How long after foreclosure

Discussion of various forms of Advance Fee Fraud, including application fees for loans that never materialize, self-liquidating loan scams, as well as mortgage elimination scams and related debt elimination scams [Nigerian-type scams should go in the Nigerian 4-1-9 forum]
pelhany

How long after foreclosure

Post by pelhany »

How long after foreclosure before you receive a 1099? My house was foreclosed on in October 2009 in Maryland. At the foreclosure sell at the court house there were no bids on the house. I received papers from the court ratifying foreclosure in December 2009. The lender listed the property with a real-estate agent in October and sold the house. The new owners closed on the property January 19, 2010. How long after the foreclosure before I receive a 1099?

Mod edits to remove spam links added long after post. Bye bye, poster.
Last edited by pelhany on Sat Oct 23, 2010 5:26 am, edited 1 time in total.
Prof
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Re: How long after foreclosure

Post by Prof »

pelhany wrote:How long after foreclosure before you receive a 1099? My house was foreclosed on in October 2009 in Maryland. At the foreclosure sell at the court house there were no bids on the house. I received papers from the court ratifying foreclosure in December 2009. The lender listed the property with a real-estate agent in October and sold the house. The new owners closed on the property January 19, 2010. How long after the foreclosure before I receive a 1099?
Under these circumstances, there should be no gain or loss to you, and therefore you would not receive a 1099. While there were no third party bids, the creditor obviously took title with a credit bid (which is to say, the creditor bid in the debt owed by you and secured by the house). Since the creditor did not send you a 1099 in 2009, when the transaction creating a gain or loss happened, it may well be that the lender bid in the entire amount of the indebtedness. Even if the lender did not bid in the balance due, and there remains a debt owed by you to the lender, until the lender forgives that indebtedness, and you should have no phantom income in the form of forgiveness of indebtedness income; of course, forgiveness of indebtedness can generate income and is reported on a 1099, but no forgiveness notice/release is mentioned by you, so that even has not yet happened.

The transaction under which the lender sold the house to a new owner, in early 2010, would under ordinary circumstances be a sale by the lender of property owned by the lender; a gain or loss on that sale would be a gain or loss to the lender, not phantom income to you.
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Nikki

Re: How long after foreclosure

Post by Nikki »

Assuming

(1) the effective date of the loan getting closed out was some time in 2010 and

(2) the holder of the mortgage at the time of foreclosure has its act together

you should have received the 1099 early in 2010.

Thus, you would have to include the "cancellation of debt" income on the income tax return(s) you filed in April, 2010.

Since that didn't happen, you need to start checking into things as soon as possible. It is possible (worst case scenario) that the mortgage holder reported the "cancellation of debt" income to the IRS as happening in 2009 and didn't notify you. If that happened, (once the IRS wheels finish their slow turning) you will receive a deficiency notice for tax year 2009. That is not good.

In any case, it's time, NOW, for you to contact a decent income tax advisor (look into the various free clinics available) to plan for next year. Also, it's advisable to contact the loan holder to determine the amount and effective date which will be reported on the 1099 so you will have all the information you need well before filing time.

Based on the results of all that, you might have to pay a visit to your local IRS and Maryland State Tax offices to work out payment arrangements well in advance of 4/15/2011.
Cathulhu
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Re: How long after foreclosure

Post by Cathulhu »

Do your homework. For starters, please go to the irs.gov website and look at the instructions for form 1099-A. The 1099-C isn't likely to come into play, it's 1099-A, and I can explain how the difference in the fmv and purchase price is affected by whether box 5 of the form is checked.
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TerryJo

Re: How long after foreclosure

Post by TerryJo »

All the rules have changed in the last couple of months. Lending banks are now being held accountable for the trap they set, borrowing money they didn't themselves have, while using loose and illegal practices in the process. The massive lawsuit against Wells Fargo / Wachovia, Indymac / OneWest bank, Citibank, Bank of America, JP Morgan Chase, GMAC..............can actually, not only put a stop to your foreclosure, but also pause your house payments with no loss to you............


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