Mortgage Defaults Down

The economy will not experience significant recovery until the housing market improves, and the housing market will not improve until the downward pressure on prices caused by all the foreclosures on the market abates.  So it's a bit of good news that mortgage defaults are down.  Defaults in August were 1.4% in contrast to 1.92% a year ago.

via Housing Wire

Mortgage Debt Exemption Set To Expire

Next year people negotiating for a principal reduction on their mortgage might find themselves taxed for that forgiven debt.  Any discharged debt is considered income by the IRS, but to encourage recovery in the housing market, Congress passed the Mortgage Forgiveness Debt Relief Act in 2007.  That Act exempted from taxation any forgiveness of mortgage debt due to a decrease in the value of the home.  Unless extended, that relief will expire at the end of 2012.  There is currently a bipartisan effort to extend this exemption that is still needed so direly by people finding themselves in homes worth less than they owe.

(ht: Los Angelos Times)