Tuesday, January 1, 2013

EXTENDED: Mortgage Forgiveness Debt Relief

Finally, there is some news worth blogging about for many of my clients, the Mortgage Forgiveness Debt Relief Act of 2007, which was set to sunset this morning, has been extended for one more year.  Many clients going through short sales and foreclosure have been anxious about this provision.

Section 202 of the Fiscal Cliff deal which was passed early this morning, contained the extension.  This does not make the provision permanent but does provide some relief to those working through the process de-leveraging personal debts.

It is this blogger's opinion that this issue will come up again as part of the remaining debt ceiling talks that must be finished before March this year.  The housing market it still tenuous despite recent increases in market pricing.  The banks have yet to significantly deal with the back log of homes being held in shadow inventory, and there has been a significant increase in the number of foreclosure filings in Washington State in the last three months.  If that trend continues through the new year, then it is likely that this provision may need extension for a few more years.

For more information on this act and how it impacts your home, see the IRS at this link or call my offices.