There is some buzzing around Capitol Hill Friday on the impending expiration of the Mortgage Forgiveness Debt Relief Act of 2007. For those of you unfamiliar, if passed, the legislation mandates forgiven mortgage debt (principal writedowns) are not subject to taxes.
It is set to expire Dec. 31, and Rep. Charles Rangel, D-N.Y., is working on a plan to extend it. When it passed in 2007, the bill received broad support. Only 27 congressmen opposed it, and while all were the dissenters were Republicans, 165 GOP members of the House voted in favor of it.
Much of the reporting and blogging on the subject predicts Republicans won’t be so supportive this time, but my take is that it is just too early to tell.
Rangel hasn’t even come out with the full bill yet, so it’s impossible to say that Republicans won’t support it. At the very least, Rangel himself seems to believe they will.
“I know that I won’t be alone on the effort to extend this measure. We passed it in a bipartisan manner in 2007 and we can do it again this year,” he said in an emailed statement. “I am certain that most of my friends across the aisle recognize that America’s housing crisis is a nonpartisan issue. More importantly the American people will make sure that it passes. Constituents all around the country, including Republicans, have been calling my office in support of it.”
HousingWire also called the office of Steven LaTourette — a Republican congressman from Ohio who is active in housing — and spoke with his chief of staff, Dino Disanto.
Disanto said the issue “wasn’t even percolating” amongst Republicans right now.
While he admitted we are in a “different time” than 2007, he said LaTourette supported the potential bill on its principles.
“He still believes in that philosophy,” Disanto said. “And it just seems ludicrous that you could make a decision that you can no longer afford your home and still be considered to have income because the bank forgave some of your debt. The intent is to help people get out of a mess that may have nothing to do with them. Simply because they lost their job and they are unable to sell their home because of where the housing market is doesn’t mean we should penalize them and stick them in a deeper hole.”
Disanto said the bill may see opposition if the extension — which is pegged to cost $2.7 billion — provides no way to pay for itself. But, according to Reba Raffaelli, Rangel’s legislative director and chief policy advisor, the New York congressman is already taking that into consideration.
“Mr. Rangel will work with the committee members to find a way to pay for all of the extenders,” she said. “Further, the president’s budget proposed several changes to the tax code that would raise money. The committee will certainly look at all options.”
But, again, this plan is still in its initial stages. What the final draft will look like is anyone’s guess.
Linda Goold, director of tax policy at the the National Association of Realtors, echoed these sentiments, and even went farther, saying the trade group is “not aware of substantive opposition.”
“Given that nearly all of the Republicans that were serving on the (ways and means) committee in 2007 voted ‘yes’ on final passage of the 2007 act, we do not anticipate opposition,” she said. “When a bill passes by such a lopsided margin, and only 27 votes are ‘no,’ then I don’t think you can project widespread opposition.”
The bill is important to be sure, and the public will certainly be impacted regardless of final outcome. But, it’s too early in the game — the text of the proposal for the extension hasn’t even been released — to say who will have a problem with it and why.
Dear readers: Be wary of any articles that make such claims.
