Kenneth,
You may fall under the debt relief act that took effect recently. Here is the link to that act, along with the form you will need to file if you in fact receive a 1099 for the deficency. Please read the information and follow it up by consulting an accountant.
Here is a link to an article from the IRS outlining the act.
http://www.irs.gov/irs/article/0,,id=179073,00.html
This next link is common questions about the act.
http://www.irs.gov/individuals/article/0,,id=179414,00.html
This last link is the IRS form you would need to fill out to receive the debt relief.
http://www.irs.gov/pub/irs-pdf/f982.pdf - Tue Apr 8 2008, 05:59