Mortgage Debt Relief Update

President Obama signed the American Taxpayers Relief Act into law last Wednesday.

"The bill includes a provision to extend the Mortgage Forgiveness Debt Relief Act, which will for one more year exempt the taxation of mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale or loan modification (including any principal reduction).  While debt relief has been extended at the federal level, the California exemption expired at the end of 2012, so forgiven mortgage debt is considered taxable state income for now. C.A.R is sponsoring SB 30 (Calderon, D-Montebello).  SB 30 will conform state law to the federal law passed last week.  Upon passage of SB 30, the measure will be effective retroactive to Jan. 1, 2013." -California Association of Realtors (C.A.R)

Time to take this on at the state level! Let your local representative know that they need to support this and protect the interest of both home buyers and sellers in the Bay Area.

Mortgage Debt Relief Extension

The fiscal cliff looms heavy. I saw an interesting graphic today that showed that Oakland was breaking records nation wide for speed of closings.  This I believe is partly a side effect of the Mortgage Debt Relief Act not having been extended yet, despite approval by the Senate Finance Committee back in September. Sellers have been needing fast all cash closes on short sales to get the homes sold before the MDR Act expires at the end of the year. The short sale listings now advertise must close by 12/31/12.  If home owners are forced to pay income tax on the amount they are underwater on their loans if they short sale, foreclosure becomes the only option in an under water housing market. A significant increase in foreclosures will be hard on the cities that will be blighted with the vacant homes, it will be hard on sellers who have lost so much value in their homes and have no other options, it will mean less inventory for buyers who will owner occupy, but need financing to buy. I'm sure the banks are not prepared to deal with the flood of foreclosures to come if this legislation is not extended.  Let's hope our government can get it together on these tax issues before the end of the year. Check out this article if you are my neighbor in Oakland, Berkeley or Albany you can contact our local representative Barbara Lee by e-mail  here.  Send a note to Barbara, or your local representative in  the days to come, so that they don't lose sight of this important piece of our economic recovery.