The U.S. Senate Committee on Finance marked up the Expiring Provisions Improvement Reform and Efficiency Act on Thursday in an effort to continue working on creating a final version on the tax extenders legislation.

The Mortgage Bankers Association says the legislation significantly impacts housing markets.

“Three provisions in the EXPIRE Act will provide much needed certainty to the residential and commercial/multifamily real estate markets at this critical point in our nation’s economic recovery,” William Killmer, senior vice president of Legislative and Political Affairs with the MBA, said.

1. The Mortgage Forgiveness Debt Relief Act

This act is designed to protect underwater borrowers from being taxed if their lender reduces principal or if they sell their home through a short sale, Killmer explained. If not passed, homeowners could face a substantial tax assessment.

2. Mortgage insurance tax deduction

If passed, the provision will extend the tax deduction for mortgage insurance premiums paid by homeowners. As a result, Killmer said the deduction would greatly benefit the large number of homeowners who cannot afford a 20% or greater down payment and who use mortgage insurance to purchase a home.

3. Low income housing tax credit

The provision maintains the fixed interest rate for affordable housing projects financed with the Low Income Housing Tax Credit. If the credit is not implemented, the tax credit’s fixed rate from projects will continue at a variable rate and could likely make it more difficult for projects to secure necessary financing, Killmer noted.