Letters seek Congressional Action on Expiring Mortgage Forgiveness Debt Relief Act

Three financialrnservices and consumer advocacy groups have joined to send letters to the Housernand Senate urging them to preserve the temporary tax exemptions for forgivenrndebt.  The Financial Services Roundtable,rnthe Center for Responsible Lending, and the Housing Policy Council sent thernletters Wednesday to the chairs and ranking members of the House Committee onrnWays and Means and the Senate Committee on Finance.</p

The groups arernpetitioning for an extension of The Mortgage Forgiveness Debt Relief Act which is due to sunset on Decemberrn31.  The legislation was originally passedrnin 2007 and preventsrnhomeowners who are underwater on their mortgagernfrom receiving a tax bill ifrnthey sell their home through a short sale or receiverna loan modification that includesrnprincipal reduction.   The Senaterncommittee has already reported out an extenders package which includes this andrnother expiring legislation but it has not yet been taken up by the Senate as arnbody. The House committee has taken no action on the bill.</p

The letters state that,rn”If Congress allows the law to expire,rnthen homeowners who are workingrnwith their servicer could end up owing more inrntaxes if they receive any kind of mortgage debt forgiveness. This would make it more difficult and expensive for these homeowners, who are already financially struggling, to accept short sales and many loan modification offers. Allowingrnthe law to expire would harm these families and their communities, and it would run counter to current loss mitigation efforts.”</p

The letters are signed byrnthe groups’ presidents, John H. Dalton, Housing Policy Council; Mike Calhoun,rnCenter for Responsible Lending; and former presidential candidate Tim Pawlenty,rnThe Financial Services Roundtable.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.