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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

Down Payment Insurance on a Home Purchase

(0) Comments | Posted February 4, 2016 | 12:21 PM

I set out recently to write about a new program of down payment (henceforth DP) insurance, but quickly realized that such an article required an extensive preface that clarifies what the DP is and what it is not. The new program is discussed after that.

Definition of Down Payment


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Shopping for an Annuity Online

(0) Comments | Posted January 26, 2016 | 6:04 PM

An investment in an annuity, possibly combined with a HECM reverse mortgage, can make a lot of sense to a retiree, as I noted in How Retirees Can Avoid Running Out of Money: The Role of Longevity Annuities. Retirees planning to draw down financial assets over their remaining...

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Life Annuities and HECM Reverse Mortgages as Tools For Protecting Retirees

(0) Comments | Posted January 20, 2016 | 11:47 AM

My article last week ("How Retirees Can Avoid Running Out of Money: The Role of Longevity Annuities") discussed the longevity annuity as a tool for protecting retirees heavily dependent on a stock of financial assets against the risk of running out of money. The retiree in my example...

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How Retirees Can Avoid Running Out of Money: The Role of Longevity Annuities

(1) Comments | Posted January 11, 2016 | 10:24 PM

Retirees are becoming a larger part of the population while their capacity to fund retirement comfortably has been declining. The population 65 and older, which now numbers about 48 million, is expected to rise to about 73 million in 2030. Meanwhile, the portion of retirees with employer-defined benefit plans that...

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The Big Short Reinforces a Widespread Misperception About the Financial Crisis

(6) Comments | Posted January 6, 2016 | 10:49 PM

This highly rated movie is about a few sharp operators who saw the financial crisis coming and decided to profit from their insight by shorting the private mortgage-backed security market. "Shorting" means to sell at the current inflated price but not deliver until later when the price of buying the...

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How Much Can You Afford to Pay for a House?

(0) Comments | Posted January 5, 2016 | 9:52 PM

Many wannabe house purchasers wonder whether or not they can afford the price quoted on the house they would like to buy. Or if they have not started their house shopping, they may be wondering what price range they should be exploring.

If you intend to buy with all...

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How to Make Your Money Last: Review of the New Book by Jane Bryant Quinn

(3) Comments | Posted December 18, 2015 | 7:00 PM

I don't review many books but I felt impelled to report on this one because as I read it, I found myself saying "I wish I had known that in 19xx", or "Yes, I should have done it that way, I wonder what my mistake cost me?"

This is a...

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Introducing the HECM Shopper's Assistant

(0) Comments | Posted December 15, 2015 | 5:24 PM

Past efforts to provide senior homeowners with the tools needed to obtain competitive pricing on HECM reverse mortgages have been only partly successful. There is now a Kosher HECM network on which 10 lenders post their prices, generating competitive prices for the seniors who access it. It is new and...

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Borrowers Pay the Piper for Lender Misdeeds

(0) Comments | Posted December 6, 2015 | 1:29 PM

I have been turned down by 2 different lenders because my last years' tax return didn't show enough income from my business to qualify, despite a credit score of 800 and a down payment of 50%. Does this make sense?

No, it doesn't make sense. You and thousands of other...

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Selling a House to Buy a House

(1) Comments | Posted November 28, 2015 | 12:51 PM

Homeowners sell their homes and buy other homes for a variety of reasons including a need to live closer to a place of employment, to be closer to family, to enjoy a better climate, or simply to upgrade. This article is about finding the best sequence of steps in the...

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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

(1) 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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