Tax Question on Option ARM Loans

Dear MortgageMaster,

I have had an option mortgage for seven years and it functioned just as I intended. At our age we never planned on paying off our home. We have a 600K loan on a house valued at $1,250,000. We refied and Homecomings became the lender. Unlike our previous lenders, they do not place all the interest paid on the 1098. They only place the difference between interest and the amount going against principal on the 1098. Since the IRS considers interest deductable whether it is paid or accrued, the difference is huge,18K versus 45K. Is there any way I can make Homecomings show all the interest payments on a 1098?

Dear Blogger,

Thank you for not asking me a tax question! I can only assume that Homecomings is reporting according to what their legal counsel advised them to do. In turn, I am sure that their legal counsel did what the IRS advised them to do. If that is the case (which I am only assuming), you may wish to talk to your CPA about the deferred interest (the negative amortization) and see if, when, and how that can be deducted.

On the other hand, asking Homecomings for a new 1098 may provide you with 1) a new 1098 or 2) reasons they do it the way they do. I suspect that in the reasons why they do it the way they do, you will get the answer(s) you are looking for. Either way, your question is a good one for a tax professional..

MortgageMaster