Letters seek Congressional Action on Expiring Mortgage Forgiveness Debt Relief Act
services and consumer advocacy groups have joined to send letters to the House
and Senate urging them to preserve the temporary tax exemptions for forgiven
debt. The Financial Services Roundtable,
the Center for Responsible Lending, and the Housing Policy Council sent the
letters Wednesday to the chairs and ranking members of the House Committee on
Ways and Means and the Senate Committee on Finance.
The groups are
petitioning for an extension of The Mortgage Forgiveness Debt Relief Act which is due to sunset on December
31. The legislation was originally passed
in 2007 and prevents
homeowners who are underwater on their mortgage
from receiving a tax bill if
they sell their home through a short sale or receive
a loan modification that includes
principal reduction. The Senate
committee has already reported out an extenders package which includes this and
other expiring legislation but it has not yet been taken up by the Senate as a
body. The House committee has taken no action on the bill.
The letters state that,
"If Congress allows the law to expire,
then homeowners who are working
with their servicer could end up owing more in
taxes 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. Allowing
the law to expire would harm these families and their communities, and it would run counter to current loss mitigation efforts."
The letters are signed by
the groups' presidents, John H. Dalton, Housing Policy Council; Mike Calhoun,
Center for Responsible Lending; and former presidential candidate Tim Pawlenty,
The Financial Services Roundtable.