Mortgage debt is debt created by the money owed following the sale of a property or other mortgage asset.
While a mortgage in itself is not a debt, it is the security for the loan that the lender makes to the borrower.
The Mortgage Forgiveness Debt Relief Act of 2007, signed into law on September 1 2007 , will help Americans avoid foreclosure by protecting families from higher taxes when they refinance their home mortgages. This Act was passed to shore up the U.S. Housing Market in light of the mortgage market meltdown. It creates a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. Under current law, if the value of a home declines, and the bank or lender forgives a portion of the mortgage, the tax code treats the amount forgiven as income that can be taxed.