When a homeowner sells his/her house in a short sale or is foreclosed upon, the amount of the forgiven debt is usually taxable under California and Federal Law.
 
Federal tax relief on forgiven real estate debt is already provided under the Federal Mortgage Forgiveness Debt Relief Act of 2007.
 
State tax relief for California distressed homowners is [...]

Every government program since 4th quarter 2008 failed in solving the nation’s foreclosure problem, because most houses are over leveraged.
When homeowners were granted loan modifications that reduced monthly payments, many still walked away from their houses, because reductions in loan balances were out of the question and homeowners weren’t comfortable waiting years to rebuild lost [...]

In 2007, California State and Federal Legislation temporarily exempted state and federal tax on forgiven debt. While the CA Law expired in 2008, the Federal Law (Federal Mortgage Forgiveness Debt Relief Act of 2007) remains in effect through 2012.
 
California Law may soon conform with Federal Law on this issue once again thanks to the [...]

Fannie Mae and Freddie Mac announced today that they are suspending foreclosure sales of owner-occupied homes from November 26, 2008 to January 09, 2009. Forecloaure sales for second homes and investment properties will not be suspended.
They are doing this while they create new procedures for the streamlined loan modification plan that I discussed in my post dated [...]