When the Debt Forgiveness Act ends in December, will Short Sales also end... or not?

We aren't hearing much about this act expiring in December.  http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief...-

If it is not renewed - what is the incentive for people to follow through with a short sale?  When the sellers are taxed on the debt forgiveness, that can mean paying tens of thousands of dollars in income tax.  Kind of like kicking someone when they are already down! 

For the most part, sellers who are coming out ahead when they sell are not being taxed on their gains....

Also, if short sales come to a screeching halt, will that mean that banks are going to wind up with more inventory as folks fall into foreclosure...?  Will that affect the strength of the banks again as they will have so much inventory on their books?

When I was in D.C. last spring, our legislatures were looking at this act just as a benefit for a few people.  It appeared they did not know how this could ultimately affect the foreclosure rate.

Thoughts? 

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Do you know if the GSE guidelines include relocation assistance?

 

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