emails sent to me by readers, which induced me to examine my spam file. Dismayed to find that it contained many letters from friends and readers that I should have received, I disabled the spam filter, and reconciled...

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Tough Questions: Negotiating a Mortgage Balance Reduction, and Can a Disabled 9/11 First Responder Become a Homeowner?

(0) Comments | Posted September 22, 2015 | 6:14 PM

Some of the questions I get from readers make me wince. One reason is that I know the questioner is not going to be pleased with my answer. The letter immediately below could have been written by millions of other borrowers who took out second mortgages before the financial crisis....

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Frequently Asked Questions About Down Payment

(0) Comments | Posted September 15, 2015 | 3:28 PM

Most consumers need to borrow some of the money needed to purchase a home, but lenders will seldom provide it all; usually, they require that borrowers provide some of the money out of their own resources. This is called the "down payment requirement." The questions about down payments shown below...

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Introducing the Kosher HECM Reverse Mortgage

(0) Comments | Posted September 6, 2015 | 8:46 PM

The kosher stamp on a food means that it has been certified as fit for human consumption. We have long needed a comparable certification process applicable to financial instruments sold to consumers, with the need most pronounced for the more complex instruments. HECM reverse mortgages are at the top of...

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Choosing the Best Type of Mortgage

(1) Comments | Posted September 1, 2015 | 10:08 AM

Mortgage borrowers having to choose between the different types of mortgages face a puzzle, which may be particularly perplexing today. Interest rates remain low by historical standards, the spread between fixed and adjustable rates remains large, but expectations are widespread that all rates will soon increase - unless the current...

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Are HECM Reverse Mortgages Overpriced?

(0) Comments | Posted August 30, 2015 | 2:09 PM

HECM reverse mortgages are reputed to carry high upfront fees, which raises two questions addressed here. First, are seniors getting real value in exchange for the high fees? The answer in most cases is "no". Second, can a senior who knows the ropes avoid paying excessive fees? The answer in...

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Is This a Good Time for a New HELOC?

(0) Comments | Posted August 20, 2015 | 10:07 PM

"Recently you pointed out a slew of problems now faced by borrowers who took out HELOCs before the financial crisis. Their timing was terrible, but that's water over the dam. Are conditions more favorable to borrowers taking out HELOCs now?"

In some respects, conditions are more favorable now for HELOC...

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Mortgage Closing Date: Does It Matter?

(0) Comments | Posted August 18, 2015 | 7:27 PM

On a purchase transaction, there is no financial advantage in closing on any day of the month, as compared to any other day. On a refinance, however, it is a good idea not to close on a Friday.

Closing Date and Per Diem Interest

The interest clock on a...

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Is Paying Down Your Mortgage Balance a Good Investment?

(0) Comments | Posted August 17, 2015 | 9:31 PM

"We are allocating $600 a month to savings... should we pay down our 4% mortgage or put the savings into our retirement account?"

In principle, you place it where it will earn the highest after-tax and risk-adjusted return. If you itemize your tax deductions and are in the 25%...

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The Tontine: A 17th Century Solution to a 21st Century Problem

(1) Comments | Posted July 25, 2015 | 12:15 PM

The tontine is an investment scheme where each of a group of participants pays a specified sum into a fund and receives a pro rata share of the income generated by the fund, but when a participant dies their share is divided among those remaining. As the number of participants...

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A New Approach to Protecting Consumers In Financial Markets

(0) Comments | Posted July 20, 2015 | 2:10 PM

Markets don't work well when one party in a transaction knows much more than the other, and nowhere is the knowledge gap wider than in HECM reverse mortgages. Borrowers typically know very little because reverse mortgages work differently and are much more complicated than the mortgages with which they purchased...

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What Happens When the Lender Miscalculates the Payment?

(1) Comments | Posted July 13, 2015 | 9:49 PM

With millions of mortgage loans originated every year, it is not surprising that now and then lenders make a mistake in calculating the monthly mortgage payment. On a fixed-rate mortgage, the payment is calculated only once, when the loan is originated, so any such mistake occurs then. On an adjustable...

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Website Features Home Buyers Should Look For

(0) Comments | Posted July 9, 2015 | 12:01 AM

Home buyers who need a purchase mortgage are less likely to use the internet to find one than are existing owners looking to refinance, yet the benefits of online shopping are just as large if not larger for home buyers. The problem may be that home buyers expend so much...

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