(snip)"California has had a very active foreclosure market and O'Toole predicts that new legislation being considered by the House could result in further increases. The Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 364is a measure meant to help address the ongoing turmoil in the housing and lending markets.
Government lawmakers approved the bill in a 386 - 27 overwhelming bipartisan vote earlier this month. Similar legislation is pending before the U.S. Senate. This bill would provide needed tax relief to families by permanently excluding debt forgiven under these circumstances from tax liability and would tighten requirements for excluding taxable gains on vacation and rental property.
Some politicians view it as a rewrite of the Internal Revenue Act of 1986 to prevent the taxation of canceled debt for a property in foreclosure. Under present law, this canceled debt is handled as income, and taxed as such.
In a Summit Daily News report opponents of the legislation say this is not a bill aimed solely at protecting the first-time home buyer of a modest property who has been sucked into a mortgage he or she cannot afford by a predatory lender. HR 3648 doubles the upper limit of value to be excluded from taxation upon debt cancellation from $1 million to $2 million dollars.
According to those in the real estate industry this potentially delivers a double whammy to the housing market by eliminating a barrier keeping mid-tier, debt strapped home owners from walking away from their homes which would undoubtedly result in more foreclosures, while also reducing demand for second homes."(snip)



is a measure meant to help address the ongoing turmoil in the housing and lending markets.
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