Comments on: Can We Finally Put To Rest This 1099 vs. Deficiency Judgment Issue?

By: Dan

Dan — Wed, 04 Jan 2012 23:45:20 +0000

Barry,

Thanks for your comments over the last couple of years. I have recently closed on an investment property in the Orlando area (I live in ILLinois). The mortgage was with Chase and Freddie. The Short Sale closed last week. Per the HUD, I have a shortage of $92K. Should I expect a 1099 from Chase for that amount? Do they always issue a 1099? Does it tend to come in the next year? The house closed in December of 2011, should the 1099 come in 2012? I talked to my Accountant who tells me he will zero out the shortage and not to worry. The wording in my Chase approval letter contained the following; “JP Morgan Chase Bank, N.A. successor by merger with Bank One, NA, agrees to release it’s security interests in the above captioned collateral AND forgive any deficiancy balances upon receipt of $XXX,XXX.XX in certified US funds”. I assume that is all I need for the approval. I had an attorney for this process who said it looked good. Can Chase come after me for the shortage down the road. Thanks again for you comments over the years.

By: Barry Cunningham

Barry Cunningham — Mon, 22 Aug 2011 15:07:06 +0000

Whoa Greg..slow down bud… If I read this right, your friend owns the property and owes the mortgage. HE would get the 1099 when you buy the property. Sounds like what you’re asking is would they discount the loan and let you assume it. Not sure on that one. Most banks we’ve dealt with want to be paid off if they are discounting the loan. That’s why it’s called a “short payoff”. But it’s worth a try in this economy. They may be willing to go along with it. Especially since it’s vacant land. Where in the mountains is it?

By: Greg

Greg — Mon, 22 Aug 2011 09:24:54 +0000

A friend owns a piece of land in the mountains of NC. The interest only 5 yr mortgage balance is $190,000. The land is worth more like $140,000. The 5 yr note comes due on Oct 1, 2011. If I can talk the bank into lowering the mortgage balance to $140,000, and giving me a 30 yr mortgage at a decent interest rate, will they send me a 1099 for the $50,000 forgiven so that I can keep paying on the mortgage?

By: Barry Cunningham

Barry Cunningham — Mon, 25 Jul 2011 12:45:17 +0000

You really need to speak to a lawyer. I would say that if BOA is taking the home back in a voluntary repossession and if you owe a mortgage on the home that they are forgiving then the IRS will indeed seek to collect. So you may seriously need to talk to a lawyer and get protected BEFORE you do anything. Good luck.

By: S. Torres

S. Torres — Sun, 24 Jul 2011 01:01:21 +0000

No comment but HUGE question. We bought a house and the sellers realtor covered and concealed mold in the house we bought as well as asbestos tiles thrown in the hvac floor vents. No disclosure to these facts of course. Mold counts were in the millions. County assessor reassessed house and gave it $0.value. The property is only worth $50,000.00. Been in litigation for 3.5 years. B of A has agreed to take the house back because it was sold to us under fraudulent terms.
Will we have to pay taxes on any future deficiencies from B of A?

By: Robin Sing-Cunningham

Robin Sing-Cunningham — Wed, 30 Mar 2011 04:12:54 +0000

Hi Linda, sorry we do not have a hard copy book available

By: Linda

Linda — Wed, 30 Mar 2011 02:58:50 +0000

Instead of ebook, do you actually have a book on your information about Short Sale and Deficiency as of date today is 3/29/2011. There seems to be more laws that have been put in place. Not everyone can keep up. Just checking. I like to read hard copies in book form and have references to look into like web links etc as the laws etc do change from time to time for future references. Thanks.

Short Saled in Maryland Feb 2010 primary home. Discount approved by bank by 1st for the 2nd. So far no collections are reported on the credit report. No promissory notes were signed at settlement. No 1099 yet. No letters from 2nd bank since then. The 1st Trust bank sent a letter that we were paid in full. The key thing is I want to make sure that there won’t be a deficiency later on. Reading sources really do help back us up if need be.

THANKS for your investigative tools for each case scenarios, even though checking with a lawyer of our state/county seems appropropriate, if necessary.

Since I am deaf, the videos are hard to use. Books I prefer. I am not a fan of e-readers. That’s since I don’t paste myself on the net.

By: Nick

Nick — Wed, 02 Feb 2011 16:59:35 +0000

Hi Barry -

I am in Clark County, Nevada.

By: Barry Cunningham

Barry Cunningham — Wed, 02 Feb 2011 16:29:52 +0000

Nick..what state are you in?

By: Nick

Nick — Wed, 02 Feb 2011 05:36:57 +0000

Barry,

Is the release that is filed the substitution/reconveyance document? That is all that I found on my county recorder’s page for my house which was short sold recently. It looks like there were two filed on separate dates (presumably one for the first mortgage and one for the second?).

