WASHINGTON (1/4/13)--Despite the 'fiscal cliff' legislation's many tentacles, the Credit Union National Association (CUNA) said Thursday there are only two aspects of the tax package that are of direct interest to credit unions.
CUNA Senior Vice President of Legislative Affairs Ryan Donovan said credit unions should know that the bill:
- First and foremost, did not include any change to the credit union tax status; and, second,
- Did include CUNA-backed language to extend the Mortgage Forgiveness Debt Relief Act for a year.
That act provides tax relief to borrowers who might lose their home to foreclosure or who have negotiated a loan-term modification to forestall foreclosure. It was set to expire at the end of 2012.
The mortgage forgiveness measure altered portions of the U.S. tax code that required lender-forgiven mortgage debt to be treated as taxable income on a borrower's yearly income tax return. The measure became law in 2007.
CUNA last month joined with housing, real estate, and banking industry groups to urge congressional leaders to renew the act to help as many underwater homeowners as possible.
"If Congress fails to act, the possibility of receiving a tax bill would make it more difficult and expensive for these struggling homeowners to accept short sales and many loan modification offers" and thereby act as a foil to current loss-mitigation efforts, CUNA said in the joint letter.