Here we are 11 months after the expiration of the Mortgage Debt Relief Act of 2007. All year it has been dangled out there to upside down home owners that it will be extended. Yet, as of date nothing has happened. As congress heads back there is still discussion of the Mortgage Forgiveness Debt Relief Act being renewed.
What is halting the renewal of the Mortgage Debt Relief Act?
Like usual, the Mortgage Debt Relief Act’s renewal is tied in with a bunch of other bills. The big hang up seems to be the hesitations of legislators not wanting to approve the repeal of a bill that puts an excise tax on medical devices that is currently a source of funding for the Affordable Care Act. As usual, what does have one have to do with the other? Meanwhile it is leaving upside down homeowners with hard choices. A short sale, or a something being seen more recently, a principle reduction, will trigger a tax liability on already stressed homeowners. With a tax liability looming, that might be impossible to pay, we are seeing more homeowners opt for bankruptcy.
In reality, bankruptcy is the worst option for the banks as well as struggling homeowners. The bank loses the principal lent on the loan, in most cases the homeowner loses the home and on top of it the homeowner has the stigma of a bankruptcy hanging on their credit for the next 10 years.
See what the LA Times had to say about the renewal of the Mortgage debt Relief Act in their article Will Congress renew tax relief for homeowners’ debt forgiveness?
This article, Is Congress going to renew the Mortgage Debt Relief Act? was provided by Kevin Vitali of EXIT Group One Real Estate. I am one of the more prominent Massachusetts Short Sale REALTORS in Essex and Middlesex County. If you are upside down on your home, contact me and I will provide you with the information you need to decide what to do with your home. Whether it be bankruptcy, a short sale or a loan modification, I can help. Call 978-360-0422