Perhaps the song "Jingle Bells" should be retitled "Jingle Mail" if this bill can get thru the Senate and is signed by Dubya. When it passes, hundreds of thousands of homedebtors who own little more than call options on the homes they inhabit will simply either mail the keys to their lenders or stay in their homes (without making mortgage payments, of course) until their lenders foreclose. One of the few consequences of irresponsible, fraudulent borrowing- namely, having to pay taxes on forgiven mortgage debt- will have been abolished. Could I get these terms at the margin desk of my stockbroker? Could you?
As always, the people who pick up the tab for this unintended largesse will be honest, upstanding folks who pay their bills, mortgages and taxes. Hard to believe the cost of this will only be $2,000,000,000. And, as always, the operative idea is: privatize gain, socialize loss:
The U.S. House of Representatives Thursday overwhelmingly approved legislation providing tax relief to homeowners facing a foreclosure. Under the bill, which was approved by a vote of 386-27, any debt forgiven to homeowners unable to repay their mortgage would no longer be treated as taxable income. "It simply makes good sense to do this," said Rep. Richard Neal, a Massachusetts Democrat. The legislation was passed in response to a subprime mortgage crisis that has reduced property values and left a growing number of homeowners unable to pay rising interest costs on their loans. To cover the roughly $2 billion 10-year cost of the bill, the bill would change tax rules on the sale of vacation homes and rental property that were used as a principal residence.
The bill now heads to the Senate.
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