About a month ago, I wrote in Salon about a potential time-bomb embedded in the efforts to increase debt relief for mortgages, the expiration of the Mortgage Forgiveness Debt Relief Act. Finally, some mainstream sources have gotten around to reporting on this, in basically the same way and with even many of the same principals quoted. Jim Puzzanghera writes at the LA Times:
A special exemption of as much as $2 million per household in principal reduction and other aid from banks, in place since 2007, is set to expire at year’s end.
Housing advocates and lawmakers are worried that the exemption will disappear just as thousands of homeowners are receiving large amounts of mortgage debt relief from the nation’s five largest banks as part of a national settlement of foreclosure abuse investigations.
“The expiration of that provision is a hidden time bomb,” said Rep. Jim McDermott (D-Wash.).
He and other lawmakers are expected to push for an extension of the special tax exemption when Congress returns from summer recess next week, but even with bipartisan support it’s unlikely to get a vote before the November election.
The report mentions at the end, as I have reported, that a one-year extension of the debt forgiveness tax relief has passed inside a tax extenders package out of the Senate Finance Committee. That appears to be the only vehicle available at this time, outside of some omnibus package at the end of the year around avoiding the fiscal cliff. But just today, Speaker John Boehner said he wasn’t confident about Congress doing anything on the fiscal cliff after the election. That leaves the tax extender deal, and with the major pre-election business of Congress wrapping up as early as this week, and only two weeks in the whole session, I find a tax extender passage highly unlikely.