Mortgage foreclosures are rampant currently. Congress is addressing the issue, and the Mortgage Foreclosure Debt Relief Act of 2007 has passed the House and is in the Senate Finance committee.

This bill, should it become law, will provide tax relief for those experiencing foreclosure on their initial purchase mortgage, but not much help for those who have used the equity in their house for other purposes (e.g., buying a car). Also, it appears that to qualify for this relief you must have both owned and lived in the house for at least 2 out of the last 5 years.