The hubbub in the news this past week is that Obama’s fiscal year budget for 2013 includes an extension of the Mortgage Forgiveness Debt Relief Act of 2007 all the way through 2015. (Note that this has not been set in stone yet, it’s just a proposed budget.) The Mortgage Forgiveness Debt Relief Act of 2007 allows for tax relief under certain circumstances to sellers whose homes are sold in a short sale.
As a short sale aficionado, I’m not sure what to think of this proposed extension. On the one hand, our economic recovery has been deplorably slow and it may take more than just three more years to get the shadow inventory of short sales off the books, so to speak. On the other hand, do the constantly new and changing Treasury-level panacea offer an appropriate to solution to the troubles currently plaguing the real estate market?
Over the last three years, the Obama Administration has offered the following solutions: HAMP (Home Affordable Modification Program), HAFA (Home Affordable Foreclosure Alternatives), and HARP (Home Affordable Refinance Program). And, while each of these programs has helped thousands of homeowners, it has just not been enough. Additionally, many of the lending institutions have begun to offer short sale incentive programs in order to get borrowers motivated to sell their homes as short sales. In fact, one major lending institution is offering certain short sale sellers as much as $35,000 or $40,000.
Yet, despite the fact that there are so many programs available to short sale sellers, the recovery continues to be slow. I’m beginning to wonder whether this was an intentional plan or a happy accident.
What say you?