Help Homeowners by Extending Mortgage Forgiveness Act: CUNA
The act, signed into law in December 2007, is intended to provide temporary tax relief to borrowers who might lose their home to foreclosure or who have negotiated a loan-term modification. Previously under the country's tax code, if a lender--voluntarily or involuntarily--forgave a portion of a borrower's mortgage debt, the forgiven amount had to be treated as taxable income.
The Dec. 14 joint letter urged Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.), Speaker of the House John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.) to "ensure renewal of the Act before the end of this year in order to help as many underwater homeowners as possible."
If Congress fails to extend the Mortgage Forgiveness Debt Relief Act, the threat of receiving a tax bill would make it more difficult and expensive for struggling homeowners to accept short sales, as well as many loan modification offers, the letter noted. "The current law makes it possible for current loss-mitigation efforts to be more successful," CUNA and others added.
The letter is also cosigned by the American Bankers Association, the American Financial Services Association, the American Land Title Association, the Consumer Bankers Association, The Housing Policy Council, the Mortgage Bankers Association and The Financial Services Roundtable.
For the Joint Letter to Congress, click here.