Your Questions About Check My Mortgage Repayments

Sandra asks…

1099-A or 1099-C for mortgage debt discharged in ch. 7 bankruptcy?

Our chapter 7 bankruptcy was discharged in Feb06. We had the original intent of reaffirming our mortgage loan and even signed the form to do so; however, Wells Fargo never took us up on our reaffirmation offer for some strange reason, and our attorney let that fact slip by. Therefore, we were not legally responsible for this mtg loan any longer. When Wells Fargo refused to show on our credit report that we had been paying them faithfully, we got fed up with them and told them they could have their house back in Jan08. I mean, how stupid of them to not take us up on our reaffirmation request anyway! My main question is this… Wells Fargo sent us a 1099-A form instead of a 1099-C. Is this correct? I have been trying to research it a bit, and I understand that the 1099-A form is usually used in abandonment cases, which we essentially did end up doing. However, I was thinking we would’ve received a 1099-C instead of the 1099-A since it was a discharged debt in our Ch 7 bankruptcy. ??

If the 1099-A form is the correct form, are we protected by this new Mortgage Relief Act? Here’s the info from my 1099-A form:
Principal outstanding $76,396.22; FMV $65,450.00; Was borrower personally liable for repayment of this debt? “Yes” (how can this be “yes” when it was discharged in our BK-7?!) With this info., what needs to be done on our income taxes this year? Which discharge box w/b the correct one to check on the 982 form in our case?

Sorry about the tons of questions, but Wells Fargo just seems to try to jerk us around at every turn, no matter how hard we tried to work things out with them. They’ve got my “dander” up. Thank you!

Additional Details
Re: Reaffirmation
We signed a reaffirmation form w/ our attorney that they sent to Wells Fargo during the beginning stages of our BK-7 filing. Wells Fargo never responded to that form, thus not taking us up on our reaffirmation offer. Our loan w/ them even shows up on our credit report as “Discharged in Ch. 7 Bankruptcy”. The reaffirmation definitely never happened. And Wells Fargo’s “tax team” is trying to say that the 1099-A form is the correct form because of the fact that we abandoned the property. I am so tired of Wells Fargo’s bullying me on this that I feel like trying to sue them over the whole issue. Just another tidbit that our BK atty brought up– when the foreclosure was filed, an “in rem” judgment is what was filed, which tells her also that we should not have been mailed any sort of 1099 form from Wells Fargo.

admin answers:

From the IRS Pub 4681http://www.irs.gov/publications/p4681/ch01.html#d0e437

Qualified Principal Residence Indebtedness

You can exclude canceled debt from income if it is qualified principal residence indebtedness. Qualified principal residence indebtedness is any debt incurred in acquiring, constructing, or substantially improving your principal residence and which is secured by your principal residence. Qualified principal residence indebtedness also includes any debt secured by your principal residence resulting from the refinancing of debt incurred to acquire, construct, or substantially improve your principal residence but only to the extent the amount of debt does not exceed the amount of the refinanced debt.

But, if you really want to report the thing, put it on a Sch-D, showing the (personal, nondeductible) loss. You will need to know the cost basis of your house for that.

Note: Wells Fargo is doing that to get the debt/bad loan off their books. It is not because of any personal malice. And, it might not have been an oversight for them not to reaffirm the loan.

George asks…

my fixed 2 year interest only mortgage deal expires end of april..?

i have not arranged another deal with the bank i assumed it would change to repayment automatically. I did get a letter in april stating my two year deal has come to an end. When i checked my direct debit on may 1st it was the same as my old payment. Nothing changed. Which im puzzled about.

can u help me make sense of it all.

admin answers:

If you think there’s an error, call you mortgage holder and talk to a representative. With all of the homeowners relief going around, there may be something you are missing. You need to be 100% clear on what your mortgage entails. During this time, try to refinance to a fixed rate immediately! Good luck!

Carol asks…

HELP!? Check my answers I reallly need to be sure i get these right!?

Math questions I have an ** next my answer! please help and don’t be rude.

1. Which item cannot be used to secure a debt? (1 point)
house
car
record collection
credit card**
2. Which type of debt is secure? (1 point)
mortgage**
credit card
personal line of credit
revolving credit line
3. Secured debt usually has _____. (1 point)
longer loan terms
lower interest rates
collateral
all of the above**
4. A _____ is not an example of collateral. (1 point)
checking account**
house
car
high-value record collection
5. When you agree to pay a car dealer for the use of a new car during a set period of time for a set amount of money and you have to return it at the end of that period of time, you are _____. (1 point)
buying
renting
leasing
owning
6. If you put a down payment on a house of less than 20% of its value, you typically have to pay _____. (1 point)
PMI
penalty points
mortgage fees**
higher interest rates
7. There is typically a significant difference in loan interest rates between _______. (1 point)
new cars and used cars
used cars and refinanced cars**
new cars and refinanced cars
There is no significant difference in loan interest rates.
8. The original loan amount is referred to as the ____. (1 point)
principal**
originating amount
loan balance
interest deferred amount
9. Lenders rely on credit scores to determine _____. (1 point)
risk**
loan amounts
loan repayment length
all terms of a loan
10. Interest begins accruing the date of the transaction except for _____. (1 point)
mortgages
credit card purchases
credit card cash advances**
auto loans

admin answers:

I think they all look right…..number 5 you don’t have an answer for, but I think it is leasing….

Betty asks…

Could someone double check my answers? 10 points to whom ever helps me and says nothing else.?

1. Which item cannot be used to secure a debt?
house
car
record collection
credit card*

2. Which type of debt is secure?
mortgage*
credit card
personal line of credit
revolving credit line

3. Secured debt usually has _____.
longer loan terms
lower interest rates*
collateral
all of the above

4. A _____ is not an example of collateral.
checking account*
house
car
high-value record collection

5. When you agree to pay a car dealer for the use of a new car during a set period of time for a set amount of money and you have to return it at the end of that period of time, you are _____.
buying
renting
leasing*
owning

6. If you put a down payment on a house of less than 20% of its value, you typically have to pay _____.
PMI
penalty points
mortgage fees*
higher interest rates

7. There is typically a significant difference in loan interest rates between _______.
new cars and used cars
used cars and refinanced cars*
new cars and refinanced cars
There is no significant difference in loan interest rates.

8. The original loan amount is referred to as the ____.
principal*
originating amount
loan balance
interest deferred amount

9. Lenders rely on credit scores to determine _____.
risk*
loan amounts
loan repayment length
all terms of a loan

10. Interest begins accruing the date of the transaction except for _____.
mortgages
credit card purchases
credit card cash advances*
auto loans

admin answers:

3. All of the above

Lizzie asks…

mortgage gift letter HELP!!!!?

I’m set to close in 2 weeks and NOW the lender wants a gift letter from my mother and daughter for deposits that were made in my account 3 times in the last 3 months. My mom’s deposit was $500 cash. My daughters was 2-$200 deposits cash. My loan officer said to cross out the info that it was a gift to purchase the house but they need to show a bank statement of where they got the funds. Daughter is paying me back for a loan I made to her in January but she cashes her check at her job and does not have a bank account. My mom gave me $500 because she wanted to help me pay for the home inspection. My mom has a bank account however these funds came from her stash :). My loan officer said she needed to talk to the underwriter but I have a feeling I’m screwed. They have both signed the letter stating there is no repayment and that these funds came from them only. Will I get denied because of this? This is my second loan officer the first one told me not to have BIG deposits over $800 so I haven’t worried about it.

admin answers:

You should be OK as long as no repayment is expected from you. They’re just trying to verify that you didn’t borrow your down payment.

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