My house was foreclosed recently in California, and before the actual foreclosure, the bank which had my second loan sent me the loan forgiveness letter (1099), and a few days later they sent me another 1099 stating that they have forgiven the loan and would not be reporting to the IRS, so I also do not need to do so.
It was after 4 weeks of this letter, that my house was foreclosed, which was also a surprise to me, as we were in a process of short sale, and the bank had approved the offer,................... any ways...........
Now after several weeks of foreclosure, I got a call from the bank saying that I owe them the money for second loan (this was not a purchase loan). I was shocked, and told them that was already settled. I have the 1099 from the bank.
I am confused, can the bank legally do that after settling the loan?
What should I do now.