U.S. Sen. Sherrod Brown (D-OH) recently helped pass provisions of the Mortgage Forgiveness Tax Relief Act, legislation aimed at relieving homeowners of the requirement to pay taxes on mortgage debt forgiveness resulting from mortgage modifications, or short sales.
The provision was included in the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, which passed the Senate Finance Committee. Brown worked with Ohio realtors and held events in Cleveland, Toledo, and Youngstown to urge extension of the vital tax credit, which expired on December 31.
“Today, we’re one step closer to reinstating a tax provision that prevents hardworking families get back on their feet and help keep individuals in their homes,” Brown said. “With housing markets beginning to recover, we must continue to provide the resources necessary to protect homeowners by extending tax relief to individuals who have gone through mortgage modifications or worked with their bank to sell their homes. This provision will help to strengthen communities and preserve homeownership.”
The Mortgage Forgiveness Tax Relief Act, cosponsored by Brown, would extend relief originally passed in the Mortgage Forgiveness Debt Relief Act of 2007. The legislation allows homeowners to exclude from annual, reportable income the discharge of mortgage debt owed on their homes. Individuals who receive assistance through the Home Affordable Modification Program (HAMP), Ohio’s Save the Dream Program, or other private agreements with financial institutions to save their home from foreclosure may now face additional tax consequences if the law is not extended.
Following Brown’s call, Ohio Attorney General Mike Dewine joined a bipartisan group of 42 State Attorney Generals in calling for passage of Brown’s legislation. In their letter, the Attorney Generals called the Mortgage Forgiveness Tax Relief Act “vital to our continued economic recovery.”
Brown is a champion for Ohio homeowners, working to prevent the housing crisis from undermining economic recovery efforts. In January, Brown sent a letter to the Office of the Comptroller of the Currency (OCC) and the Federal Reserve calling on the regulators to ensure that adequate relief is provided to all homeowners who suffered abuses in the foreclosure process, particularly low-income and minority homeowners who may not have filed a claim in the initial Internal Foreclosure Review (IFR) process. Brown also asked the OCC and Federal Reserve to continue their work to address abuses in the foreclosure process. Brown also called for passage of the Foreclosure Fraud and Homeowner Abuse Prevention Act. This legislation would expand access to foreclosure prevention services, while increasing protections for homeowners and investors in mortgage-backed securities.