Potentially you might be responsible for income tax on the $90,000 that you are writing about under the theory of forgiveness of debt at the state level, but perhaps not at the federal level under exisitng federal law where you lost your home in a foreclosure where there was a second trust deed in effect.I recommend that you consult with a tax attorney who practices in the area of real estate as well to assist you in resolving the dispute that you have with the second mortgage holder so it can be resolved on best terms for you and less potential tax ramifications at the federal and state level.