The Congressional Clock Ticks Toward the Cliff

As Congress rapidly approaches the unfortunately named 'fiscal cliff,' with its military and domestic budget cuts ('sequestrations') and threat of double-dip recession, we in the real estate biz are reminded of the dire implications for millions of distressed homeowners and the housing market as a whole. With the balance of power virtually intact post-election, the way forward toward compromise seems as muddled as ever. Meanwhile, 50,000 homeowners go through foreclosure each month and short sales have ballooned to almost 500,000 a year.

Perhaps the most important housing issue in this debate is one we've touched on before: the Mortgage Forgiveness Debt Relief Act. Should this be allowed to expire, homeowners going through foreclosure, short sale or principal reduction will have to pay income tax on the forgiven portion of their mortgage. The National Association of Realtors supports an extension of the bill and says all interested parties agree that it's good policy. "The hold up is in the process. I'm confident it will get done. I just don't know how," says Jamie Gregory, NAR's chief lobbyist. Cold comfort as the clock winds down...

The NAR has also been critical of the Simpson-Bowles commission and its recommendation to streamline the tax code by revamping the mortgage interest deduction (MID) to only include principal homes worth up to $500,000. Any changes to the MID could depreciate home prices by up to 15%, according to NAR, and the association has promised to "remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest."

Nice to know someone's looking out for the interests of the housing market, which were all but ignored during the election. Let's hope some kind of consensus can be reached without doing further damage or compromising the slow-but-steady housing rebound!

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Right away, housing challenges for Obama | Inman News | November 7, 2012

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