Congress has approved legislation that would give homeowners, whose foreclosures or loan workouts resulted in some principal forgiveness, a pass on paying taxes on up to $2 million of forgiven debt. The Mortgage Forgiveness Debt Relief Act of 2007 provides the relief for three years (covering debt forgiven from January 1, 2007, to December 31, 2009). Under current law, forgiven mortgage debt is taxable as income. The legislation helps many individuals avoid the somewhat perverse result of facing a higher tax bill after suffering a foreclosure due to the inability to afford the mortgage. The President is expected to sign the bill.