| Jackson Hewitt cited for tax schemes
The government said it is trying to shut down more than 125 Jackson Hewitt tax-preparation stores in four states for systematic "tax-fraud schemes." The Justice Department accuses the franchises of bilking the government out of more than $70 million through fraudulent practices such as using phony W-2 forms, bogus deductions and fuel tax credits and false claims regarding the earned income tax credit. The franchises were either totally or partially owned by Farrukh Sohail, the Justice Department said, and involved "a pervasive and massive series of tax-fraud schemes," according to court filings.Accredited Home Lenders gets fundingThe same day fellow subprime mortgage lender New Century Financial Corp. filed for bankruptcy protection, Accredited Home Lenders Holding Co. said late Monday it arranged $1.1 billion in financing that might help the company avoid the same fate.
Rule of 22 can help you see refinance ramifications
Obviously, for refinancing to make sense, current interest rates must be lower than your current mortgage rate. But how much lower? Mortgage interest rates have been at historic lows for more than a decade. Currently, they are in the high 5 percent to low 6 percent range. Rates would have to come down to the 3 percent to 4 percent range for a no-cash-out, straight refinance to make sense for these mortgages. There is a rule of thumb -- called the Rule of 22 -- for refinancing a 30-year mortgage that tells you whether it makes sense to do that. The Rule of 22 states that for a refinancing to make sense, your rate must be reduced by two points and the costs to refinance must be recovered within two years with the reduction in the monthly mortgage payment. At current mortgage rates, you would have to have a mortgage rate in the high 7 percent or higher range for refinancing to make sense.
Professor creates tool for mortgage seekers
Homeowners and homebuyers who have been in the dark about how mortgages work have a new tool to help them decide what loan is best for them -- the Mortgage Payment Index. The quarterly index, created by Susan Wachter, a real estate professor at the Wharton School in Pennsylvania working with Genworth Financial, gives consumers information about current trends in mortgages. Wachter recently answered some questions about the origin of the index and how it can be used. QWhy did you develop this index? A "The mortgage meltdown (shows) the consumer is missing a lot of information in weighing decisions about mortgages," said Wachter, who notes that one-third of borrowers don't even know the terms of their loan. "They are not given complete information of what the different kinds of mortgages are.
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