There is nothing here that indicates a sale happened. 1099-S is Sale. 1099-C is forgiven debt, but that doesn't drive if it is taxable.

You should find out what this is and don't make any assumptions. It can be Principal adjustment, and it might not even be taxable under whichever Federal plan allowed the adjustment. It could be the same lender and the same program on both properties. Or, it is likely two different programs, since one is primary residence and one is rental/investment property.

There are a bunch of Federal programs that include being extended for years now, that could be what happened here. HAMP, HARP, HOPE, PRA, HHF, UP, HAFA, etc.

These owners have paperwork somewhere and know their story. We don't know their story.