If the 1099-C you received in the earlier year had an amount in Box 2, that amount could have been taxable. However, the Mortgage Forgiveness Debt Relief Act of 2007 (see this IRS article) generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief.
Cancellation of qualified principal residence indebtedness that is discharged before January 1, 2026, or discharged subject to an arrangement that is entered into and evidenced in writing before January 1, 2026, is excluded from gross income.
See IRS Tax Topic 431 for more information.
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