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September 2, 2014

AGs to Congress: Extend Debt Forgiveness to Distressed Owners

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AGs to Congress: Extend Debt Forgiveness to Distressed Owners

Forty-one state attorneys general are calling on lawmakers to extend tax relief to distressed home owners, HousingWire reports. 

The Mortgage Debt Relief Act, which is set to expire on Dec. 31, relieves distressed home owners of the tax burden following a foreclosure, short sale, or loan modification.

The state attorneys general have joined other industries and groups in calling for an extension. State AGs and the nation’s five largest lenders earlier this year reached a $25 billion settlement to provide home owner relief -- including loan modifications and more short sales -- stemming from past foreclosure processing errors. 

“Failure to extend this tax relief would hurt the very families we set out to help in the national foreclosure settlement,” says Lisa Madigan, attorney general in Illinois.  “We need to do everything we can to encourage -- not deter -- struggling home owners to seek help to stay in their homes.”

The state attorneys general sent a letter to the U.S. House and Senate requesting an extension and noting that if the $25 billion national settlement expires, home owners could face up to $1.3 billion in tax increases over two years.

"Unless Congress acts, any debt relief to be provided in 2013 under the national mortgage settlement, as well as other mortgage debt relief programs, will likely be considered taxable income," says Attorney General Catherine Cortez Masto of Nevada. 

Source: “Attorneys General Request Extended Tax Relief for Distressed Home Owners,” HousingWire (Nov. 20, 2012)

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