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Mortgage Forgiveness Tax Law Expires Dec. 31, CUNA Urges Extension

Tax relief law gives break to amounts forgiven by lenders when mortgage is modified or home is list in foreclosure or sold in short sale.

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CUNA, along with banking, mortgage and real estate trade associations, is pressing Senate and House leadership to extend the Mortgage Forgiveness Debt Relief Act before it expires at the end of the year.

The act, signed into law in December 2007, provides tax relief to borrowers by waiving taxes normally due on amounts forgiven by lenders when a mortgage is modified, or home is lost in foreclosure or sold in a short sale. If the law is not extended, homeowners would have to report the amount as taxable income, a requirement that CUNA said would make it more difficult and expensive for homeowners to accept short sales and modification offers.

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