Low mortgage rates over the past year have inspired many Americans to refinance their home loans, but some eligible borrowers haven’t made the leap.

Often that reluctance to refinance stems from the fact that interest rates on their adjustable-rate mortgages have fallen below 3% – a better rate than they’d get by switching to a fixed-rate loan.

For now, anyway.

As the economy strengthens, super-low ARM rates will adjust upward. Meanwhile, rates on fixed-rate mortgages are expected by many in the industry to start rising this year, after the Federal Reserve halts its purchase of mortgage-backed securities.

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When Toronto resident Celia Bernath files her annual income tax return, she includes a long list of deductions from her home-office income. After all, as a chartered accountant, she knows that travel, bank charges, postage, courier, utility and other expenses are fair game for the micro-entrepreneur. But the item that sometimes has the most impact is deducting a proportion of her residential mortgage interest.

“The mortgage-interest deduction — like other deductions — is based on the square footage of my office divided by the total square footage of the house. Keeping track of all your household expenses is very important,” says Ms. Bernath who has about 15 corporate and 100 personal clients.

Ms. Bernath is one of the more than 700,000 home-based business owners who might be eligible to deduct a portion of their mortgage interest on their principal residence as an expense.

Generally speaking, in Canada, interest on residential mortgages is not tax deductible.

However, Ms. Bernath can do so because there is a direct link between the borrowed money and earning income.

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Suspicious activity reports filed in the third quarter of 2009 showed a 7.5 percent increase in possible mortgage loan fraud over a year earlier, the Financial Crimes Enforcement Network (FinCEN) reported on Thursday.

Forty-two percent of the reported activity took place in California and Florida, while the greater Miami, Los Angeles and New York areas topped the list of metropolitan locations.

The Bank Secrecy Act requires financial institutions to file suspicious activity reports, or SARs, with FinCEN when they identify or suspect fraudulent activity.

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Tech giant joins banking, insurance firms in litigation with the government

Hewlett-Packard Co. has become an unlikely member of a group of companies targeted by the U.S. Internal Revenue Service in a coordinated legal assault on suspect international tax credits.

H-P is one of roughly a half-dozen firms, nearly all in the banking and insurance industries, now ensnared in the IRS’s “three-and-out” litigation strategy targeting so-called foreign tax credit generators, experts say. The IRS has pegged a handful of such cases as promising enough to pursue, in hopes of winning at least three decisions in a row — and thereby gaining a more solid legal footing on the issue.

“Usually the government does a good job of starting with cases that are very weak for the taxpayer, and developing law,” said University of Southern California Law Professor Edward Kleinbard.

Foreign tax credit generators are investments by U.S. companies that earn income and result in taxes overseas. Companies can then claim foreign tax credits, to offset their tax payments in the U.S. However, the IRS alleges that many are designed to unnecessarily load up on foreign tax credits, and create an artificial financial benefit.

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In a nod to the effects of the real estate meltdown, Freddie Mac shows that mortgage borrowers, if not lenders, may have learned their lesson. According to Freddie Mac’s quarterly Product Transition Report for Q4, 2009, refinancers are overwhelmingly choosing fixed-rate loans, whether or not the original loan was an adjustable-rate mortgage (ARM) or a fixed-rate mortgage.

ARMs are the reason that many found themselves in trouble during the real estate meltdown. Sub-prime loans with attractive interest rates that adjusted to a higher rate, or even had a balloon payment, put those who had gotten themselves into homes they could not justifiably afford, into situations that could only end in foreclosure.

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On the eve of major demonstrations in Iran, California Insurance Commissioner Steve Poizner demanded Wednesday that insurers doing business in California withdraw $6 billion of investments they indirectly hold in Iranian nuclear, energy and defense companies that he said are backing the nation’s “rather evil” regime.

California law bans insurance companies doing business in the state from investing in Iran, which the State Department considers to be a state sponsor of terrorism. This week, Iran announced that it would begin producing more highly enriched uranium – which would bring it closer to producing weapons-grade nuclear fuel.

While no California insurer is directly investing in Iran, Poizner said some of them have found “a big loophole,” by funneling money to Iran through third-party companies based in other parts of the world.

On Wednesday, Poizner published on his department’s Web site a list of 50 companies that the agency found to be holding such investments.

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There is growing concern in Congress that the shaky $6.7 trillion commercial real estate market could implode, delivering a major blow to the economic recovery. A bipartisan group of 79 House members led by Representative Paul E. Kanjorski, Democrat of Pennsylvania, and Representative Ken Calvert, Republican of California, sent a letter to the Treasury Department and the Federal Reserve on Monday urging them to take a more active role in keeping the commercial real estate market from turning into a disaster.

“The growing bubble in the commercial real estate industry has the potential to infect our economy and slow a recovery,” Mr. Kanjorski said in a statement.

“In order to safeguard the businesses operating on Main Street and protect the millions of jobs depending on commercial real estate, the Treasury and the Federal Reserve now must take needed and urgent action to stave off a potentially devastating wave of commercial real estate foreclosures and bank losses,” Mr. Kanjorski said.

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When given the opportunity, criminals will target whom they perceive as the weakest among us. And that notion could become even more apparent as Utah and the nation cope with the bursting of the real estate and economic bubbles.

The Salt Lake office of the Federal Bureau of Investigation and the Utah Division of Real Estate have compiled a list of the potential top five mortgage related rip-offs in 2010. Chief among them: a reverse mortgage scam targeting the elderly.

“Scam artists are always looking for new ways to reinvent the same crime,” said Michelle Pickens, special agent and mortgage fraud coordinator with the FBI. “The reverse mortgage scam is based off the ’straw buyer’ model where they use senior citizens … against their own mortgages.”

Reverse mortgages can be a legitimate way for homeowners to take equity from their homes without a monthly payment, which can be especially useful to seniors who need supplemental income during retirement, she said.

Unfortunately, con artists sometimes convince seniors they can live in a home for free, obtain a home loan under the occupant’s name and disappear with the equity, while leaving the victim to repay the mortgage.

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BROCKTON, MA — Homeowners with oil heating systems that were installed before 1990 will have to pay up to $300 to comply with a new state law that will take effect in July.

The “Oil Heating System Upgrade and Insurance Law” requires either a sleeve around the pipe that feeds the burner or a safety valve to prevent leaks.

Once the upgrade is completed, a homeowner can apply for leak coverage on his insurance policy.

“This new law will definitely benefit all homeowners who use oil to heat their home,” said Wayne C. Perkins, an insurance agent and retired director of the state insurance Rating Bureau.

He said this type of insurance coverage was not available in Massachusetts in the past because policies carried a pollution exclusion.

The new law allows all homeowners to buy insurance coverage for the cleanup of a leak if their system is in compliance.

Diane Chaplin, branch manager of the Farrell Backlund Insurance Agency in Taunton, said the rates have not been set.

“First the industry has to write the coverage form, then the state has to approve the form and the rate filing,” she said.

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