Ocwen Financial Corporation has announced its support for Treasury Secretary Jack Lew's recent announcement that the Home Affordable Modification Program (HAMP) is being extended through 2015 and supports his call for the reauthorization of the Mortgage Forgiveness Debt Relief Act (the Debt Relief Act).
"As an early supporter of HAMP, we've been working hard to prevent foreclosures through sustainable loan modifications," said Ocwen CEO Ronald Faris. "That's the best solution for everyone long term - keeping homeowners in their homes with re-performing loans that yield greater cash flow for mortgage investors." Ocwen believes that the extension of HAMP and the renewal of the Debt Relief Act together will support the recovery of the housing market and will be in the best interests of all stakeholders in the mortgage finance system.
The Debt Relief Act allows homeowners who receive principal reductions or other forms of debt forgiveness, like short sales, to avoid paying taxes on the amount forgiven. Originally passed in 2007 in response to the mortgage crisis, this legislation is subject to annual renewal. Without this relief, homeowners who are able to keep their homes through a principal reduction modification would be responsible for federal income taxes on the amount canceled.
"Along with extending HAMP, it is critical that Congress continue tax relief for mortgage write-downs," Faris said. "If mortgage debt forgiveness were to be taxed, the effectiveness of successful programs such as HAMP, which is responsible for more than 1.3 million loan modifications since its inception, would be seriously compromised." Ocwen was the first in the industry to offer principal write-down modifications for underwater mortgages, and they continue to be an important component of the company's foreclosure prevention efforts, particularly in the hardest hit areas.
