Congress is scheduled to vote on the Mortgage Forgiveness Debt Relief Act (MFDRA) today. The bill is an attempt to reclassify and thereby forgive foreclosure-related debts as taxable income. The MFDRA has been reinstituted several times since it was originally passed in 2007. Congress must pass this bill in the remaining days of the 113th Congress in order for the IRS to apply favorable tax treatment to struggling homeowners who use it.
Proponents of the MFDRA say it will help to provide housing market flexibility by allowing homeowners to short sell underwater mortgages thereby foregoing the specter of foreclosure and keeping banks out of the business of owning real estate. Opponents of the measure believe the MFDRA is akin to a government subsidy for the housing market because tax dollars that otherwise would have gone to the U.S. Treasury will now be forgiven as debt and not collected.
NAILTA previously issued a revised white paper in support of extensions to the MDRA. Many of our members and represented industry colleagues have handled the ever-growing number of short sale transactions that have helped homeowners avoid foreclosure and maintain the continuity of land transfers. Without the MDRA, the short sale market will collapse and foreclosures will increase putting an already strained real estate market on the way backward.
Support for the MFDRA from the housing industry is unanimous and the measure is likely to pass both the Senate and the House and be signed into law. To voice your view on the measure, please contact your member of Congress today. To determine who your representative is, please click here: http://www.opencongress.org/people/zipcodelookup.
For more information, please review the enclosed white papers that were drafted by NAILTA the last time this measure was contemplated.
