Good question, at present, the Mortgage Debt Relief Act runs through 2012. If real property is not foreclosed upon by the lender through the end of 2012, the foreclosure does not apply under the current act. The act was extended once before and general consensus is that it very well could be extended again beyond 12/31/12.If the act is not extended beyond 2012 and your home is foreclosed upon after 12/31/12, very well the forgiveness of the loan could be taxed as income to you.I suggest that you consult with a real estate/tax attorney further about your question.