221.04
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The Internal Revenue Service requires certain mortgage holders, including Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! , to file information returns when $600 or more of a Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 is cancelled. Except as provided in Part V, Chapter 2: Reporting and Remitting, Section 221.04D: Exceptions to IRS Form 1099-C Reporting , the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must file these returns on Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! 's behalf, using IRS Form 1099-C, for all applicable Mortgage Loans Mortgage LoansMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 (including Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 participations if Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! 's percentage ownership of such Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 is 50% or greater). If, in the same calendar year, a Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 is canceled in connection with a foreclosure or abandonment of secured property, it is not necessary to file both Form 1099-A and Form 1099-C for the same Borrower BorrowerPerson who is the obligor per the Note. . Only Form 1099-C need be filed, and the Form 1099-A filing requirement for the Borrower BorrowerPerson who is the obligor per the Note. will be met by completing boxes 4, 5, and 7 on Form 1099-C.
A debt is cancelled (in whole or part) when any of the following occur:
- discharge in bankruptcy under Title 11 of the U.S. Code;
- receivership, foreclosure, or similar federal or state court proceeding makes the debt unenforceable;
- the statute of limitations applicable to collecting the debt expires (if so determined by a court and any appeal period has expired), or expiration of the statutory period for filing a claim or beginning a deficiency judgment proceeding;
- foreclosure remedies by law end or bar Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! ’s right to collect the debt (e.g., foreclosure by exercise of the “power of sale” in the Security Instrument Security InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. );
- probate or similar proceeding cancels or extinguishes the debt;
- Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! and the Borrower BorrowerPerson who is the obligor per the Note. agree to cancel the debt at less than full consideration;
- a decision or defined policy of Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! causes collection activity to be discontinued and the debt to be cancelled; or
- expiration of a “non-payment testing period”.
The Internal Revenue Service presumes that a debt is cancelled during a calendar year if no payment has been received on the Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 during a period (the “non-payment testing period”) of 36 months, plus the number of calendar months when collection activity was precluded by a stay in bankruptcy or similar bar under state or local law. The presumption may be rebutted, however, if there has been significant, bona fide collection activity at any time during the calendar year, or if facts and circumstances, existing as of January 31 of the calendar year following expiration of the 36-month period, indicate that the indebtedness has not been discharged.
| 221.04C | |
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The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. is responsible for completing the Cancellation of Debt (IRS Form 1099-C) accurately, and for filing it with the Internal Revenue Service and providing the information to the Borrower BorrowerPerson who is the obligor per the Note. and to Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! by the required dates. The form must be filed on or before February 28 (or March 31 if filing electronically) of the year following the calendar year in which the discharge of indebtedness occurs.
If the Internal Revenue Service penalizes Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! because the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. failed to file a return or filed an incorrect or late return, Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! will require the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. to reimburse Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! for any penalty fees the Internal Revenue Service assesses (unless the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. can document that it met the filing requirements).
The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. also must furnish the Borrower BorrowerPerson who is the obligor per the Note. with an information statement before January 31 of that year. The requirement for notifying the Borrower BorrowerPerson who is the obligor per the Note. can be satisfied by sending Copy B of a completed IRS Form 1099-C (or a substitute statement that complies with Internal Revenue Service requirements for substitute forms) to the Borrower's Borrower'sPerson who is the obligor per the Note. last known address, and the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must send Copy C to those states that require it. When the form is filed on Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! 's behalf, it must show Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! 's name as the “Creditor,” Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! 's address and federal identification number (52-0883107), and include a legend identifying the statement as important tax information that is being furnished to the Internal Revenue Service.
Information that must be reported on IRS Form 1099-C includes:
- the Borrower's Borrower'sPerson who is the obligor per the Note. name, address, and taxpayer identification number (the Social Security number if the borrower is a natural person);
- the date the debt was cancelled;
- the amount of the cancelled debt, which does not include interest or any amount received in satisfaction of the debt from a foreclosure sale or other means;
- a description of the debt, such as “mortgage loan,” and a description of the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). if a combined IRS Form 1099-C and 1099-A is filed;
- whether the Borrower BorrowerPerson who is the obligor per the Note. is personally liable for the debt;
- whether the debt was cancelled in bankruptcy; and
- the fair market value of the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). if a combined IRS Form 1099-C and 1099-A is filed.
If the cancelled Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 had an original principal amount of $10,000 or more, was originated after 1994, and involves Borrowers BorrowersPerson who is the obligor per the Note. who are jointly and severally liable for the debt, a separate information return for each Borrower BorrowerPerson who is the obligor per the Note. must be filed, and each return must report the entire amount of the cancelled debt. If the Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 was originated prior to January 1, 1995, or if the original principal amount of the cancelled Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 was less than $10,000, and if there are multiple Borrowers BorrowersPerson who is the obligor per the Note. , reporting is required only with respect to the primary (or first-named) Borrower BorrowerPerson who is the obligor per the Note. . In addition, only one information return is required, regardless of the origination date or the original principal amount, if the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. knows, or has reason to know, that co-Borrowers were husband and wife living at the same address when the Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 was originated, and does not know or have reason to know that such circumstances have changed when the Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 is cancelled.
Interest. Interest need not be reported. If it is reported as part of the cancelled debt, the IRS Form 1099-C instructions require that it be shown in a separate box on the form.
Non-principal amounts. Cancellation of amounts other than stated principal, including penalties, fines, fees, and administrative costs charged to the Borrower BorrowerPerson who is the obligor per the Note. , need not be reported.
Release of a co-Borrower. IRS Form 1099-C need not be filed when one Borrower BorrowerPerson who is the obligor per the Note. is released from a Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 as long as the remaining Borrowers BorrowersPerson who is the obligor per the Note. are liable for the full UPB UPBUnpaid Principal Balance of the Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 .
Guarantor or surety. A guarantor or surety (i.e., any Guarantor GuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other Mortgage Loan guaranty. or Key Principal Key PrincipalPerson who controls and/or manages the Borrower or the Property, is critical to the successful operation and management of the Borrower and the Property, and/or may be required to provide a Guaranty. executing a Non-Recourse Guaranty Non-Recourse GuarantyGuaranty executed by a Key Principal on Form 4501 series or Form 6015 series, or approved by Fannie Mae. or a Payment Guaranty Payment GuarantyGuaranty executed by a Key Principal on Form 4502 series or Form 6020 series, or approved by Fannie Mae. ) is not a Borrower BorrowerPerson who is the obligor per the Note. for purposes of the debt cancellation reporting requirements, so IRS Form 1099-C is never required.
If, in the same calendar year, the Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 is cancelled in connection with the acquisition or abandonment of the same Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). securing the Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 , filing a timely and accurate IRS Form 1099-C will satisfy the requirement to file an IRS Form 1099-A.