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American Express is going to begin allowing pre-approved consumers who have a mortgage with 'partner' mortgage companies to charge their mortgages....

Until now, mortgage lenders typically wouldn't take credit cards. And "card issuers would not encourage [the charging of mortgage payments] since this is in most cases a major red flag that the customer is in financial trouble," said Robert McKinley, president and chief executive of

But American Express is limiting its venture to cardholders it pre-authorizes before enrolling them, and then checks on them every month thereafter before a mortgage payment is charged.

Those cardholders will also have to qualify for a new-home-purchase prime loan or refinance prime loan - which typically goes to those with good credit - as opposed to subprime loans which are targeted to home buyers with bad credit.

Talk about a slippery slope.....for some people, this would be great - personally, I would love to get cash back on my mortgage payments. And in fact, I lived at an apartment complex one year that allowed me to charge my rent payment, so I got lots of airline miles (before cash-back cards). It was also nice to be able to make the charge over the phone rather than dropping my check in a box.

But for people who already have debt issues, this could be disasterous. People who are already overspending could feel that they have even more 'money' to spend because they can still make the minimum payments - at least until their interest rate on their card spikes because they are over-utilizing it.

And just weeding out people by their credit scores isn't going to capture all of the potential disasters. Think of the people who come to this board with tons of debt, much of it at low BT rates. To get the low BT rates, their scores are probably in the prime range, at least for the moment.

It will be interesting to see if this is picked up by other issuers and other mortgage companies.

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