Select Portfolio Servicing, Inc They sent me a 1099-A tax form with a big amount listed which is false Salt Lake City Utah
We lost our home to foreclosure apparently in October 2017 but the shyster lawyer we had nor the mortgage company told us this. Last week I received a 1099-A tax form listing the balance of the principle outstanding and it's false! Way more than it should be! Select NEVER sent us any paperwork showing what was owed and what the property sold for.
Looking it up the Fair Market value is at $414,,506 not the $557,078.16 they listed on the 1099 plus if the home sold for $274,100 that left a true balance of $140,406 not $399,930.38. I am writing IRS to alert them to these false taxes. Seems I am not the only one who has a bad experience with this group. Question is: Why are they still in business and why haven't they been charged with illegal acts?
1 Updates & Rebuttals
Jim
Beverly Hills,California,
United States
It Sounds Correct to Me...
#2Consumer Comment
Wed, February 13, 2019
I mean there isn't enough information but it sounds right.
Looking it up the Fair Market value is at $414,,506 not the $557,078.16 they listed on the 1099 plus if the home sold for $274,100 that left a true balance of $140,406 not $399,930.38. The FMV of the home is irrelevant - you likely report FMV or the mortgage - and generally it's the lesser of the mortgage or the FMV. However, the FMV could be the $557,078 number, not the 414,506; the latter sounds like your purchase price, which is not the FMV. The only time the FMV really comes into play is when there has been a severe drop in home prices within your geographic area - like during 2007-2008. It doesn't sound like this happened here.
The home's sales price is completely irrelevant. This isn't like a car that gets repossessed, and you're only on the hook for the balance of the car loan, less the sale price of the car at auction. In a real property situation, you lose title to the house upon foreclosure - the title transfers to the bank. The 1099-A therefore details the benefit you received as a result of the foreclosure when the mortgage was eliminated, not what the bank lost. That benefit sounds like it's going to be the $399,930.38 number; the 1099-A is what you have to declare as income. Now, there are exclusions, depending upon your situation, and you may not have to pay tax on that income. You should find out what the outstanding mortgage was at the time the house was foreclosed, if you're not sure. But, most institutions don't screw up a 1099-A. Just saying.
This is a situation where you need to consult with a tax advisor to best determine your liability on any taxes due. I guarantee if you do this yourself, you are going to be screwed. Find a competent tax preparer to prepare your taxes this year and pay the extra money to have the taxes done right. Best of luck to you.