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1099 form

Posted on: 28th Jan, 2010 10:02 am
I am going thru a foreclosure, Live in MN, had a 70/30 interest only loan, I agreed on a settlement w/ my 2nd mortgage co. for $41,000 less than what is owed, will they file a 1099, if so do I have any grounds to fight payement, do i have to worry about the 1st mortgage Co. filing a 1099, the first mortgage loan is out for much more than the home is worth at this point
hi worried,

the second mortgage lender can send you 1099 form if they settle the debt for less than what is owed on the loan and forgives the balance. the canceled debt will be considered as your taxable income. if the sale price of the house at the foreclosure does not satisfy the first lien on the property, the first lender can come after you for the deficiency. in case they forgive the deficiency, you will have to pay taxes on the forgiven debt amount. however, you can claim exemption from paying taxes on the forgiven debts under the mortgage forgiveness debt relief act. to know more on this, you can refer to the following page:
http://www.irs.gov/individuals/article/0,,id=179414,00.html .
Posted on: 30th Jan, 2010 01:47 am
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