1099c

[ORNV3]

Does anyone know this?

If you get a 1099c is the potential for a deficiency judgment still there or does that mean it's done? I really need to know.

Thanks

[Evan Bedard]

Hi ornv3,

Does anyone know this?

If you get a 1099c is the potential for a deficiency judgment still there or does that mean it's done? I really need to know.

Thanks

The issue of the 1099 will be the deficiency judgement..

Are you completing a short sale?

[Enough Already]

ORNV3,

I just Googled it and it looks like the 1099 c is cancellation of debt which is covered by the Mortgage Forgiveness Debt Relief Act of 2007. I think this is good news! Here's a link to the info I found on the IRS website: Home Foreclosure and Debt Cancellation

If I understand it correctly, if they've issued you a 1099 C it looks like you're off the hook for the deficiency (fingers crossed)!!

Let me know what you find out.

EA

[Enough Already]

ORNV3,

Now that I'm reading through the Debt Relief Act: http://www.irs.gov/individuals/artic...179414,00.html

I'm not sure it will be of use to you since your house isn't your principle residence. I hope I'm wrong on this. Please let me know what you find out.

[ORNV3]

I'm pretty sure the house is still considered my primary residence. I did not buy it as an investment property.... just had to move and had no choice but to rent it. I don't own any other houses.

Both of my short sale approval letters say nothing about the right to pursue a deficiency judgment. It doesn't say ANYTHING about it....

I asked both to include something in the letter stating that they will not pursue a deficiency but they said they cannot change the wording at all.

They do state that they will issue a 1099c.

I'm fine with the 1099c but want to know if I go through with the short sale and get a 1099.... does that mean its over or can the come after me years in the future.

I have a call into a real estate attorney but don't have my appointment for 2 weeks.

[Enough Already]

Another thing you can try is to check with a CPA. We just emailed our CPA to verify the Mortgage Debt Act applies to short sales as well as foreclosures. CPA's are not too busy at this time of year, so you may be able to get a quick answer, rather than waiting 2 weeks to speak to a RE attorney. Be you check with a CPA in NV though.

So, have you decided to go through with the short sale after all?

[ORNV3]

Trying.... They (banks) are making it very difficult.

[Enough Already]

ORNV3,

I just heard back from our CPA he says the Mortgage Debt Forgiveness Act of 2007 does apply to short sales (this is FL CPA).

From what I'm reading I believe the 1099 C signals the end. The bank has taken the loss and moved on.

As I understand it the 1099 C is a cancellation of debt. It shows an expense to the bank, so that's money they don't have to pay taxes on. In other words they get a tax break on that amount. This is where the Mortgage Debt Forgiveness Act of 2007 come into play.

I found this on a CA real estate site:
It’s important for you to know that the lender cannot pursue a deficiency judgment and issue a 1099. They can only do one or the other, not both. In other words – you either have to worry about a deficiency judgment or taxable cancellation of debt income, but not both.

I don't know if it's true, but it makes the most sense (not that anything makes sense when it comes to the RE mess).

I hope this info is helpful. Keep me posted!

EA

[faith]

Originally Posted by ORNV3

Trying.... They (banks) are making it very difficult.

Good morning ORNV3,
Please do not sign the escrow papers until your lender stated in a letter that they will not pursue any deficiency judgment against you. Telling you that they will issue a 1099C should be in writing also. Because lenders LIE all the time.

When I completed my Short Sale with CW, I demanded from my Negotiator that he better give me a letter stating they they will issue me a letter stating they will not pursue any deficiency judgment against me and my husband or I rather have the house foreclosed and I will file for bankruptcy.

When he faxed the letter to my agent and he mailed me the original letter, I emailed my Negotiator just want to confirm what the letter said. I said you better put in escrow papers that they will not pursue any deficiency judgment against us or I will rather have the house foreclose and I will file for bankruptcy. He responded via email too that says, the letter said they, referring to CW, its investors and insurers will not pursue any deficiency judgment against us. So I have that in writing and by email. I again emailed my Negotiator how about my 1099c, who will issue the 1099c and how much is the balance forgiven. He responded saying that the investor will issue the 1099c and told me how much the balance was forgiven. The escrow closed on July 9, 2008 and the escrow papers showed that they will not pursue any deficiency judgment against us.

When tax time came in 2009 CW did not send me the 1099C, I called my Negotiator and referred me to a 800 number and I called that number and referred to Fannie Mae and I called Fannie Mae and referred me back to CW. CW will only give me the 1099C if I will sign a promissory note to pay for the balance owed. I said I have everything in writing, I have purchase money mortgage and never refinance and I am in CA, I am protected under CA Section 580b. So I filed my income tax with the IRS without 1099C and I completed the form 982 and put the amount that was forgiven thanked God for the email. I gave copies of that letter and email plus the reconverance letter that I have received from County Clerk stating that the deed of trust is paid in full. I also attached a letter explaning to IRS everything including my disability via car accident which caused me lost my job. IRS and Franchise Tax Board accepted the form 982 without 1099C, all my documents and letters and reconveyance letter and I only paid $90 dollars to FTB and got a refund of $27 from the IRS.

