Mortgage settlement leaves out responsible homeowners

I am concerned as a taxpayer and homeowner about the multi-state settlement in regard to foreclosures and mortgages.

I have sympathy toward their plight, but homeowners who had little equity in their homes and thus little to lose have been walking away from them in droves, some with their credit ratings intact as banks have been overwhelmed and unable to complete foreclosure proceedings. Some have lived rent and mortgage free for months and years in houses on which they no longer pay taxes.

A large group of responsible taxpayers has been overlooked. In today's corporate culture many employees are required to (or choose to in order to advance a career) relocate around the country. The conventional wisdom for years was that real estate was an excellent investment and, for many in the disappearing middle class, the primary investment in future funds for retirement.

After selling a house in Florida when the housing market had begun to fall off the bubble in 2008, I did what I thought was most financially sound: I put the proceeds directly into a property in my new city of Baltimore to increase my equity and lower my mortgage payment. Baltimore, as everywhere, has seen a steep drop in housing values since 2008. I have never refinanced, as the general rule of thumb is that it takes from three to five years of payments at a lower rate to offset the costs of refinancing. I have paid my taxes on the property on time and have always been current on the mortgage and homeowners association fees.

I'm now in a position where in the future I will need to sell my property in Baltimore. I stand to lose at least 35 percent to 40 percent of the initial purchase price, and additionally, the not insignificant cost of renovating the property. As it is not an investment property, the four years of homeowners association fees are non-deductible for tax purposes and also are now gone.

Nowhere in previous or proposed legislation is there any redress for a taxpayer in these circumstances (and the number I'm sure is large): undervalued property but not "underwater" due to sizable down payments, mortgage intact and current, taxes paid on time and in full. Why not propose a onetime tax deduction for loss on a property that is the principal residence for this taxpayer similar to what is already available for owners of an investment property? This would offset some, but not nearly all of the loss incurred and would reward those taxpayers, who although they made what proved to be a bad investment, have lived up to the obligations they contracted.

Michael Roberts, Baltimore

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