Foreclosure - Year End Statement - Delay

[Phil]

House was included in bk (chapter 7) - not reaffirmed. House was foreclosed through the courts in October 2010 but sheriff sale was pushed back till March. (they are killing me)

I did not receive a year end statement with interest and taxes paid for 2010 so I called Wells Fargo.

I hate them and how rude they are, but anyway, the very nice person on the other end of the line said because it is not scheduled for sheriff's sale till March, it is not foreclosed (ummm ok) and because of that, they cannot generate the year end statement until after the sheriff sale is completed. So I being stupid asked when I would then get the year end statement (it makes a HUGE difference if I receive money back or not)...she said I would not get that statement until next year. When I asked her to clarify, she obviously was very busy and said it isn't foreclosed yet so it is considered foreclosed in this year, not last and they wont send me the taxes and interest paid. She also said there would be tax consequences. I reminded her this was included in bankruptcy which she said yes I know.

SO help me out here. I can't file that until next year for my 2010 taxes? I really need coffee or something. Why would I not get info on the taxes and interest paid for 2010????

[tcreegan]

Hi Phil,

Your post looked so lonely out there w/ no replies, thought I could give it a shot....

Can you come up w/ an amortization schedule based on your past statement? That would give you the interest. For the taxes, did they change in 2010? If they didn't maybe you can use your 2009 year-end statement.

The downside to this is WF reporting to the IRS. You aren't doing anything wrong, the 2010 taxes and interest go on the 2010 tax return, but the IRS might get confused.

As for trying to get someone competent on the phone at WF, ask for the loss mitigation or BK dept, then ask for a supervisor, the ask for a manager. Heck, call the IRS and tell them WF won't give you the year end statement as required.

Anyhow, good luck with it, my sympathies on dealing with a megaconglomocorp..

Tom in Colo

[debee]

I think the person on the confused the 1099 (foreclosure) with the 1098 (taxes and insurance). They should issue the 1098 without reference to the foreclosure and the 1099 will come sometime after. I would call back, get someone on the phone with a few neurons still firing and tell them you're looking for your 1098. The IRS requires them to provide you with this information so they can't just decide not to send it because they're miffed. Call them back.

[tobee43]

I think the person on the confused the 1099 (foreclosure) with the 1098 (taxes and insurance). They should issue the 1098 without reference to the foreclosure and the 1099 will come sometime after. I would call back, get someone on the phone with a few neurons still firing and tell them you're looking for your 1098. The IRS requires them to provide you with this information so they can't just decide not to send it because they're miffed. Call them back.

exactly....

can you get the 1098 on line?????

OR............it's really not needed now...just get the actual number maybe from the phone auto system????

the 1098 only reflects what the bank reported to the irs...so it's really NOT important that you don't have the actual paper to file and claim the amount on your 2010....then worry about getting a copy of it...by law you are entitled to it.

[tcreegan]

Yeah, that's what I thought debee!!

IRS requires them to provide you with this information so they can't just decide not to send it because they're miffed.

[BrokeinMD]

You'll probably have to wait until after the foreclosure and see if they send you a 1098 for 2010, or if they apply it in 2011, or whenever. If they do it in 2010, and you've already filed, then you just do an amended return. I had to deal with this with my bank. Sending the year-end statements and escrow analysis is actually regulated by the FDIC and while you're in the foreclosure the bank is exempt from sending it. I wrote to them about this very issue. This is the response I received:

Section 3500.17(i)(2) of the Real Estate Settlement Procedures Act contains an exemption from the provisions of Section 3500.17(i)(1). This paragraph (i)(2) contains an exemption from the provisions of § 3500.17(i)(1). If at the time the servicer conducts the escrow account analysis the borrower is more than 30 days overdue, then the servicer is exempt from the requirements of submitting an annual escrow account statement to the borrower under § 3500.17(i). This exemption also applies in situations where the servicer has brought an action for foreclosure under the underlying mortgage loan, or where the borrower is in bankruptcy proceedings. If the servicer does not issue an annual statement pursuant to this exemption and the loan subsequently is reinstated or otherwise becomes current, the servicer shall provide a history of the account since the last annual statement (which may be longer than 1 year) within 90 days of the date the account became current.

If you would like to file a complaint against a financial institution, please contact the FDIC at 1-877-275-3342 for assistance.

We hope the above information is helpful to you. As part of our ongoing efforts to improve our service to the public, we would appreciate it if you would complete a short questionnaire on the level of service you received from this office. The questionnaire form can be accessed at <http://www2.fdic.gov/starsmail/customer.html>.



Sincerely,

Federal Deposit Insurance Corporation

Division of Supervision and Consumer Protection

2345 Grand Boulevard, Suite 100

Kansas City, MO 64108 Fax number 703-812-1020

Consumer Response Center

1-800-378-9581

[debee]

It's only the interest paid that appears on the 1098.

