Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Litton Loan Servicing issued me a 1099-C for 2010, when I have been out of the house since 2008.  How is the government allowing this to happen?  Everybody with a heartbeat knows this mortgage fiasco was a big fraud, but yet they still allow the banks and mortgage servicers abuse the people.

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Pam, so-called "forgiven debt" is one of the blades servicers keep hidden in their scabbard to be used when they decide to punish someone for challenging them.

What most people don't know, and this isn't legal or tax advice, is the IRS does not penalize a servicer for not issuing a 1099 for forgiven debt on loans that are securitized into a REMIC trust - it is purely an arbitrary and capricious decision on the part of someone in the servicer's management to decide whether or not to report whatever amount they dream up on a 1099.

Having said that, it does create a recorded amount of the alleged debt - something that sometimes cannot be validated even with absurdly convoluted accounting. This is where they get the 'get out of jail free' card - in most cases they can't put a viable number on an income tax record so the IRS conveniently doesn't penalize them.

In short - it has to be challenged in your tax filing and in many cases (again, not being legal or tax advice) the servicer will have no legitimate basis for the speciously concocted number they put on the form.


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   I am not a tax professional but I think if you research a 1099-c as it relates to your primary residence you may NOT have to consider the forgiven debt as income.  I think this is also important for people that (the few) received a HAMP modification where some of the principal is reduced.,,id=179414,00.html

I hope this helps a little.
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In case the link doesn't work:


If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17.

This is off the IRS website at the link I provided above.  So it is POSSIBLE that even with the debt forgiven which is usually income, when it relates to your home you won't have to claim it as income. 

I am not a tax professional, I'm not sure if H&R Block is familiar with this so I might be finding a real tax accountant. 

I hope this helps.
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I got a 1099-A (Acquisition or Abandonment of Secured Property) a couple of days ago from Wells Fargo.  In a non-judicial state.  We filed BK in 2009, Wells had the stay lifted, discharge of BK in 2009, and finally foreclosed on in Jan 2010.   Also got 1099-A from our second.  I noticed that the fair market value (Box 5)  on each form has a different amount.  I have aso been getting 1099-C for discharged credit card debt from 2009.  One states date canceled in 2010, and also stated the debt was discharged in BK.  Another one does not state anything about BK.  Why would I be getting 1099-C for discharged credit card debt from 2009?  Makes no sense. 

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