The Senate Finance Committee approved a bipartisan bill that would extend the Mortgage Forgiveness Debt Relief Act through 2013.  At the moment, it is scheduled to expire December 31, 2012.
Why is this important? Under IRS regulations, forgiven debt is usually considered income and it is subject to income tax as such.  The Mortgage Forgiveness Debt Relief Act relieves homeowners who receive principal reductions on their mortgages from federal income taxes on the amounts forgiven. Without it, millions of owners who go through foreclosure or a short sale would experience even more financial stress.
The Senate Finance Committee wrangled enough votes in early August to pass the debt-relief extension, after heavy lobbying by the National Association of Realtors and the National Association of Home Builders. The bill now moves to the full Senate for possible action in September when the Senators and Members of the House of Representatives return from their summer recess.
This is a tight election year so keep an eye on political wrangling as this important extension could still be used a bargaining chip.
What should you do?  Write to your Senators and to your Representative. 
No.  Really.  This author has done so on any number occasions for a variety of reasons.  It has always helped!
Impress upon them how important this extension is to this continuing short sale and foreclosure issue plaguing all home owners through the United States.  If you too are caught up in this mess (as 1 in 7 Washingtonresidents are), get your friends, family, and work colleagues to contact their Senators and Representatives on your behalf.
If you or someone you know has questions about this, please do not hesitate to call at 206-588-6801.