U.S. Rep. Bill Pascrell, Jr. (D-NJ-08) a member of the House Ways and Means Committee today praised passage of the Mortgage Forgiveness Debt Relief Act in the House of Representatives.  The legislation passed with overwhelming bipartisan support by a vote of 386-27.

“This mortgage relief package is a sensible measure that would reverse an unfair and imprudent tax effect on struggling working class homeowners,” stated Pascrell.  “I applaud Chairman Rangel for working across party lines towards a solution for a housing crisis that is dividing families and threatening the American economy.”

The Mortgage Forgiveness Debt Relief Act would end the tax on phantom income when a lender forgives some part of a families’ mortgage in foreclosure.  Under current law, the debt forgiven following mortgage foreclosure or renegotiation is considered income for tax purposes, resulting in an unfair tax liability for individuals and families.

The bill also provides tax relief by permanently excluding mortgage debt forgiven on or after January 1, 2007.  To prevent abuse, the bill caps the maximum amount of forgiven debt that would be eligible for relief at $2 million.

It also provides a seven year extension of tax deductions for mortgage insurance to insure homeowners against default on their mortgage.  

“Homeownership stabilizes families, neighborhoods, communities and the economy.  I am confident that this legislation will save families from foreclosing on their homes and prevent future homeowners from resorting to predatory alternatives.  This is a wise and decent response to some of the tax issues that have arisen as a result of problems in the subprime mortgage market.  I implore my colleagues in Senate to follow our lead and pass these critical tax reform measures,” concluded Pascrell.

The Mortgage Forgiveness Debt Relief Act has received strong support from the housing and mortgage industries, including the National Association of Realtors, Mortgage Bankers Association and National Association of Homebuilders.

 
 

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