The U.S. House on Tuesday passed three bills that will have a big impact on the real estate industry. All three have passed the Senate and President George W. Bush is expected to sign them.
The bills are:
- The Mortgage Forgiveness Debt Relief Act of 2007. This legislation waives taxes by creating a three-year exception for borrowers whose mortgages are modified, with a portion of their debt forgiven, to avoid foreclosure or other financial distress.
"In sending this bill to the president, Congress made a good decision today that will affect many Americans who find themselves in a truly bad situation,” NAR President Richard (Dick) Gaylord said in an NAR public statement on the issue. “As the leading advocate for housing issues, NAR believes that changing the IRS code is an issue of fundamental fairness. It will relieve a tax burden at a time when an individual or family has experienced a true economic loss arising from the sale or loss of their home."
- Mortgage Insurance Tax Deductibility. This bill makes mortgage insurance premiums tax deductible for all mortgages originated for the next three years. Mortgage insurer Genworth Financial estimates that this tax break is worth $350 to the average taxpayer who has purchased a home with less than 20 percent down.
- Terrorism Risk Insurance Act. Federal backstops for terrorism insurance, passed initially after the Sept. 11 attacks, have been extended for another seven years. The bill also expands the program's protection by including domestic terrorism. The insurance and real estate industries have pushed for an extension, saying federal guarantees to help cover catastrophic losses are crucial to stimulating the investment needed to spur economic growth.
Source: The Associated Press, Jim Abrams, and Dow Jones International News and REALTOR® Magazine Online (12/18/2007)