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According to the just released findings of analysts employed by the federal government of the United States of America to monitor real estate transactions in the wake of recessionary property depreciations, the Mortgage Debt Relief act has done rather more than merely alleviate the debt of deserving homeowners since taking effect on January 1, 2011. If the studies compiled by the U.S. Department of the Treasury are accurate, a little less than half a billion dollars may have been dispersed on the behalf of potentially ineligible citizens who fudged parts of their documentation or willfully submitted fraudulent information to the overwhelmed governmental arbiters. To make matters worse, the majority of misspent funds, some three hundred twenty million dollars at the federal accountants’ last reckoning, didn’t involve stipends sent directly to home owners (therefore able to be easily reclaimed) or debt relief tax waivers that could be reassessed.  Instead, the brunt of the monetary outlay went directly to the lending institutions who’d foreclosed upon the over mortgaged residences of borrowers owing significantly more than what the properties managed to garner when auctioned off by local officials.

Prior to the establishment of the Mortgage Forgiveness Debt Relief Act, Americans who qualified under a governmental program for the alleviation of some or all of the equity loan burdens placed against their home would still have been subject to eventual income tax assessments that perceived the amount of debt relinquished as tantamount to income. Considering that the criteria for mortgage forgiveness – and virtually any federally sponsored bout of debt relief, whether pertaining to family residences or credit card debt balances – most always centers around limited earnings and nonexistent assets, this seemed a glaringly obvious misapplication of the Internal Revenue Service doctrine, and consumer advocate groups throughout the nation had urged some restructuring to take into account the families driven further into debt through the aftershock of so called forgiveness.

Purely a federal statute affecting the Internal Revenue Service, the act has nothing whatsoever to do with the various state or municipal levies – many of the various local tax authorities have established their own similar variants – but the economic and political effects were nevertheless profound.  From the time the legislation was first passed, the political landscape has grown considerably more amenable to the financial limitations of the men and women who had entered into untenable mortgage agreements at the peak of a real estate market already stretched to the furthest excesses of the most ambitious realtor’s imagination without anything more than a passing awareness of just what their new fiscal obligations would genuinely entail.

We’ve just recently grown to understand the true extent of the damage done to the financial security of so many Americans who scraped through the initial lender underwriting process only because of suspect maneuvers that temporarily hid the effects of amortization to arrange funding of the home equity line of credit to consolidate out of control credit card debt.  As a form of debt settlement intended to avoid bankruptcy filings sweeping through the courts and halt further injury to the already depressed real estate sector, the motivating impulse of our legislators when constructing the mortgage forgiveness measures remains sound.  However, with more than fifty thousand Americans exploiting the mortgage debt relief & tax forgiveness to clear financial benefit despite trailing some record of previous home ownership (strictly forbidden within a program designed for first time buyers), the implementation couldn’t have been more lazily organized, and the nation can ill afford to spend such eye popping sums cleaning up the debt relief messes of consumers who really should’ve known better.