Bill forgives taxes on modified home loans
WASHINGTON -- A new bill in Congress would forgive some taxes for distressed homeowners who modify their mortgages under the $25 billion national bank settlement reached last month.
The bill would waive tax liability on mortgage debt that is forgiven on homes whose owners are able to get their principal reduced or the loans restructured.
It also excuses taxes on cash payments made to homeowners who were found to have been wronged in foreclosure. The bill also covers military service members who may have been overcharged mortgage interest or wrongfully foreclosed upon.
The bill, sponsored by Reps. Shelley Berkley, D-Nev., John Larson, D-Conn., and Jim McDermott, D-Wash., extends a 2007 law that is set to expire at the end of this year and applies it to the $25 billion mortgage settlement that states reached with five of the nation's largest banks.
Berkley estimated 68,000 Nevadans are eligible to take part in the settlement.
"This legislation will prevent homeowners in Nevada and nationwide who receive refinancing help, principal reductions or direct payments under this settlement from having to literally pay for the fraud and deception committed by banks and members of the mortgage industry," Berkley said in a statement.
Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760. Follow him on Twitter @STetreaultDC.
