Many San Diego homeowners considering a short sale or facing foreclosure got a bit of good news today with the U.S. House of Representatives passing H.R. 3648, The Mortgage Forgiveness Debt Relief Act of 2007. The bill addresses the forgiveness of acquisition debt, which is that debt used to purchase real estate that is used as a primary residence. This debt forgiveness due to a short sale or foreclosure would not be subject to taxation as earned income. The bill now goes to the Senate.
The bill saw a few modifications from it's original version approved by the House Ways and Means Committee.
UPDATE: 12/14/2007 - Senate passes H.R. 3648, The Mortgage Forgiveness Debt Relief Act of 2007.
Overview of debt forgiveness portion of bill: Short Sale and Phantom Tax Debt Relief Overview