If you are a homeowner and are forced into a short sale, Congress just extended legislation which could help you at tax time.
The Mortgage Forgiveness Debt Act has been extended until 2017. According to Chicago Agent:
Originally passed in 2007, the act protects underwater homeowners from incurring tax bills on the debt forgiven during a short sale. Three times now, the act has come close to expiring, but strong lobbying efforts by NAR (National Association of REALTORS®) have managed to extend it.
The bill provides some relief for those who borrowed to finance a home which as a result of the financial crisis saw its value plummet.