From Puget Sound Business Journal
When her Edmonds condo went on the market, Mindy Moore thought she had managed to avoid foreclosure.
Moore listed the home in Edmonds for about $30,000 less than she owed on the mortgage. She thought the “short sale” agreement signed with the bank meant the bank would absorb the loss.
Then she discovered [...]

Kind of a snarky article at the NY Times about Countrywide executives being involved with the purchase of distressed loans from the government.  The “bad” loans, or toxic assets as some call them are a significant part of the problem with the financial industry in the United States.  There really is only one way to [...]

From AP
Mortgage law experts say the incentive to walk away from a home loan is highest in states that have anti-deficiency statutes, which prohibit lenders from suing borrowers for additional funds after foreclosure.
Anti-deficiency statutes have been a recent topic of discussion with many borrowers wondering whether their lender has the right to come after them [...]

The IRS has provisions for excluding income from the discharge of debt. The IRS also attempts to explain what can be excluded:
Questions and Answers on Home Foreclosure and Debt Cancellation
The link is provided for informational purposes, I’m not going to interpret it.