MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 -- (House of Representatives - October 04, 2007)
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Mr. PASCRELL. I thank the gentleman for yielding. I want to thank Mr. Rangel and Mr. McCrery for the great work they have done and the great work of ROB ANDREWS from New Jersey, the exhaustive efforts in this regard, to help people avoid foreclosure, to stay in their homes.
There is a little doubt that the current tax effect on the struggling homeowners is not fair or prudent. Requiring any discharge of indebtedness to be included in taxable income further exacerbates and endangers the financial health of those already in distress.
Think about it: A bank forgives some amount of indebtedness for a homeowner in trouble, either to avoid foreclosure or to forgive a debt to a homeowner in the foreclosure process. Right now the amount of forgiven indebtedness is treated by the IRS as income, which is then taxable. That's pretty incredible, I think.
For families across America, this dubious income and the resulting tax burden can cause an even greater level of anguish that they should not have to absorb in the time of need.
This legislation would provide a permanent exclusion of gross income of discharged homeowner indebtedness. It is the wise and decent thing to do.
And I might add there is danger ahead. Right now between January and September of this year $263 billion of debt that was opened up, people were losing their homes, and in 18 months that is going to go to $700 billion of loans in the pipeline that are going to open up to higher rates. This is what we have to look forward to. This is a serious, serious problem that's not going to go away next week.
So I thank both the chairman and the ranking member. With the abundance of acute problems in the mortgage finance system, this legislation can help stabilize families, their neighborhoods and communities, as well as our national economy.
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