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Senate legislation could aid underwater homeowners

Posted on Wednesday, March 11, 2015 at 7:57:35 AM

Following the Great Recession, underwater homeowners became a widespread issue across the country. Many borrowers couldn't afford their residential financing payments and ended up owing more on their homes than they were valued on the market. 

Naturally, this situation constricts homeowners and hampers sales activity. Since the Great Recession, though, many homeowners are no longer underwater, as government aid, an improved housing market and economy have all helped stem the tide.

In fact, the U.S. Senate is currently working on additional legislation to further benefit underwater homeowners. The two bills would prolong the Mortgage Forgiveness Debt Relief Act through 2016. The main purpose of the legislation is to prevent sellers from paying certain taxes on distressed home sales. 

"Unless Congress acts, those who are underwater in their homes and have received financial relief for their mortgage could be forced to pay a tax on income they never received," Sen. Dean Heller (R-NV) explained in a statement.

In an opinion piece for HousingWire, Tom Zeeb, president of Traction Real Estate Investors Association, wrote in favor of the Senate legislation. He argued that the bills will not only benefit underwater homeowners, but also boost the economy, improve job creation and bolster current federal housing programs.