Mortgage Forgiveness Debt Relief Act
I recently attended the annual conference for the American Association of Private Lenders. The key note speaker was Mark Calabria, Director of Financial Regulation Studies for the CATO Institute. Mr. Calabria is broadly informed and well studied on financial regulatory issues and impressively well connected in Washington.
His presentation was interesting and informational on many fronts. I I would like to mention one key point that is, what I believe to be, very good news.
[blockQuote position=”center”]He anticipates, without hesitation, that the Mortgage Forgiveness Debt Relief Act will be extended one more year.[/blockQuote] Without the Act, any forgiveness of debt is to be recorded and taxed as income. In the instance of a short sale, the borrower would have to pay income taxes on the deficiency. The Act forgives that requirement. You can imagine if that were to expire on December 31, 2012. As with any looming deadline, there would be a rush to complete a bunch of deals before the act expires, then a lull thereafter.
Whether you agree with the Act or not, you have to work and make decisions within the framework you have been given. So, information is key. As you or your clients make decisions as the year ends, I would confidently anticipate that the Mortgage Forgiveness Debt Relief Act will be extended at least one more year.