By extending the federal Mortgage Debt Relief Act before it expires at year's end, December 2012, lawmakers can provide relief to homeowners stuck in distressed houses. To not extend this Act, would lead to many people who are finally about to get some relief by way of reduced principles and other debt forgiveness, into being stuck with massive tax bills.
Currently the Mortgage Debt Relief Act protects any debt written of, as being taxed as income. Once the Act expires in Dec 2012, innocent families already harmed by the banks, and a failing economy, will be plunged back into more debt. This will not help the housing market and will ultimately affect the entire economy very badly.