Debt Forgiveness Act – Short Sales

Senate Finance Committee agreed to extend the Mortgage Debt Forgiveness Act through December 31, 2013.

The law, which has provided relief to thousands of people who have debt balances written off as part of loan-modification agreements and is crucial to the $25 billion federal-state robo-signing settlement with large banks, is set to expire at the end of December.

Some Capitol Hill analysts predicted that an extension might have trouble making it through the partisan gauntlet in an election year. The Senate committee, however, managed to pull together enough votes Aug. 2 to pass the debt-relief extension, after heavy lobbying by the National Association of Realtors and the National Association of Home Builders.

The bill, which now moves to the full Senate for approval would also extend tax write-offs for mortgage insurance premiums for 2012 and through 2013, and continue some energy-efficiency tax credits for remodeling and new home construction.