U.S. House Passes Mortgage Debt Forgiveness Bill Targeted at Short Sellers, Foreclosures

The U.S. House of Representatives passed another bill targeting troubled homeowners today, overwhelmingly approving the Mortgage Forgiveness Debt Relief Act (H.R. 3648) by a vote of 386-27. The House Committee on Ways and Means had originally approved the bill on September 26.

The bill revises how the tax code treats mortgage debt forgiveness, as well as make the current temporary tax deduction for private mortgage insurance permanent.

From Reuters:

To cover the roughly $2 billion 10-year cost of the bill, the bill would change tax rules on the sale of vacation homes and rental property that were used as a principal residence.

The bill now heads to the Senate.

The White House said the tax relief should be temporary to help people through the current crisis and also objected to the tax change on the sale of vacation homes and rental properties.

In a statement, President George W. Bush applauded the House’s efforts to move the process forward and “I urge the Senate to swiftly consider this legislation and make it temporary.”

I noticed over the wires tonight that PMI Mortgage Insurance Co. wasted no time issuing a press release praising the measure’s passage, either — probably giddy over the prospect of future income streams, no doubt. (Ahem. I meant to say PMI is excited about the prospect of helping “Americans secure sustainable mortgages.”)

Since I’m on the topic of legislation, it’s worth noting that the Democrat’s recent call for a “mortgage czar” has been soundly thumped by most. Matt Carter over at the Inman News blog characterized the press conference yesterday on Capitol Hill as a “dog-and-pony show:”

To a family facing foreclosure, all the criticism the Dems directed today at the Bush administration’s alleged inaction might have sounded a bit like empty rhetoric.

Calculated Risk proposed Tanta for mortgage czar, and noted with some trepidation in the very same post that Alan Greenspan has now called the bottom of the credit crunch — after all, the former Fed chief called the bottom in housing back in October of 2006.

And we all know how well that has worked out.