President Touts Rep. Andrews’ Mortgage Cancellation Relief Act in Recent Speech

The recent decline in the nation’s housing market has had a devastating effect on homeowners.  Many have had to sell their homes for less than they paid for them, and many times these people have leftover mortgage debt owed to their bank.  Banks will sometimes forgive this debt because the homeowner has undergone enough hardship.  When this happens, however, the homeowner must pay income tax on this forgiven debt!  It is patently unfair to tax people on this “phantom” income, particularly when they have just suffered serious economic loss.  That is why I have introduced the Mortgage Cancellation Relief Act (HR 1876), which will relieve this unfair tax burden.

None of us want to learn that our families will be forced to pay taxes when they have no money and have incurred a substantial loss on what, for most, is the most significant asset they own.  We do not want to learn that the IRS has the power to make them homeless because they have neither equity nor cash.  My legislation will prevent a fundamental unfairness in the lives of those who find themselves in these truly unfortunate circumstances.

Below is a small excerpt from the President’s speech from Friday August 31, 2007 addressing this issue:

President Bush:

“So I believe we need to change the code to make it easier for people to refinance their homes and stay in their homes. And to this end, I've called Senator Debbie Stabenow of Michigan and told her that she's on to a good idea with the bill that she and George Voinovich have submitted to the Senate. The House has got Rob Andrews of New Jersey and Ron Lewis of Kentucky introducing legislation that is a positive step toward changing the tax code so people aren't penalized when they refinance their homes. With a few changes in the Senate version and the House version, this administration can support these bills, and we look forward to working with them -- the senators and the members of the House -- to pass common-sense legislation to help us address this issue.”  

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