Reply #71

"The exclusion for "qualified principal residence indebtedness," provides canceled debt tax relief for many American home owners involved in the mortgage foreclosure crisis currently affecting much of the country. The exclusion allows taxpayers to exclude up to $2,000,000 ($1,000,000 if married filing separately) of "qualified principal residence indebtedness".
say the IRS link.

http://www.irs.gov/taxtopics/tc431.html

The OP mentions that OWS plans involved talking to the IRS, so I feel safe in assuming they know to present the loan forgiveness in a way that does not harm the recipient.