Does anyone know if there are tax consequences with getting a loan modification?
My lender agreed to reduce the unpaid principal amount and forgiving the deficiency. I also had help from the Hardest hit program in MI
I was reading this:
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:
Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.

In my case I did file bankruptcy and included my mortgage and it was discharged.
Being that I now agreed to a loan modification do you think it opens me up to having the pay taxes on the deficiency?
I am not exactly sure how that is going to work.


Thank