H.R.3506: To amend the Internal Revenue Code of 1986 to exclude from gross income certain amounts of cancellation of indebtedness income on account of a foreclosure on the mortgage secured by the principal residence of the taxpayer.

Foreclosure Tax Relief Act of 2007 - Amends the Internal Revenue Code to exclude from gross income up to $50,000 of the amount attributable to a discharge of mortgage indebtedness or to a refinancing of a principal residence. Limits such tax exclusion to taxpayers with modified adjusted gross incomes of $100,000 or less ($200,000 in the case of a joint tax return).