Real estate agents support the Principle Forgiveness bill -- DELZOMPO

We should all re-blog and title this, "Real estate agents support the Principle Forgiveness bill -- LAST NAME," whether we are fans of the current administration or not.  We must analyze issues one at a time, rather than lump them all together as "Liberal" or "Conservative."  

The article below has it right: the vast majority of folks getting crushed in the tidal wave of the housing crisis are innocent victims of someone.  Most are victims of government policies that said, "Everyone should own a home, even if their financial scenario does not indicate they can pay on the loan."  The banking industry followed guidelines coming out of those incentives, and, yes, there was a small minority of borrowers who themselves tried to take advantage of the system, whether wrongfully or innocently.

But the government's job is to do what's best for the most, and for the most part, people who had to sell homes under water are victims.  The government should pass the Principle Forgiveness bill to help them.  And then banks can, in rare cases, deal with borrowers who committed wrongdoing (fraud, etc.) on a case by case basis, as those folks would not be covered by the bill, as I understand it.

Otherwise, we will spawn a vast ripple effect of lawsuits when the banks at some point sell their claims against 1000s of 1000s of borrowers to debt collectors, who will pursue "the little guys" relentlessly as debt collectors do, victimizing them yet again -- again, in the vast majority of cases

“I’m With You on This One Mr. President”

As I have shared many times in the past, I am not an advocate of our current administration. Even though he did not author the original Principle Forgiveness bill, he is jumping on the band wagon to extend this tax break, that helps individuals that lose their home through foreclosure or short sale.

Both of these events can cause a taxable result, that would further harm them financially. Without this bill, these individuals would end up owing thousands of dollars in taxes to the government. These folks have already been hurt enough.

The present bill expires at the 12/31/12. A two year extension to this bill would certainly help many folks that need this kind of help.

Principle Forgiveness Bill = tax break

Obama Seeks Extension of Principal Forgiveness Tax Break

By: Brian Collins

The Obama administration is urging Congress to extend a tax provision allowing troubled homeowners that complete a short sale -- or benefit from a principal reduction -- to avoid paying taxes on the discharged amount of their loan balance.

The current tax exclusion for discharges of "qualified principal residential indebtedness" has been in effect since 2007, but is due to expire at the end of 2012. Without the QPRI exclusion, the amount of the discharged mortgage debt would by counted as income for tax purposes.

"Although there has been some improvement in the residential real estate market, there is still an elevated number of cases in which homeowners may have discharge of indebtedness income with respect to their home mortgage loans," the Treasury Department says in its new "Green Book" report.

As part of the budget process, Treasury issues the Green Book to explain all the tax proposals the administration wants Congress to act on.

The White House desires at least a two-year extension of the QRPI exclusion. "An extension beyond January 1, 2015 may be appropriate to correspond to the availability of additional homeowner relief as a result of government actions and other arrangements," Treasury says.

The $26 billion robo-signing settlement with the five mega-servicing banks provides nearly $17 billion in principal reduction modifications and short sales. The servicers have three years to complete these residential relief transactions that would result in discharges of mortgage debt.

image:renjith krishnan/freedigitalphotos.net

Joe Petrowsky, NMLS #6869

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Lisa Delzompo (951-704-4559)

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Comment balloon 0 commentsLisa Delzompo 951-704-4559 • February 16 2012 10:11AM

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