The law expired at midnight Tuesday because lawmakers went home for the holidays without extending it — despite bipartisan support.
According to the Congressional Research Service, a middle-income homeowner whose loan was restructured so that $20,000 of debt was forgiven would face a $5,600 tax bill if the mortgage debt relief act is not extended.
The extension of the mortgage debt relief act is backed by major players in the housing industry, including the National Assn. of Realtors and the Mortgage Bankers Assn., as well as dozens of consumer groups and housing advocates, such as the National Consumer Law Center.
Lawmakers are expected to take up the issue of extending the Mortgage Forgiveness Tax Relief Act when they return from their holiday next week to consider extending dozens of tax provisions that expired at year's end including deductions for corporate research and development.