The House Ways and Means Committee has passed the Mortgage Forgiveness Debt Relief Act of 2007 (H.R.‚3648) from the Daily Herald:

the House Ways and Means Committee voted to permanently remove the so-called “phantom income” tax penalty that haunts financially distressed homeowners whose debt is partially forgiven by a lender after a foreclosure or a “short sale” to avoid foreclosure.

Also, committee also passed a provision to extend the deductibility of mortgage insurance premiums through 2014. This is also very important and will affect homeowners mortgage choice for a long time. Currently the deduction applies only to loans originated in 2007. So, once this new provision becomes law we can pretty much kiss the need for a second mortgage good bye.

We can go back to doing one loan (much simpler). Both of these provisions still need to make it through the full House and Senate. However, I would think it will pass and become law before the end of the year.

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