Mortgage Forgiveness Debt Relief Act of 2007
MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 -- (House of Representatives - December 18, 2007)
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Mr. BLUMENAUER. I appreciate the gentlewoman's courtesy in permitting me to speak on this bill.
We are watching fiscal chickens come home to roost with this housing bubble that is slowly working its way through the system. As my good friend from Connecticut mentioned, we are looking at perhaps 2 million foreclosures looming. There is another 2 million figure to keep in mind, and that is the number of loans that are going to reset in the next 18 months. And many of these people were not particularly sophisticated. There are a number of folks that appear to have been lured into subprime loans that actually would have qualified for conventional, fixed-rate mortgages. And this is a ripple effect that can have a very profound consequence for people.
If we see a 15-percent drop in housing values, which is projected by Goldman Sachs, we are talking about millions of families who can be in this situation of having phantom income. If it is a 20-percent drop, it is 3.7 million. And some people feel that 30 percent correction is not beyond question, and that would put almost 20 million American homeowners in this negative territory.
It is important for us to make sure that people are not paying taxes on phantom income. Frankly, I am a little disappointed that the legislation that came back to us from the Senate is only 3 years because I fear that this is going to be a longer-term problem. And, frankly, I can't foresee any circumstance where this Congress would like to apply tax rates on phantom income when anybody is under water, getting a loan forgiveness. We have put careful provisions in this to make sure that it is not unlimited, it is not for wild speculation, but for typical, average everyday homeowners.
I hope we pass this bill, but I also hope that we look at a long-term adjustment so that no one who is in this unfortunate circumstance ends up making a tax payment on phantom income when they have lost their home.
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