October 18, 2014

Mortgage Debt Relief Act

An article on Housingwire suggests “extending the tax break through 2015 and making it retroactive to cover all of 2014 would be a good start. Congress should follow the leadership of Sen. Debbie Stabenow, D-Mich., and Sen. Dean Heller, R-Nevada, and move immediately to extend the bipartisan Mortgage Forgiveness Debt Relief Act before more damage is done”.

I like the sound of that but these articles always center around the 1099-C which a short seller can receive on a short sale but never discuss the 1099-A that they get when they do a deed-in-lieu or complete a foreclosure.  On top of that the foreclosing lender can also pursue a deficiency judgment in the state of Florida where a short sale can provide debt forgiveness with no deficiency collection.

Even if the Mortgage Debt Relief Act is not extended, there is always the insolvency exclusion to debt forgiveness, so please be sure to check with your tax advisor.

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