Paddy Deighan is a real estate investor, attorney and advocate. This blog is dedicated to providing useful information, tips and guidelines for all of your real estate needs.
Tuesday, January 1, 2013
Mortgage Forgiveness Debt Relief Act EXTENDED
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!!
Paddy Deighan J.D. Ph.Dhttp://www.homesavers.pro