Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.
Yes, this is possible. As long as this is your principal residence, forgiven debt(even that forgiven due to a modified or restructured loan) may be excluded from income due to the Mortgage debt Relief Act of 2007. Up to 2 million of debt may be excluded from income this way.
Here is a link to the info:
You will need to file Form 982 to use this exclusion.