Initial reports on Yahoo stated that the mortgage forgiveness act was extended for one more year.
However, note that there's many factors that are to be considered. Even if one doesn't short sale and decides to walk away from their home, the borrower can still have taxable income which is determined by calculating the difference on what the bank is able to sell the property for and what the borrower walked away from- again the mortgage relief act addresses this for one more year on one's primary residence.
Despite having an accounting background I put the disclaimer out there that I am not a practicing accountant and the above is a simplified response. One should talk to their CPA and see how their personal situation would be affected by current tax laws.