The ""Center for Responsible Lending,"":http://www.responsiblelending.org/ a nonprofit group dedicated to protecting homeownership, and the ""Financial Services Roundtable,"":http://www.fsround.org/ a group of representatives from the nation's largest financial institutions, have come together to ask Congress to extend the Mortgage Forgiveness Debt Relief Act, which will otherwise expire at the end of this year.[IMAGE]
In nearly identical letters to the ""Senate Committee on Finance"":http://www.responsiblelending.org/mortgage-lending/policy-legislation/congress/final-senate-finance-qpri-extension-letter.pdf and the ""House Ways and Means Committee,"":http://www.responsiblelending.org/mortgage-lending/policy-legislation/congress/final-house-ways-and-means-qpri-extension-letter.pdf the two organizations argue that the act is supported across party lines and is ""critical to helping homeowners and communities struggling with the ongoing foreclosure crisis.""
The singular difference in the two letters is a word of appreciation in the first line of the version drafted for senators on the chamber's Finance Committee, which passed a package of tax extenders at the 11th hour just before breaking for summer recess on August 2.[COLUMN_BREAK]
The package included a one-year extension of the Mortgage Forgiveness Debt Relief Act, among other tax provisions set to expire at year-end such as allowable mortgage insurance write-offs and energy efficiency tax credits. Four months later, however, and the bill sanctioning these extensions has yet to be presented to the full Senate or even considered by the House.
Passed in 2007, the Mortgage Forgiveness Debt Relief Act prevents struggling and delinquent homeowners from having to pay taxes on any portion of their mortgage debts forgiven by financial institutions through short sales, principal forgiveness, or loan modifications.
Without the act, homeowners receiving such assistance would be required to pay income tax on the amount of debt forgiven, making it ""more difficult and expensive for these homeowners, who are already financially struggling, to accept short sales and many loan modification offers,"" according to the 97 institutions that make up the Financial Services Roundtable and the nonprofit Center for Responsible Lending whose primary focus is to fight predatory lending practices.
While the housing market is starting to see some signs of recovery with rising prices and increasing home sales, the two organizations express concern that allowing the Mortgage Forgiveness Debt Relief Act to expire at the end of the year will hinder the budding recovery.
""Our tax policy should not result in bad housing policy that will prolong a foreclosure crisis that has already gone on for too long,"" the groups state in their co-authored letter to lawmakers.