Margin Loan Interest Treatment

A generous client of mine is using a margin loan to provide a relative with a mortgage.
There is a promissory note and deed of trust. It is an interest only loan.
The relative is paying the margin loan interest directly to the brokerage.

For my client, is this interest income? Offsetting investment interest expense?
For the relative, qualified mortgage interest? Paid to my client or the brokerage?

Your client has interest income and investment interest expense. Hopefully s/he itemizes so that s/he realizes a benefit for the deduction.

The relative needs to secure the loan and make sure s/he meets the other requirements in 163 to treat the loan as acquisition debt.

About what I thought.
Neither client will itemize so I was hoping that direct payment of the interest by the relative could skirt interest income to my client, but that was just my fantasy. Thanks JAD.