Wells Fargo not issuing a 1099 c

Hello - I have called WF 5 times and each loss mitigation representative, short sale dept. and others tell me that because I had PMI on my loan, I will not receive a 1099 c and that it is noted on my acct.  They told me that the PMI company paid them so it is not right for them to claim the loss. They said that FHA and PMI backed loans are not issued one.  When we first started this process, I was under the assumption that we would receive this form come tax time. 

 

I am now confused and unsure what to do.  WF isn't reporting it to the IRS.  Do I claim this on my taxes?  Will the PMI company send me a 1099 c? The SS closed on 9/6/12.  We had a ramainder of $204,000 left on our mortgage and the condo sold for $139,000.  On our SS approval letter, it does state that the bank waives all rights to collect the deficiency once the SS is closed.

 

Has anyone ever dealt with this?  We only had one loan.  WF was the loan service and it was owned by Fannie Mae.

 

We did contact a CPA who did tell us that if we didn't get a 1099 c then to not worry about it.  Any advice would be much appreciated.

 

-Kristy

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Permalink Reply by Bryant Tutas on February 11, 2013 at 8:43am
Permalink Reply by Kristy Smith on February 11, 2013 at 2:09pm

Thanks for all of your replys.  Ron - According to WF, they did get paid in full.  They told me that they will not issue a 1099 because they didn't take a loss as the PMI company paid them.  The one representative I talked to assured me that they have CPA's making sure all of their ducks are in a row and it is noted on my account that we will not receive one. 

 

I have heard of people still receiving 1099s even with PMI, but I am wondering if their deficeit was higher and the PMI company didn't cover the whole thing.  Our deficiency was about $69,000 when everything was all said and done.

Permalink Reply by Kevin - Greenville, SC on February 12, 2013 at 1:46am

Perhaps the most misunderstood portion of this process is the first step – whether the debt is recourse or non-recourse. In almost all instances, non-recourse debt will not be subject to cancellation of debt (COD) income.[3] I repeat, in almost all situations, non-recourse debt will not lead to COD income.[4]

http://kevinhardin.com/mortgage-forgiveness-debt-relief-act/

http://www.garystickell.com/articles/arizona-antideficiency.htm

31cg1fw8yxswnPermalink Reply by 31cg1fw8yxswn on March 6, 2013 at 9:38am

Ron,

It would seem to me that if the lender was paid in full, they can NOT send a 1099.  Instead the insurer that paid the balance would be the party that sends the 1099 or attempts recovery of loss (or both).

just my humble opinion of the transactions as described.

Permalink Reply by Ghana Bigsby on March 11, 2013 at 6:02am

Insurance proceeds are generally not taxable money. That is why the PMI will not be issuing a 1099.

Unfortunately several sellers who's notes were insured still received 1099s. Most borrowers do not know their was insurance in place that paid the short pay in full. Best time to find out is before the transaction closes.

I had a tax client (they did a short sale) a few years ago who brought me ALL the mail from the lender when it was time for me to do their taxes. Many were un-opened. There was a 1099C and I found copies of two 1098s. Both 1098s showed the interest allocated to mortgage interest paid. But one had addition info. It showed the details of the loan pay off. It listed the short sale payoff and the insurance payoff. What impressed me was this loan had no PMI. Turns out the note had insurance placed on it by the investor. Wow I say!

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