I understand that it is up to the lender whether or not a 1099 will be issued to the owner in default, depending on the mitigating circumstances causing the default (i.e. catastrophic illness, job loss, etc.) Is this correct?
Is there a way to negotiate with the lender so the 1099 does NOT get issued to the owner? What is the approach?
One last thing: Does the lender get reimbursed for the loss through the mortgage insurance?
The lender determines whether or not to notify the IRS, it is not (apparently) required. Note that if the property goes to auction the lender can still pursue the money that they lost, still write it off, still tell the IRS, so an auction is no answer. I cannot speak to a deed in lieu of foreclosure.
Simply make the debt forgiveness part of your ss offer. Of course, if this is a sticking point, then they win.
I posted a similiar question about 1099 on the legal forum. I noticed that this question didnt get enough response to answer the first question.
So can you write it in your offer that the bank not send in the 1099 request. I write in my offers that they waive their right to a deficiency judgement but i thought they could still send the home owner a 1099. So i can actually put in my contract that they dont do the 1099 either??
Cause i have a reluctant homeowner not sure if she wants to do a ss because she doesnt want any more tax implications?