COLUMBUS —Ohio Attorney General Mike DeWine today joined Attorneys General from 41 States and Territories in urging Congress to once again pass legislation extending tax relief for distressed homeowners who receive relief from the National Mortgage Settlement. The request was made in a letter sent to House Speaker John Boehner, Senate Majority Leader Harry Reid, and other leaders of the House and Senate.
“We supported your extension of this benefit last year and we continue to believe that this relief is crucial to both the homeowners struggling to regain their financial footing and to the battered housing market whose recovery is slow and still uncertain,” DeWine and the Attorneys General said in their letter. “If this deadline is not extended, financially strapped homeowners, even those who lose their home to foreclosure, will be forced to pay taxes as income on any mortgage debt that is forgiven by the holder of the mortgage.”
In February 2012, DeWine and 48 Attorneys General signed a National Mortgage Settlement with the nation’s five largest mortgage servicers. The Settlement provides $17 billion in debt reduction and other relief to homeowners. Loan claims were accepted on behalf of 33,876 Ohio borrowers, and payment checks worth approximately $1,480 were sent between June 10th and June 17th for each valid loan claim.
Pursuant to the Mortgage Debt Relief Act, which went into effect in 2008, many types of forgiven mortgage debt provided to a homeowner in financial hardship may be excluded from a taxpayer’s calculation of taxable income. However, this tax relief expires on December 31st of this year, after Congress extended the relief one additional year. The letter from the Attorneys General requests congress to extend this tax relief to ensure homeowners do not face unexpected tax bills from participating in the settlement.
In addition to Ohio, the letter was signed by Attorneys General from Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico, New York, North Carolina, Northern Mariana Islands, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, and West Virginia.
A copy of the letter is available on the Ohio Attorney General’s website.