Although this Bill was signed into law by President Bush back in December 2007, it’s contents are significant enough that it warrants re-emphasis as we enter the final quarter of the year 2008. With home foreclosures continuing to rise to unprecedented levels, many affected homeowners are not even aware of the potential ramifications of this legislation.

A homeowner facing foreclosure is inevitably deluged with valid concerns such as finding the funds to pay their mortgage, their next move as far as their family residence, combined with the long term effects that the foreclosure will have on their credit. Many folks are not even aware of the fact that if they lose their home to foreclosure or a short sale, which results in the “forgiveness” of some amount of debt owed, that without this legislation they would be liable for taxes on that debt reduction. What a huge double-whammy that can be, as if losing your home and ruining your credit is not enough of a punishment.

The legislation is a saving grace for many families, but this is a temporary measure and there are limitations that you should be aware of, most significantly that it only applies to debt forgiveness on a primary residence. Other primary points include:

• The maximum debt relief eligible is 1 million for a single individual, 2 million for a married couple
• Debt relief is valid for dates inclusive of January 1, 2008 to  January 1, 2010
• The loan must be an acquisition loan and loan forgiveness must be directly related to a decline in property value or the borrower’s financial condition
• Loan forgiveness is granted by way of short sale, foreclosure, a deed in lieu, or loan modification

This legislation is significant and absolutely necessary, in my humble opinion, to help these (the ones that are truly distressed) homeowners begin the process of starting over.

Opinions, readers?

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