By: Barry Cunningham

Barry Cunningham — Sat, 29 Jan 2011 13:22:59 +0000

Hi Pat, despite sometimes being referred to as a know it all, I am certainly not. 1031 exchanges are unfortunately not an area of real estate that I have any experience with and as such I can’t give you any advice on. I can recommend an attorney you can speak to if you want, please advise.

By: pat

pat — Sat, 29 Jan 2011 12:51:23 +0000

a few months ago you gave me very good info on my short sale. I now have another problem. about 5 years ago when we bought the property we
did a 1031 tax exchange now we have short saled property. the property
value was 37,000 dollars below amt owed to mortgagee and the 1031 exchange was for 80,000, of course we lost everything and this was a second home. How bad will my tax implications be? Is there anything I can do to lessen my debt to the IRS? Any info from you will be greatly
appreciated.

By: Barry Cunningham

Barry Cunningham — Mon, 24 Jan 2011 21:04:23 +0000

If you want a quick real answer, go to the public records in the county in which the property is and search online for recent (60-180 days) for the actual releases that were filed by Chase. Often the servicers and people involved are different than those who actually file the documents. We have been told over and over that BOA does not do full releases…then lo and behold you check the public records and what actually is filed? A full release of mortgage AND the note. So if the negotiator won’t budge, ask, insist and then be prepared to accept the short sale in as best a terms as you can get…but before you do anything…see how their releases are being worded on the public records. You may find you’ll end up sitting pretty anyway

By: Dan

Dan — Mon, 24 Jan 2011 20:11:15 +0000

Barry,

About 4 – 6 months ago I was on your site often and read every comment posted on short sales. I was going through with a sale that came apart at the end. Buyer found a house that was cheaper. I am now back in the hunt with a new Realtor and am starting the process all over again with Chase (loan is a Freddie). I just talked to an attorney in Florida who tells me that he has not seen many Full Releases from Chase. Is that your experience as well? This house is an investment home for me. I owe $213K on the mortgage (in my name) and the house is worht $150K at best. I told the Realtor I can not sell the home unless I get a full release and want that listed as a contingency. Am I being realistic expecting a Full Release letter from Chase? Thanks….

By: Barry Cunningham

Barry Cunningham — Fri, 29 Oct 2010 12:34:39 +0000

Glad we could help

By: Jane P

Jane P — Fri, 29 Oct 2010 12:05:05 +0000

I had previously read about the Mortgage Forgiveness Debt Relief Act — you article, however, clarified a point on which I was previously not clear.

Thanks again.

By: Barry Cunningham

Barry Cunningham — Mon, 13 Sep 2010 19:55:08 +0000

Hi Jacquline..like we have said in the article..a 1099 and a deficiency judgment are two separate items. The 1099 is based upon the amount of income you “earned” by having the debt forgiven. And yes, you do owe that on your taxes…sort of…

If this was your primary residence, you will ahve a get out of jail free card based upon the Mortgage Debt Reflief Act. If it wasn’t on your pesonal residence, you’ll have to seek refuge through IRS Form 982. Either way talk to your accountant for assistance.

As for the deficiency judgment, check the terms of your approval letter and then pull the mortgage satisfaction filed and that should tell you what’s up. Also certain states do not allow any deficiency to be collected. What state are you in and do you have a copy of your mortgage satisfaction?

By: Jacqueline Huckabee

Jacqueline Huckabee — Mon, 13 Sep 2010 19:25:12 +0000

I was issued a 1099A on a property that went into foreclosure, but they sent the deficiency to a collection company who is trying to collect on the balance. Are they still able to try to collect the deficiency after they issued a 1099A?

By: Elle

Elle — Thu, 09 Sep 2010 20:04:49 +0000

Anyone want to buy or invest in a shortsale home in Las Vegas? Everything was fully approved, but now my buyer fell through because he couldnt get financing! Now I have to start the whole process all over again.

By: Maryann

Maryann — Thu, 09 Sep 2010 17:06:42 +0000

Hi Barry,

Have you had a chance to review my question. I really want to know. I think we are closing in a few weeks and I’d like to know what I’m in for.

“Can you explain this to me? One West (our primary) is releasing the lien and not pursuing deficiencies. I’m reading my letter from Greentree my second and this is what it says
“The current payoff on your above referenced account is $48,930. Please be adviceds that Green Tree Servicing LLC will accept and consider payment in the amount of $9000 on the account as sufficient to release the deed of trust. Any funds in your escrow account will be applied to your remaining loan balance. Upon receipt and verification of funds, Greentree will release the deed of trust/mortgage. However the remaining obligation due under the Note or any former or subsequent modifications to the note, shall remain fully due an payable”

I’m assuming the balance will be headed to a collections agency? Also could I get a 1099 from One West and still be liable for the second? I’m hoping I don’t end up in court, but again, they will pursue me either collections or court on the second right?”