I have been following the progress of the Mortgage Forgiveness Debt Relief Act, and I’m happy to tell you that it passed the US House. It is now headed to the Senate. I’m pretty sure it’ll pass and I’m sure President Bush is pretty eager to sign this one into law.
If you’re late to the party here is what this bill is about:
As the title implies, the primary goal of the proposed legislation is to buffer homeowners who currently face an unwelcome tax bill when lenders forgive some of their loans.
I’ll keep you posted on how it fares in the Senate.
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Update: Mortgage Forgiveness Debt Relief Act of 2007
Mortgage Forgiveness Debt Relief Act of 2007
Mortgage Forgiveness Debt Relief Act of 2007 is Now Law
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on Oct 12th, 2007 at 4:01 pm
[...] to the ever vigilant Arizona Mortgage Guru, we now know that the Mortgage Forgiveness Debt Relief Act has passed the US House. Next stop is [...]
on Oct 21st, 2007 at 8:14 am
Who qualifies for the Mortgage Forgiveness Debt Relief Act of 2007 (H.R.‚3648).?
What homeowners qualifies for this Law?
What kind mortgages?
Year of foreclosure? 2007 and beyond?
1st and 2nd Mortgages?
How this relate to the Deficient Judment law in Arizona?
on Oct 22nd, 2007 at 2:55 am
It’s good that people having financial troubles and not able to pay off their mortgages can now get some relief through the Tax bill.
But as much as I’ve heard home sellers earning profits through capital gains might now have to lose some of their gains in order to compensate for the tax relief on forgiven debt. Does it sound too good as a long term solution to this problem? Don’t think so.
Regards,
Jessica
on Oct 22nd, 2007 at 8:40 am
Jessica,
You raise a good point. I believe the capital gains applies to higher priced homes and the government is planning on making up its lost income there.
Thanks for stopping by!
on Oct 22nd, 2007 at 9:13 am
RE Brokers in SoCal are saying that this would also apply to “shortsales”, where the lender’s current practice is to 1099 the amount for the forgiven portion created by the short pay of the mortgage upon short sale of property before foreclosure. In your opinion will this practice be banned by this legislation? g
on Oct 22nd, 2007 at 1:56 pm
How long will it take mortgage debt relief bill to be made law? I know you said it has already passed the House but what time frame is it from the house to the senate to the president and then to law? Also I have been getting mixed signals on this. Does this apply to shortsales or no?
on Oct 23rd, 2007 at 1:38 pm
Hello Andrew,
I do not know how long before the Senate gets it and passes it. I know there is usually some degree of negotiating that goes on. I would think before the end of the year this should be done. As far as who it covers, the way the bill is right now, any forgiven debt is allowed. Whether this is due to a foreclosure or short sale. Again the bill hasn’t passed so we don’t know what the final version will include. I would consult with a CPA to get this clarified once the bill passes.
Thanks for stopping by.
on Oct 23rd, 2007 at 1:40 pm
George,
The bill hasn’t passed so we don’t know what the final version will include. I think lenders would have to discontinue issuing 1099’s. I would consult with a CPA to get this clarified once the bill passes.
Thanks for stopping by!
on Nov 29th, 2007 at 7:40 pm
Any more news on this? Seems senate is just playing games - tried to add this to the farm bill and failed to act before TG break…real chance for this to pass or just our useless legislators patting themselves on the back for thinking of the little guy while they hand the real money to oil/gas/arms dealers/military contractors etc…
on May 16th, 2008 at 7:57 pm
My wife and I are divorcing in 2006 we bought a house in az took a 390k 1st out then a 98k 2nd to pay for pmi we are going to let the house go into foreclosure. She and I are on the 2nd and it is recorded in both our names but I am the only one on the 1st. after sahort sale or foreclosure will we still be liable to payback the 2nd and also I have a 2nd home in my name sole and seperate will this foreclosure effect that property at all
Thanks Jeff
on May 19th, 2008 at 7:23 pm
Jeff,
A lot of this depends on the state you’re in and the bank you’re dealing with. Lenders are sticky on this issue. I wish I could give you something specific, but I really can’t. I suggest you discuss the issue with both the lenders involved and make sure you understand all the terms. Good luck.