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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

Mortgage Borrowers Thinking About Paying Down Their Loan Balance Should Know How Mortgage Amortization Works

(10) Comments | Posted February 26, 2015 | 9:06 PM

Recently, I have been getting a lot of mail from mortgage borrowers asking about amortization. Most are considering whether to pay down their loan balance more rapidly, and have suddenly realized that they don't know how best to do that, or even whether it is a good idea because they...

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Does the New CFPB Rate Tool Help Consumers Shop for a Mortgage?

(0) Comments | Posted February 16, 2015 | 1:44 PM

The Consumer Financial Protection Bureau (CFPB) deplores the fact that almost half of the home buyers it recently surveyed did not shop for a mortgage but dealt with a single loan provider. To encourage shopping, the agency has developed a "Check Interest Rate" tool. It advises borrowers: "As you start...

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Why Do Some Borrowers Pay Higher Mortgage Interest Rates Than Others?

(0) Comments | Posted February 7, 2015 | 5:51 PM

The Consumer Financial Protection Bureau (CFPB) recently unveiled an internet-based tool designed to help consumers shop effectively for the lowest possible mortgage interest rate. For this tool to work, it must help mortgage shoppers distinguish between rate differences that are justified, which borrowers would have to pay in a perfect...

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Some Recent Letters on Downsizing and Mortgage Lender Mistakes

(0) Comments | Posted February 6, 2015 | 10:56 PM

Downsizing But Retaining Current Home
I am downsizing by purchasing a smaller home that will be my primary residence. Because I do not have my existing house on the market, the lender I approached to finance the purchase has asked me for a letter describing my reasons for...
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After March 2, Reverse Mortgage Borrowers Will Have to Prove They Are Not Deadbeats

(0) Comments | Posted January 25, 2015 | 11:36 AM

One of the attractive features of the HECM reverse mortgage has been that there are no income or credit requirements. All homeowners 62 and older who live in their homes without a mortgage have been eligible, and those with mortgages may also be eligible if the balance is not too...

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How Can You Be Sure That Refinancing Will Save You Money? Introducing the Integrated Refinance Calculator

(0) Comments | Posted January 20, 2015 | 5:21 PM

Despite the recent increase in the growth rate of the economy, interest rates remain stubbornly low. Many mortgage borrowers who to this point have procrastinated in making a refinance decision are wondering whether the market fates are giving them another shot. And some who did refinance earlier are wondering whether...

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The Fixed-Rate/Adjustable-Rate Decision: Standard vs. HECM Reverse Mortgages

(0) Comments | Posted January 12, 2015 | 10:51 PM

The other day a reader caught me off guard by saying that she had counted 28 articles on adjustable-rate mortgages on my website, but that all of them pertained to standard mortgages. Not one applied to reverse mortgages, she said, and she wondered whether that was because the issues were...

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Transitioning From a Standard Mortgage to a Reverse Mortgage

(2) Comments | Posted December 30, 2014 | 11:28 AM

In my father's generation, very few people still had a mortgage to pay when they reached retirement age. Now it is common. But retired homeowners may now have an option my father did not have: If they have enough equity in their home, they can pay off the balance of...

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A New Approach Toward Selecting a Mortgage Loan Originator

(0) Comments | Posted December 22, 2014 | 2:39 PM

One important reason the home loan market works so poorly is that borrowers have no reliable way to select the loan originator (LO) -- the individual who takes the borrower through the loan process. LOs are loan officer employee of a lender or broker, or a broker herself. The problem...

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Forget the Homeownership Rate, It Is the Process That Matters

(0) Comments | Posted December 16, 2014 | 10:34 PM

Because of the widespread belief that homeownership is valuable, the recent decline in the homeownership rate has generated some dismay. The rate, which had peaked at 69.1 percent in 2005, shortly before the financial crisis, has since fallen to 64.8 percent. This is the lowest it has been since 1995.

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To Avoid Outliving Your Money, Take a HECM Reverse Mortgage Before Interest Rates Rise

(1) Comments | Posted December 12, 2014 | 3:16 PM

Many seniors in retirement are concerned that they may outlive their financial assets. If they have equity in their homes, however, they can reduce or eliminate this worry. They can use the HECM reverse mortgage program to generate an income stream that becomes larger the longer they live. It is...

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Can Bad Financial Habits Be Unlearned?

(0) Comments | Posted December 9, 2014 | 11:51 PM

Some readers of last week's column recognized themselves in my description of a "NOHO": someone not cut out to be a homeowner. NOHOs live paycheck to paycheck, price substantial purchases in terms of the monthly financing charge, and typically have no reserve for meeting unexpected contingencies. Some readers asked me...

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Homeownership Is Not For Everyone

(0) Comments | Posted December 9, 2014 | 11:41 PM

Some people are not cut out to be homeowners. I call them NOHOs. What distinguishes them is not their income, their mobility, or where they live -- rather, it is how they live.

While homeowners live with at least one foot in the future, and have learned how to...

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Introducing the Manageable Mortgage

(0) Comments | Posted November 16, 2014 | 2:25 PM

Last week I suggested that the standard mortgage was very difficult for many borrowers to manage because of its rigid payment obligation, the fixed payment period and payment amount, and the high cost of building a payment reserve. This article introduces what I will call the Manageable Mortgage which has...

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Why the Standard Mortgage Is Obsolete

(0) Comments | Posted November 11, 2014 | 11:43 PM

Last week I wrote about the so-called wealth-builder (WB) mortgage, designed to marry the rapid balance pay-down of a 15-year mortgage with the low monthly payment of a 30. I concluded that without the lender or government providing a subsidy, WB doesn't work.

That doesn't mean that our existing...

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Is the Wealth-Builder Mortgage All Smoke and Mirrors?

(1) Comments | Posted November 5, 2014 | 6:08 PM

"What do you think of the new Wealth-Builder mortgage that has gotten a lot of press?"

The developers of the Wealth-Builder (WB), Edward Pinto and Stephen Oliner of the American Enterprise Institute view the 30-year mortgage that today dominates the market as badly flawed. Their view is that it takes...

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Why Many Good Mortgage Loans Are Not Being Made

(4) Comments | Posted October 25, 2014 | 11:44 PM

The housing sector today is not providing the economic stimulus we had come to expect during periods of economic recovery. A major reason is that the underwriting rules and practices that determine whether or not an applicant qualifies for a home mortgage are much stricter today than they were before...

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Introducing the Kosher HECM Reverse Mortgage

(0) Comments | Posted October 19, 2014 | 9:16 PM

The kosher stamp on a food means that it has been certified as fit for human consumption. We need a comparable certification process for financial instruments sold to consumers, with the need most pronounced for the more complex instruments.

When scaled by the need for certification, HECM reverse mortgages...

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Why and How to Eliminate Mortgage Charges by Third Parties

(2) Comments | Posted October 13, 2014 | 11:27 PM

In a recent article I proposed that Fannie Mae and Freddie Mac be removed from limbo and given a new mission: to create a better primary mortgage market. Among other things, this would include the elimination of third-party settlement costs. To borrowers, these are a horrible yet unnecessary source of...

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Why Not Use Fannie and Freddie to Make a Better Primary Market, Instead of Scrapping Them?

(0) Comments | Posted October 9, 2014 | 10:10 PM

The phase-out of Fannie Mae and Freddie Mac, which have now been in conservatorship for 6 years, is on indefinite hold. Terminating them without an effective replacement would devastate the market, and no effective replacement is in sight. The one proposed by the Senate Banking Committee, which I looked at...

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