Good news for homeowners who are underwater with their homes.
Washington has voted to extend the Mortgage Forgiveness Act of 2007 through 2013. This will extend mortgage cancellation relief for homeowners who cannot sell their homes for what they owe the bank. As long as the lender offers the debt forgiveness as in a short sale or foreclosure if selling or if an owner modifies their loan, the debt forgiven will not be taxable. This takes a big burden off of home owners who are already in financial difficulties.
It is important for sellers to be working with professionals who have experience in negotiating the forgiveness of debt. Also important is the need for proper tax preparation and filing.
Section 202 of the bill.