On the instructions for Line 12 on the worksheet for calculating your average loan balance, the IRS states to use only your outstanding home mortgage. As far as I can tell, this is the only mention of only using outstanding mortgages, not all mortgages you carried during the year. It seems a little counter-intuitive to me, but TurboTax seems to be following the letter of the law by using only the outstanding balances.
@jxman
