The community development group Boston Community Capital is urging lawmakers to extend the Mortgage Forgiveness Debt Relief Act before it expires at the end of the December.

The MFDRA, passed in 2007, allows homeowners to avoid paying taxes on discharged mortgage debt of up to $2 million for a married couple. If members of Congress allow the law to expire, homeowners who restructure their mortgages or are foreclosed upon would be required to pay taxes on the canceled or forgiven debt.

Such large tax bills are "not affordable to homeowners who are already struggling to make mortgage payments with limited income and have often depleted what savings they had," Boston Community Capital Chief Executive Elyse Cherry wrote in a letter to Sen. Elizabeth Warren, D-Mass., this week.

Allowing the MFDRA act to expire would also hurt homeowners by hobbling loan-modification programs like Boston Community Capital's Stabilizing Urban Neighborhood Initiative, according to Cherry. The SUN initiative uses privately raised funds to buy foreclosed homes from lenders at fair-market prices, then sells the homes back to original homeowners at a 40% discount, on average.

"The program only works when we can save homeowners money," Cherry said in a Tuesday press release. "If Congress doesn't vote to extend the MFDRA, it becomes more difficult to do that."

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