Looks like many distressed home owners received a late Christmas present and another reason to celebrate New Years’ day!! The Mortgage Forgiveness Debt Relief Act of 2007 (MFDRA) expired in New Years’ day. However there was a little known aspect of the “American Taxpayer Relief Act of 2012’’ (ATRA) that included an extension of the MFDRA!! As I write this, the House of Representatives passed the ATRA and now it goes to President Obama for his signature.
There were many provisions in the ATRA that received a lot of coverage – including the farm aid portion that will keep milk prices lower (doesn’t affect me since I drink almond milk-LOL)!! However, the extension of President Bush’s MFDRA will provide relief from a tremendous burden facing distressed home owners. In fact, on Monday, I had a failed closing on a multi-million dollar property that had significant ramifications to the seller if the settlement was not completed before the end of the year. A last minute problem caused a delay in settlement that appeared to be catastrophic for the sellers since it now appeared that there would be a tax ramification.
The Mortgage Forgiveness Debt Relief Act extension will enable many sellers to breathe a little easier and perhaps it will help the housing market as well. I have another short sale that will be able to be completed now because the sellers were going to breach a contract if the close of escrow was not completed before the end of the year because they did not want to face the tax consequences. They were willing to face a lawsuit over failure to close rather than pay the taxes but now that is not an issue.
I know that the National Association of Realtors fought hard for this and their efforts should be appreciated by everyone affected by this. In the grand scheme of things, I am surprised that anyone thought to include this in last minute bills presented by the Senate, but fortunately the MFDRA was extended and there is already reason the cheer in 2013!!
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