HOUSE PASSES ANDREWS’ MORTGAGE CANCELLATION ACT

Yesterday, the House passed my legislation that will help millions of Americans deal with the mortgage credit crunch.

The House passed, by a vote of 386 to 27, a bi-partisan piece of legislation that includes a bill that I cosponsored along with Rep Ron Lewis (R-Kentucky) that will ensure that homeowners who are forced to sell their homes for less than the amount remaining on their mortgage, will not be further penalized by being taxed on the difference should the lender choose to forgive that amount. It is simply unfair and wrong to tax people on “phantom” income, especially when they have just suffered such a serious economic loss. 

 
I want to commend Chairman Charles Rangel (D-NY) for including the Mortgage Cancellation Act, a bill that I first introduced in 1998, in the broader legislation being voted upon today. The recent rise of foreclosures and the continuing decline in the housing market has had a devastating effect on homeowners and the idea that the government is  further taxing individuals in this manner after they have lost one of their most valuable assets is one that needed to be changed.

Below is an article highlighting this legislation:

Law helps those who lose homes to foreclosure From staff reports

Gannett News

October 4, 2007

WASHINGTON - Legislation largely written by Rep. Rob Andrews to help people who lost their homes to foreclosure or sold them for less than they were worth passed the House by an overwhelming margin this afternoon.

Under current law, the difference between the mortgage balance and sale price is considered taxable income. The Andrews bill, which President Bush endorsed earlier this year, would eliminate that tax.
  
The House vote was 386-27. All New Jersey congressmen voted for it.

The legislation would make sure homeowners “will not be further penalized by being taxed on the difference should the lender choose to forgive that amount,” Andrews said in a statement.

“It is simply unfair and wrong to tax people on ‘phantom’ income, especially when they have just suffered such a serious economic loss,” the Haddon Heights Democrat said.

The bill is in response to the rising default rate among borrowers who can no longer afford adjustable rate mortgages. The tax rule change would be retroactive to Jan. 1, 2007.

Andrews first introduced the legislation in 1998. Today’s bill, which is largely similar to Andrews’ proposal, was sponsored by Rep. Charles Rangel, the New York Democrat who chairs the tax-writing Ways and Means Committee.

The Senate has not taken up its version of the bill, introduced by Sen. Debbie Stabenow, D-Mich.

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