The escrow items aren't on it unless you paid VA, FHA, Rural Housing mortgage insurance of $600 or more in that year into an escrow account, and that may require a separate 1098 anyway. (I typed "taxes and insurances" in my post, but I was thinking "interest". lol. That should count!)

You can only deduct actual taxes and insurance paid in the calendar year so whatever is in the escrow account isn't relevant to the tax year. (Btw, thanks for that FDIC info, BrokeinMD. Good stuff.)

You should have records for what you paid in property tax and insurance. Although our accounts were escrowed, we were still sent that info by the insurance company & the county. If you don't have it, you can call your county and your insurance provider to find out what you paid in 2010.

The 1098 is an IRS form and the IRS requires the lender to send them so long as the mortgage interest paid was $600 or more.

IRS deadline for 1098 to homeowner: mailed by Jan 31

Edit again: The requirement for Information Returns, including the IRS form 1098, originates from Internal Revenue Code section 6041, which says under paragraph (a) that all payments of over $600 that are made in connection with a "trade or business" must have Information Returns filed on them.

(TITLE 26 > Subtitle F > CHAPTER 61 > Subchapter A > PART III > Subpart B > § 6041)

[BrokeinMD]

The year end statement and escrow analysis are to be provided by your lender per the FDIC unless exempted by the above in the RESPA Act 3500.17 that they quoted me. The Lender will not send a 1098 until they apply or close anything if you're in arrears or foreclosure. After I caught my mortgage up at the end of December, I received my year end statement on 2/6/11, in compliance with the 90 day RESPA rule above to do so. I then received my 1098 for 2010 on 2/20/11, after they got their paperwork done.

[BrokeinMD]

I should add that I received my 1098 after I went with what the year end statement (that also said "Substitute 1098" on it) said I paid in for 2010. So, I had to do an Amendment to my 2010 taxes, as I received the damn thing one day ONE STINKING DAY after I filed!

Anyway, my babble with this means to go with what you know you paid in 2010, as it's probably going to be a while for them to get you that 1098 and then Amend your 2010 taxes when you receive it.

[debee]

The year end statement and escrow analysis are to be provided by your lender per the FDIC unless exempted by the above in the RESPA Act 3500.17 that they quoted me. The Lender will not send a 1098 until they apply or close anything if you're in arrears or foreclosure. After I caught my mortgage up at the end of December, I received my year end statement on 2/6/11, in compliance with the 90 day RESPA rule above to do so. I then received my 1098 for 2010 on 2/20/11, after they got their paperwork done.

This is a misunderstanding. The year end statement mentioned above is the year end escrow analysis, not the 1098. The escrow part is the only thing exempted by RESPA. The 1098 is a different bird altogether.

[BrokeinMD]

Hi Debee - My babbling is that I don't think there is a hard date on the 1098 when there is an issue with it being held up by foreclosure, arrears, etc. Have you been able to find that?

[debee]

There's no hard date because the IRS doesn't allow the lender any extensions whatsoever. Which makes sense if we remember that the 1098 is a reporting form and whether the consumer is in good standing on Dec 31st doesn't change what they actually paid in the twelve months prior.

The lender has to mail the 1098 to the consumer by the end of January and if they miss that date, they get fined. There is a second deadline automatically set and if they miss that, another fine. If they miss that, another fine. And so on forever and ever, amen.

Separate from sending a copy to the consumer, the lender also has to file the 1098 with the IRS. They get until the end of February, or end of March if filing electronically. If they miss the Feb deadline, they get fined and the new deadline sets to the end of March. If they miss that, they get fined again and given a new deadline. Repeat until bank joins bkforum.

edit: The reason your 1098 said "substitute statement" was because they didn't use copy B of the official IRS form. (They can use substitute statements so long as they follow the format requirements.)

edit again: Actually, I should say that the IRS will consider applications for extensions to allow more time to furnish the statement to the consumer, but first they have to send in a written request with all kinds of req'd info and the consumer/payor has to sign it as well, and then the most they get is another 30 days. (So Jan 31 plus 30)

[tobee43]

by law.....you MUST receive your 1098 if you paid mortgage interest..........your taxes or were charged back taxes from the bank........if you had an escrow account......however, if not...for your tax payment information you can also get that number from the town or city which you live in...this is not difficult...honestly.

it's simple......you just call your banks auto line and get your numbers for interest and taxes.......you need NOT even provide a 1098 unless you are irs audited and then it's the banks error for not providing one...anad the ONLY way one would be audit is if the numbers provided by the bank to the irs are different than what you are claiming on your taxes...

believe me...i have done too many returns to say that i had the persons 1098 info on slip of paper or had to call their banks for info....

we got ours no problem during foreclosure....if YOU paid the taxes and the interested in 2010 you are entitled to claim those deductions this filing.....