Mortgage Debt Relief Act. When forgiveness ceases, defiance increases.
Richard hits the nail on the head in his recent blog post. Why bother to do a short sale if the debt forgiveness is taxable? More bank owned homes on the horizon if this is not dealt with by the end of 2012.
Somebody should have really thought this through. When the Mortgage Debt Forgiveness Act expires on December 31, 2012 chaos will ensue in the distressed property market.
Debt forgiveness is not a boon. It is an incentive to work out a mutually agreeable solution to an unprecedented market condition. The notion that someone should give up their property AND pay a hefty income tax doesn’t sit well in the psyche of any normal thinking human being.
Once the incentive is eliminated, we will return to the days of adversarial defiance. The barricades to resolution could become insurmountable.
It is hard to imagine the reasons that this issue has not been addressed. The scramble to close by December 31 is in full force and many a stomach is churning with anxiety.
When forgiveness ceases, defiance increases.
The debacle looms.
Will someone step up to prevent it?
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