Rob Andrews: “This is what this bill is about: A person buys a house for $150,000 and has a $140,000 mortgage. And then bad times hit…”

“This is what this bill is about: A person buys a house for $150,000 and has a $140,000 mortgage. And then bad times hit the neighborhood and the person can only sell the house for $130,000, but they still owe $140,000 on the mortgage. So they go to closing and they sell the house, but even after all the proceeds of the sale are paid, they still owe money on the mortgage. Now, someone is only going to do this because they have lost their job or had a health crisis or some other family crisis. By definition, this is an American family in some trouble. If their lender says that they are going to write off that $10,000 that still is owed on the mortgage, if the lender says we are not going to bother to chase this person, usually because there is nothing to recover from, under present law the IRS would treat that family as having $10,000 worth of income. Now, they have no money in their checking account to pay it. They have no means to go earn the money. They owe a tax on money they never saw. This is unfair, and it exacerbates the problem we see in the mortgage market right now.”