Harry was experiencing financial difficulties and could not make the mortgage payments on his home. The mortgage holder agreed to reduce the debt principal by $50,000 because the real estate market was depressed. Assuming that Harry is not bankrupt or insolvent, would the tax consequences differ under the following circumstances?
a. The mortgage is held by the person who sold him the property
b. The mortgage is held by the financial institution that made the loan for the purchase of his residence.