Senate Panel Backs Extension of Mortgage Debt Relief Law

Senate panel backs extension of mortgage debt relief law

The law spares homeowners who receive principal reductions on their mortgages from being hit with hefty federal income taxes on the amounts forgiven.

WASHINGTON — Here’s some encouraging news for financially stressed homeowners across the country: The Senate Finance Committee has approved a bipartisan bill that would extend the Mortgage Forgiveness Debt Relief Act through 2013.

Why is this important? Several reasons: The debt relief law spares homeowners who receive principal reductions on their mortgages from being hit with hefty federal income taxes on the amounts forgiven. Without it, millions of owners who go through foreclosure or leave their homes following short sales would experience even more financial stress.The law, which is set to expire Dec. 31, has also provided relief to thousands of people who have debt balances written off as part of loan-modification agreements and is crucial to the $25-billion federal-state robo-signing settlement with large banks. Some Capitol Hill analysts predicted that, along with a host of other special-interest tax benefits, an extension might have trouble making it through the partisan gantlet in an election year.

The law, which is set to expire Dec. 31, has also provided relief to thousands of people who have debt balances written off as part of loan-modification agreements and is crucial to the $25-billion federal-state robo-signing settlement with large banks. Some Capitol Hill analysts predicted that, along with a host of other special-interest tax benefits, an extension might have trouble making it through the partisan gantlet in an election year.

But the Senate committee managed to pull together enough votes Aug. 2 to pass the debt relief extension, after heavy lobbying by the National Assn. of Realtors and the National Assn. of Home Builders. The bill, which now moves to the full Senate for possible action next month, also would extend tax write-offs for mortgage insurance premiums for 2012 and through 2013 and continue some energy-efficiency tax credits for remodelings and home construction.

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One Response to “Senate Panel Backs Extension of Mortgage Debt Relief Law”
  1. 1ofthemany says:

    Principle reduction?!?!? debt forgiveness of mtg??? who is getting this??? not the fannie or freddie loans which is Most of the loans out here today which they designed, so they have done what to help???? Am I missing something? Is this more lip service and still not written in stone and if written only for the lucky ones. I would be Very interested to know who has achieved a principle write down. Anybody out here got one? Just curious as always. Kinda sound like IRS will not hang what is left of our carcass from the nearest tree. That is nice of the illegal entity, they will not rape you any further but only for a while, oh I am touched…truly touched by the kindness of the robbers.

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