The answer for a for a person purchasing a home to reside in is, possibly. The federal government may forgive this debt if it is a purchase money debt. The answer for an investor is expect, the RED 1099. You will need to talk with a CPA, tax advisor or a real estate attorney. If someone is suggesting that you do a short sale, please contact your lender first and see if there is any way to modify your loan or what other programs that they may have in place to help you. If you find yourself in a position that the bank will not work with you then contact your CPA, tax advisor or RE attorney.
I wish you the best in getting your financial house in order.