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The Republican tax plan unveiled yesterday takes aim at the most sacred of tax deductions: the provision that subsidizes homeownership by allowing the deduction of interest on mortgage debt, the New York Times reported. For most of America, the impact would be minimal. The proposed bill reduces the maximum deduction from $1 million to $500,000, or more than double the median home price in the U.S. of roughly $200,000. Less than 3 percent of home mortgages are more than $500,000, according to data from CoreLogic. But if the idea holds — and history suggests that will be difficult — it will echo loudly through higher-priced cities on the coasts. “The impact on the market is going to be recognizable,” said Ure R. Kretowicz, chief executive of Cornerstone Communities, a homebuilder in San Diego. “There’s going to be less incentive to build, and less incentive to buy.”

A house-flipping company in Indianapolis that pitched its services to Christian audiences has filed for bankruptcy, leaving more than 120 people who bought or sold homes through the firm in limbo, the Associated Press reported. Chart Properties LLC filed for bankruptcy on Oct. 17, and the monetary losses could be more than $5 million. The bankruptcy petition has few details about the company's finances, but it indicates the company doesn't have the assets to repay clients and other creditors. Chart Properties had contracts to purchase the properties it sold, but the contract deals were made with no money down — so Chart didn't actually own the homes. The company would put buyers in the homes and charge them monthly payments in a rent-to-own style. The company would then repay sellers from those funds. The business largely pitched its services at churches, on the internet and on religious radio and TV stations. Legal experts say families who bought homes from Chart Properties could be forced out, and those who sold their homes may be saddled with property they don't want. Many sellers said they don't want the homes back because they've purchased other properties or can't afford the mortgages.

Barclays Plc and the U.S. Justice Department, engaged in a legal battle over the suspected fraudulent sale of mortgage securities a decade ago, have revived discussions about reaching an out-of-court settlement, Bloomberg News reported yesterday. The Justice Department sued Barclays for fraud in December, in the waning days of the Obama administration, after the bank refused to pay the amount the government sought in negotiations. At the time, Barclays was willing to pay no more than $2 billion to settle the civil matter, while the Justice Department was seeking a far higher penalty. The lawsuit was the government’s first against a bank over the sale of toxic mortgage bonds that helped spur the financial crisis. Other lenders negotiated settlements worth tens of billions of dollars in penalties overall rather than risk drawn-out litigation and possible trials. Deutsche Bank AG accepted a $7.2 billion agreement to resolve its RMBS investigation in December, the same month talks with Barclays collapsed.

Walter Investment Management Corp. was supposed to prosper by snapping up mortgage cast-offs from big banks at fire-sale prices. Instead, Walter is belatedly joining the list of companies burned by the U.S. housing crisis, Bloomberg News reported today. The mortgage servicer and lender faces a deadline today to get creditors on board with its bankruptcy plan, and needs at least two-thirds of its term-loan and bond holders to agree for its restructuring to take effect. About half had signed up by the end of last week, according to a statement Friday from the Fort Washington, Pennsylvania-based company. Walter’s pre-packaged chapter 11 plan, which would be filed by late November, would cut the company’s $2.1 billion corporate debt load by about $700 million, and ideally would include some recovery for holders of Walter’s convertible notes and existing stock, according to the statement.