Well it seems as though almost no one in Congress is paying attention to the expiration of the Mortgage Debt Forgivenss Act; sadly for many homeowners who are still struggling as it expired on December 31st.
If, I repeat, if I were in a situation today that would require me to make a decision between a short sale and a foreclosure I believe I would just let the foreclosure process continue until the home was sold at a trustee's sale or whatever method might apply in other states.
Why? Because I have no money, I'm losing my home, I have a hardship, and if the home is sold short I will not only have nothing but will still owe the IRS and possibly my state tax on the forgiven debt. Where will I get that money? Will I be indebted to the IRS for the rest of my life?
Fortunately in California it seems, based on everything I read so far this new year, that homeowners in that situation are still protected by the State of California (unless the homeowner has modified their original loan). But what about the other 49 states? How are homeowners who are underwater protected if there is debt forgiveness.
I am hoping this will get resolved soon for the entire country. Until then here is all we have:
Congressman Bill Foster (D-Illinios) has introduced the "Homeowners Debt Relief Extension Act" (H.R. 3856). He did so on January 14th 2014. The bill would extend the mortgage debt tax exemption for another two years. The original bill was passed in 2007 and extended for one year in early 2013.
Until then we are stil in a "wait and see" situation and many homeowners can't afford to wait.