Now is the time for negotiation not later. Everything should be done in writing. Remind your Negotiator that you are covered under CA Section 580b and they can not pursue you for any deficiency judgment. Tell them a scare tactic that you will not sign the escrow papers until you get in writing that the balance is forgiven, and the Short Sale is accepted as Paid, Settled in less than full balance. Email the Negotiator about you need something in writing that says no deficiency judgment against you, email him who is going to give the 1099C and how much is the balance owed. Hopefully he will respond via email and get everything you want him to say by email.

Hope this helps.

God bless and take care.

[ORNV3]

Thanks for the info Enough and Faith. I'm working on it.... I'll let you know how it goes.

[chefette]

Faith,
Thanks for your input. I just signed papers last night on my short sale. The papers note that I owe 0$ and that I will be issued a 1099 form for the difference. No where in the papers does it say that they will come after me for any money. From what I understood the 1099 is the write off for the bank. And the 1099 should be dismissed in my case under the debt forgiveness act. Please let me know what you think.

God bless........

[Enough Already]

Originally Posted by Enough Already

From what I'm reading I believe the 1099 C signals the end. The bank has taken the loss and moved on.

As I understand it the 1099 C is a cancellation of debt. It shows an expense to the bank, so that's money they don't have to pay taxes on. In other words they get a tax break on that amount. This is where the Mortgage Debt Forgiveness Act of 2007 come into play.

EA

Chefette,
Congratulations on your short sale. I'm no expert, but it sounds like you're off the hook!

ORNV3, Any updates?

EA

[faith]

Originally Posted by chefette

Faith,
Thanks for your input. I just signed papers last night on my short sale. The papers note that I owe 0$ and that I will be issued a 1099 form for the difference. No where in the papers does it say that they will come after me for any money. From what I understood the 1099 is the write off for the bank. And the 1099 should be dismissed in my case under the debt forgiveness act. Please let me know what you think.

God bless........

Chefette,
Thank God for his goodness. You are in the clear my friend. Make sure you get a copy of everything and that part that you owe zero. As far as 1099C sometimes lender do not issue it like what CW did to me and since I have it on paper that the investor will issue the 1099C and how much the balance was forgiven. That's all I need to complete the form 982 and put how much the balance forgiven When you complete the form 982 just put on line 2 how much was forgiven, line 1 checked e and line 10 checked b1 both same amount with line 2.


YOu should be getting a Reconveyance Letter from the County recorder's office and the title company saying that the 1st and 2nd are paid in full satisfaction.

Congratulations Chefette, thank God, thanks also to Moe. Hep hep, hurray, hep hep hurray, You finally get rid of that headache, Just wait 2 years and you can buy again if you want to. My husband and I decided not to, the value of homes keep going down, the last one I've checked, the house that I short sold was recently sold at $150k, my buyers bought it at $298k and we bought it at $475k plus upgrades of $25k.

Cheers, God bless and take care.

[chefette]

Oh thank you Faith so much for responding to my post. I will be really glad to have this thing done with. So many months and months for all of us here, I am blessed that they accepted the short sale in such a quick amount of time. God bless you Faith for all of your genuine care for all of us here. God sends us angels every day, its up to us to see them.

[Cali5]

I agree. Thanks Faith for all your help. You are an angel. I asked you before regarding my loan mod offer with a large balloon payment at the end. It was like a reverse negative amortization. We aren't going through with it. We sent in our $1585 payment but the bank changed their mind. We are now decided and will be doing a short sale. We are upside down $150K and paying $3200 a month. God help all of us.

[ORNV3]

No updates from me....

Unfortunately the first only wants to second to get $3k and the second wants 10K. As of now they won't budge.

We were able to stall the foreclosure sale once last month but the new date is next week. I'm pretty sure it's the end of the road for me.

[Enough Already]

Hi ORNV3,

Thanks for the update. I've been thinking it must have stalled out. It's unbelievable that they would rather let it go to foreclosure than allow the sale to got through. I guess the 2nd mortgage holder must feel they've got little to lose at this point, since the 1st mtg will probably be spending the $$ to foreclose. It seems like there should be something that could be done, but I have no idea what that would be.

This is madness! Please update once you know the outcome.

EA

[Enough Already]

ORNV3,

I can't remember. Are both of your loans with Chase?

[ORNV3]

1st is WaMu, second is AHMSi. I think things would work out if they were both with the same lender.

[JohnBurns]

Hi ORNV3,

You mentioned that the second is getting $3k but is asking $10k. Is this the only issue remaining? Have they agreed not to pursue a deficiency against you for the difference?

