How the Mortgage Forgiveness Debt Relief Act helps home owners avoid foreclosure

By HOM Editorial Team
April 2015

Fast Fact: Millions of homeowners avoided foreclosure because of the Mortgage Foregiveness Debt Relief Act. Millions more still need help. Tell Congress to renew the Act and protect our home values.


In the early months of the housing crisis, Congress did something that made a huge difference for millions of homeowners. It passed the Mortgage Forgiveness Debt Relief Act of 2007.

Since then, that Act has helped millions of homeowners avoid foreclosure, while preventing further declines in all our home values.

But today’s distressed homeowners don’t have that help. Congress let the Act expire at the end of 2014, putting our neighborhoods and home values at risk.


The federal government includes “debt forgiveness” as taxable income. Short sales and loan modifications that reduce mortgage principal are considered “debt forgiveness” and, therefore, taxable.

The Act freed homeowners from that potential tax liability, making short sales and loan modifications viable options — options that millions of homeowners still need today.

Many of the same hardships, struggles,and risks to neighborhoods that led to the creation of the Act in 2007 still exist today.

New legislation called the Mortgage Forgiveness Tax Relief Act of 2015 was recently introduced which would essentially extend the Mortgage Forgiveness Debt Relief Act of 2007. Tell Congress to pass this legislation and extend the Mortgage Forgiveness Debt Relief Act or e-mail your thoughts and questions at


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