Deed In Lieu Of Foreclosure Taxable?

we are an active duty family and were forced to move due to orders. our home has been on the market since 10/2009 and so far, no offers. we now reside in a different state, 2400 miles away and are behind on mortgage payments by 6 months. we were served a summons /foreclosure notice 2 weeks ago. we have been trying to work with the bank ( citi mortgage) but they are not very helpful and keep losing paperwork. we have requested a deed in lieu of foreclosure now, hoping it will get approved before my husband deploys in 2 months. what kind of tax consequence are we looking at? will it make a difference that my husband will be deployed when final papers are signed since all income is non taxable during deployment to a war zone?