I noticed in the article the question and answer pair:
Q. How do we determine the interest portion of mortgage payment?A. Interest above the rate on 10-year Treasury bonds is subject to the FairTax. This will prevent suppliers from discounting prices and making it up with high interest rates on financing. The 10-year Treasury rate is a market-determined interest rate that is not targeted by the Federal Reserve.
Where exactly on the FairTax website is that explained? I have looked at the FAQs, and I don't see any mention of this provision under section 801 of HR 25.
I also read through the document Promoting Home Ownership: How the FairTax's Benefits For Homeowners Exceed the Mortgage Interest Deduction. It nowhere mentions this FairTaxation of mortgage interest paid --- in fact, it shows a computation putatively comparing the cost of home ownership under the income tax versus the FairTax, and nowhere does it mention that FairTax will be assessed on mortgage interest in excess of the section 805 "basic interest rate."
Bowyer's question about mortgage interest seems like a red herring.
I'm no expert, but here is how I undestand it. Under the Fair Tax, the tax is imposed when the house is purchased. The seller has to remit the tax to the government. The amount of the tax is included in the list price of the house. The amount of mortgage principle and interest would be calculated just as they are now and would not be taxable.