After holding back on legislation for far too long, California Governor Arnold Schwarzenegger has finally agreed to bring California in line with Federal legislature that exempts home owners from tax on canceled mortgage debt.

This is typical of un-joined up American government. On the one hand every State including California wants to help relieve the pressure, while at the same time we let the rules defeat their own objectives.

Until now, cash strapped Californians forced into short sales or foreclosures have had the added burden of finding money for the tax collectors too. This is downright unfair, un-American and immoral besides. California is not a poor state and the situation should have been changed years ago in favor of thousands of distressed home owners in trouble not always of their own making.

Its high time legislators learned to separate their narrow political agendas from the broader need of American society, and work together, not against themselves to do what must be done. High political rhetoric has no meaning to Americans forced from their homes into the street – getting them permanently housed again seems to be so far ahead of time that few appear concerned about it.

In 2009 the California Legislature approved a bill to bring the State in line with Federal tax exemption legislation. While the Governor supported mortgage tax realignment, he disagreed with other provisions in the bill, and so he vetoed it.

Last month Schwarzenegger vetoed another bill that included mortgage tax exemption, even though it also contained two other sensible tax provisions. Did this mean that an apparently heartless Governor was still disinterested in the hardships that his fellow Californians were still laboring under? Or is the point elsewhere and still invisible to many?

Whether this was true or not, the bald facts are that Schwarzenegger’s decision meant that struggling homeowners who have to face the indignity of losing their homes either to foreclosure, or through short sales, and then still have to go back to their lenders cap in hand for debt forgiveness, pay tax on the forgiven amount as if were income.

Its third time lucky this time for underwater Californians. Just before Tax Day legislators finally approved a bill to bring the State in line with Federal legislation on mortgage tax exemption. The Governor says he’s going to sign, and the tax collectors will allow its application in the current tax year and beyond.

It’s been a long haul down the towpath for delinquent borrowers, and we’ll never know how many were tipped over the edge by Schwarzenegger’s apparent reluctance to assist. Although economic experts keep on predicting that recovery’s around the corner, that’s insufficient reason not to help keep families in their houses.

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