Congress Needs to Extend Mortgage Debt Relief Act

An issue of critical importance is gaining the attention of savvy underwater homeowners, and there can have only one answer regarding what needs to be done. The Mortgage Forgiveness Debt Relief Act is scheduled to expire on Dec. 31, 2012, and, absent any discussion of extending this law coming from Capitol Hill very soon, the pending sunset of the act will cause some chaos in what is starting to be perceived as a recovering residential real estate market. The act states that forgiveness of debt used to purchase or improve a borrower's principal residence will not be considered taxable income. The act has provided dramatic comfort to many underwater homeowners who feared that while they were working through their issues with their lender, the IRS was waiting in the wings to collect.