IRS Outlines Tax Consequences for Financially Distressed Homeowners

"In February 2010, the Treasury Department established the HFA Hardest Hit Fund, which is authorized by the Emergency Economic Stabilization Act. The HFA Hardest Hit Fund is designed to allow each state housing finance agency the maximum flexibility in designing locally focused programs to address the needs of financially distressed homeowners within the state or a specific region of the state. Each state program that receives funding from the HFA Hardest Hit Fund has as its primary objective preventing avoidable foreclosures of homeowners’ homes and stabilizing housing markets."