The change is too new for us to measure its effect. HR 3648 seeks to relieve the onus of the “phantom income tax” on what the IRS considers to be taxable income arrising from debt that is forgiven. The legislation will not help everyone who has debt forgiven. Investors, for instance, are excluded.

It seems to me that, if a person cannot afford their mortgage, the relief from an income tax liability that may haunt them after a foreclosure or short sale will not enhance their ability to make the mortgage payments in the short run. In other words, this legislation may help some after they lose their houses but it will not prevent the loss of the house.