This is bad news in 2014 for homeowners who are "underwater" on their home loans. 

The issue is that when a homeowner has a home value that is less than the current market price, and the homeowner gives the home back to the mortgage lender; then a potential tax liability occurs.

An example.   A homeowner has a mortgage of $300K.  The homeowner is allowed by the mortgage lender to sell the home for $200K.   The difference is a loss of $100K.  The  mortgage lender "forgives" the $100K loss.  However, the IRS does not forgive the loss as the IRS considers the $100K as income and requires the homeowner to pays taxes on the $100K.

For the past few years, including 2013, Congress passed a special law known as the Mortgage Forgiveness Debt Relief Act, which saved homeowners from this tax burden.

The Mortgage Forgiveness Debt Relief Act expires at the end of this year and Congress has not renewed the  Act.    This is bad news for homeowners who are underwater as not only will the  homeowner in 2014 lose their home but to add insult to injury the IRS will require taxes to be paid on the loss.

More info.