For homeowners who may find themselves in trouble, help is available to avoid foreclosure. Congress’ action to avert the Fiscal Cliff also brought an extension to the Mortgage Debt Relief Act, which could bring some relief to homeowners.Historically, if a family took a short sale on their home for less than their home was worth, they would have to pay taxes on the difference. So, if you sold your home for $100,000 less than it was worth, you had to pay taxes on that $100,000. Since 2007, this was reversed with the Mortgage Debt Relief Act, which gives an exemption on federal taxes. This exemption also applies when lenders forgive a portion of mortgage principal without the home changing hands.The settlement requires the five largest servicers to provide $20 billion in consumer relief to struggling homeowners.As of September 30, 2012 servicers provided 21,833 borrowers with $2.55 billion in relief, which averages to about $116,929 in debt forgiveness for each borrower.Without this tax exemption, some homeowners might have no choice but to lose their home to foreclosure instead of facing a large tax bill. However, with the extension of this law, banks are now indicating that this may be their preferred method of dealing with behind homeowners. Many states have seen a record number of short sales in 2012, and thus indicates and that trend should continue in 2013.The Mortgage Debt Relief Act will last until Jan. 1, 2014 and only applies to first homes.