Short Sales & Taxes: Will Lawmakers Revive 'Mortgage Debt Relief Act'?

Since 2007, the federal Mortgage Debt Relief Act has helped distressed homeowners who have had mortgage debt forgiven after a foreclosure, short sale, or loan modification. The law made it possible for these homeowners to exclude the forgiven debt from their calculation of taxable income, saving them thousands, or even tens of thousands of dollars, in taxes that could have been owed.

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Tax Lien Sales: Vulnerable Homeowners Fall Prey to Investors

The retired Marine sergeant owed $134 in property taxes, but the D.C. local government sold the tax lien to an investor who foreclosed on his $197,000 house. The Washington Post has chronicled this new trend borne out of the financial crisis that left many local governments scrambling to collect unpaid property taxes.

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