Bank and CU Trade Groups Call for Congress to Pass Bill Helping Underwater Homeowners

ABA, CUNA and seven other trade groups urged House and Senate leaders to extend a bill -- the Mortgage Forgiveness Debt Relief Act -- slated to expire at year’s end that would help underwater homeowners. The measure is included in the Family and Business Tax Cut Certainty Act of 2012, a bipartisan tax-cut extension bill that the Senate Finance Committee approved in August.

The Mortgage Forgiveness Debt Relief Act “prevents underwater homeowners from being taxed if their lender reduces principal or they sell their home through a short sale,” the trade groups explained in a letter. “If Congress fails to act, the possibility of receiving a tax bill would make it more difficult and expensive for these struggling homeowners to accept short sales and many loan modification offers.”

“We urge you to ensure renewal of the [the Mortgage Forgiveness Debt Relief Act] before the end of this year in order to help as many underwater homeowners as possible,” they said.

Read the letter.