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kingno1 · Joined: 25 Apr 2008 Posts: 61 21.19 Dollars($)

Hello, I short saled my house on Dec 24th 2008 and it got recorded on the same date. I got a letter from my bank saying that my account is paid in full and closed. Will I be expecting 1099-C for the difference. I have savings acct also with the same bank.
I got my 1099-INT form and then the 1098 form for paid mortgage, but did not receive any 1099-C for cancelled debt.
Wondering if they are going to issue me with 1099-C. If so, should I have gotten it already. Should I check with the bank on this? Is it mandatory to send this form in all cases of short sale?
Any suggestions?

jameshogg · Posted: Tue Feb 10, 2009 12:38 am Post subject:

Hi Kingno,

Nice to see you again. Smile

Well, banks usually send in the 1099-C form when they cancel a part of your debt. They get it signed by you and then send this form to the IRS just to let them that they have suffered a loss due to default on your behalf. However, if you satsify certain conditions, you may not have to pay tax on canceled debt.

In your situation especially you son't have to pay tax because the bank has been very supportive. They've stated your loan as paid in full and closed. That's a great thing I believe in times of crisis. Since the bank does not want to declare any unpaid debt as "canceled debt", therefore, you won't get Form 1099-C probably. Just make sure that the lender reports your mortgage as "Paid in full" to the credit bureaus. Pull a copy of your credit report to find out if it says "Paid in full" beside your mortgage debt account.

Just for your clarification, you may have a talk with the lender regarding 1099-C form. But I believe it's not necessary considering that your loan is declared "Paid in full and closed".

Thanks

kingno1 · Joined: 25 Apr 2008 Posts: 61 21.19 Dollars($)

Thanks Jameshogg, I got a form from the closing title company, but that only shows the sale price. If I call up and ask bank about the form, will they think now..oops i forgot, here you go with the form.
Lets say, if they are not issusing me the 1099-C form, then I dont need to gestimate the difference and file a 982 form..right?
I posted this question on all forclosures forum and somebody expressed that I need to gestimate the diff and file it. However I am not convinced with that answer.

kingno1 · Joined: 25 Apr 2008 Posts: 61 21.19 Dollars($)

Hello, My credit report shows as below. Does this mean that bank is not going to report as short sale? Also, does this mean that bank is now reporting it as current and paid?
Experian: Status: Paid,Closed/Current, was past due 120 days.

Equifax: ING DIRECT
Show Details XXXXXXXXX 07/2007 $0 01/2009 $0 PAYS AS AGREED $0

Posted: Fri Feb 13, 2009 4:31 am Post subject:

If the lender short sells your property, it will definitely report it to the credit bureau. I think you have paid the deficient amount resulting from the sale of the property. Thus, your credit report shows "Paid as agreed".

kingno1 · Joined: 25 Apr 2008 Posts: 61 21.19 Dollars($)

Well, My deficiency was 230K. I never paid that. if I can afford that, I wouldnt be short selling the property. I was behind by 4 months of payments and property taxes. Property taxes were paid to county as part of escrow and the remaining amount went to bank. I never paid the past payments to bring it to current. So, was trying to understand the situation and wondering if my bank is being nice to make them current. So, Looking at his on the report, means that my credit history is free of short sale remark?

Guest

Holy crap -- if you got away that easily on your huge deficiency....then consider yourself lucky. I think you should probably check with the IRS and see if they have or have not filed a 1099C. Lately I have been hearing that the consumers/sellers are supposed to do that. You can't just take it for granted that it was not filed.

Guest

Indeed, the onus falls on you to check with the IRS to check and ascertain that the bank hasn't filed a 1099-C. And make sure that when the bank sends you, that they state the FMV of the property instead of 0.00.

Guest

You all make us good credit Americans sick walking away from your obigations like that and helping to bring America down!

Most of you know damn well you could afford the home and you also knew damn well the terms of the loan, but now want to play stupid, like you were taken advantage of.

Guest

Good job kingno1, im going to do the same thing, screw them goodie 2shoes just because they pay their mortgage, thanks for the bailout American, lmao

Guest

to Amer Guest on Jan 29 2010: you are naive if you think all americans wanted to walk away fr their obligations. doesnt sound like you've had the misfortune of being in a hard situation with your mortg, you're lucky. prior to selling my house via short sale, my credit was 800+, I had a great paying job, & my mortg + rest of bills were always paid on time. After realizing that my home was under water, and my job layoff, I attempted to do a loan mod FOUR times with Chase since Dec 2008. lost paperwork & the run around for over 1 yr got me nowhere. When I asked bank for help, they told me to 'get in line' as so many others were ahead of me who were already behind on payments, whereas I robbed peter to pay paul just to keep the mortg pymts going. I thought it was completely un-American to stop paying the mortg & it felt irreesponsible. but when Chase eventually told me it'll take a long time for them to help me if I kept paying them. so reality hit for me and i stopped paying & put house for sale. that extra money just went to my other bills. by no means is it 'new found money that I spent frivolously. So your comments are offending to think people arent in a hard situation these days. Hopefully you'll never have to make tough decisions like this. It is not for the faint of heart.

Guest

How dare you! My husband lost his job in Oct 09. This was after overtime had been cut and we were struggling. We ALWAYS paid our bills and enjoyed a 800 + credit score. We had no freaking choice in our situation. It was horrible. Our house did sell short sale, and we considered ourselves lucky it did not foreclose. We are a few years shy of retirement, but everything we worked for is gone. Down the Drain. Watch your mouth before you spout off on stuff you don't know.

Guest

Hi , I short sale my house in 2009 , this year I had received form 1099c on my first loan from my lender . My second loan ( home equity line ) They will send form 1099c too , Is this correct ? Thank you .

jenkin7 · Posted: Mon Mar 08, 2010 12:51 am Post subject:

Hi Tran,

It seems that the lenders will not come after you for the deficiency from the short sale. This is why they have sent you a 1099C Form, which suggests they have forgiven the balance on the first and the second mortgages. The forgiven debt is considered as your taxable income. However, you may not have to pay any tax on this debt amount as per the Mortgage Forgiveness Debt Relief Act, 2007, if you have used your property as your primary residence.

Guest

We recently short sold our home of 6 years after my wife lost her job and my company trimmed my salary by 18%. Our FICO was 800+ it quickly went to 610, Now we are trying to rebuild the FICO (at 740 now). Currently the credit report says the account was settled. Not paid in full. We are waiting for 2011 to come around so we can see what the 1099C will bring. I have been running some numbers through some tax programs trying to get a feel for the future. I estimate the deficiency at 180k. The results of the different scenarios range from taxes of 50k to 0. What say you?

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Short Sale - Havent received 1099-C yet for difference.