If that is the case, I still see hope. Seems like you have come a long way, and I really hope there is some middle ground here. Provided the issue is just this $7k, I wonder if the last step here is to make both parties realize this fact. Why would any bank in their right mind choose to foreclosure over such a small amount.

[Enough Already]

Originally Posted by JohnBurns

Hi ORNV3,

You mentioned that the second is getting $3k but is asking $10k. Is this the only issue remaining? Have they agreed not to pursue a deficiency against you for the difference?

If that is the case, I still see hope. Seems like you have come a long way, and I really hope there is some middle ground here. Provided the issue is just this $7k, I wonder if the last step here is to make both parties realize this fact. Why would any bank in their right mind choose to foreclosure over such a small amount.

Hi ORNV3,
John may have a good point here. I wonder if the bank might let you off with a promissory note for the other $7K? Would something like that work out for you? If so, that would save you the trouble of filing BK etc.

Hmmmm...might work

[ORNV3]

My realtor finally got in touch with a negotiator for the first today. They said they will allow the second to have more money if the money comes from the buyer and/or the agents commission. They will not allow me to bring any money to closing..... which work well because I have none!

I have an appointment with a RE attorney tomorrow and then we have to see if the buyer is willing to pay more for the house.

I wonder if this is ever going to end.

[Enough Already]

Hi ORNV3,

Good news! Let's hope the buyers are willing to come up a bit on the price. After hanging in there for so long my guess is they will be (fingers crossed).

My realtor said the same thing. He's prearranged with the buyer that they may need to come up on the price and they're willing to do that, so we'll see.

We found out yesterday that the 1st is close to giving us the approval. The 2nd has gone to the Recovery Dept to be charged off. My realtor is not alarmed by this. He says this is where the negotiation is normally done with the 2nd (depending on the bank). Anyway, the words recovery dept and charge off make me very nervous, but we're sitting tight. We should hear something from them by early Nov (seems like forever). The realtor is projecting a closing date by Nov 30th. I hope he's right. We'll see....

Thanks for the update. Let me know what happens next.

EA

[ORNV3]

Will do, good luck!

[emc0317]

Originally Posted by faith

Good morning ORNV3,
Please do not sign the escrow papers until your lender stated in a letter that they will not pursue any deficiency judgment against you. Telling you that they will issue a 1099C should be in writing also. Because lenders LIE all the time.

When I completed my Short Sale with CW, I demanded from my Negotiator that he better give me a letter stating they they will issue me a letter stating they will not pursue any deficiency judgment against me and my husband or I rather have the house foreclosed and I will file for bankruptcy.

When he faxed the letter to my agent and he mailed me the original letter, I emailed my Negotiator just want to confirm what the letter said. I said you better put in escrow papers that they will not pursue any deficiency judgment against us or I will rather have the house foreclose and I will file for bankruptcy. He responded via email too that says, the letter said they, referring to CW, its investors and insurers will not pursue any deficiency judgment against us. So I have that in writing and by email. I again emailed my Negotiator how about my 1099c, who will issue the 1099c and how much is the balance forgiven. He responded saying that the investor will issue the 1099c and told me how much the balance was forgiven. The escrow closed on July 9, 2008 and the escrow papers showed that they will not pursue any deficiency judgment against us.

When tax time came in 2009 CW did not send me the 1099C, I called my Negotiator and referred me to a 800 number and I called that number and referred to Fannie Mae and I called Fannie Mae and referred me back to CW. CW will only give me the 1099C if I will sign a promissory note to pay for the balance owed. I said I have everything in writing, I have purchase money mortgage and never refinance and I am in CA, I am protected under CA Section 580b. So I filed my income tax with the IRS without 1099C and I completed the form 982 and put the amount that was forgiven thanked God for the email. I gave copies of that letter and email plus the reconverance letter that I have received from County Clerk stating that the deed of trust is paid in full. I also attached a letter explaning to IRS everything including my disability via car accident which caused me lost my job. IRS and Franchise Tax Board accepted the form 982 without 1099C, all my documents and letters and reconveyance letter and I only paid $90 dollars to FTB and got a refund of $27 from the IRS.

Now is the time for negotiation not later. Everything should be done in writing. Remind your Negotiator that you are covered under CA Section 580b and they can not pursue you for any deficiency judgment. Tell them a scare tactic that you will not sign the escrow papers until you get in writing that the balance is forgiven, and the Short Sale is accepted as Paid, Settled in less than full balance. Email the Negotiator about you need something in writing that says no deficiency judgment against you, email him who is going to give the 1099C and how much is the balance owed. Hopefully he will respond via email and get everything you want him to say by email.

Hope this helps.

God bless and take care.

Faith,

Thanks for this very detailed info, it's helping me a lot. I'm in the middle of shortsale, however I'm still skeptic because first, we have PMI that the lender is paying, second I refinanced from 80/20 to 1 loan never cashback. So I'm afraid about the deficiency if it's gonna covered with 580b or 580d, I'm in Sacramento.