221.04C

Preparing IRS Form 1099-C

The ServicerServicerPrimary 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 BorrowerBorrowerPerson who is the obligor per the Note. and to Fannie Mae 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 because the ServicerServicerPrimary 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 will require the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. to reimburse Fannie Mae for any penalty fees the Internal Revenue Service assesses (unless the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. can document that it met the filing requirements).

The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. also must furnish the BorrowerBorrowerPerson who is the obligor per the Note. with an information statement before January 31 of that year.  The requirement for notifying the BorrowerBorrowerPerson 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'sBorrower'sPerson who is the obligor per the Note. last known address, and the ServicerServicerPrimary 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's behalf, it must show Fannie Mae's name as the “Creditor,” Fannie Mae'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'sBorrower'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 PropertyPropertyMultifamily 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 BorrowerBorrowerPerson 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 PropertyPropertyMultifamily 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 LoanMortgage 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. had an original principal amount of $10,000 or more, was originated after 1994, and involves BorrowersBorrowersPerson who is the obligor per the Note. who are jointly and severally liable for the debt, a separate information return for each BorrowerBorrowerPerson 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 LoanMortgage 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. was originated prior to January 1, 1995, or if the original principal amount of the cancelled Mortgage LoanMortgage 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. was less than $10,000, and if there are multiple BorrowersBorrowersPerson who is the obligor per the Note. , reporting is required only with respect to the primary (or first-named) BorrowerBorrowerPerson 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 ServicerServicerPrimary 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 LoanMortgage 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. was originated, and does not know or have reason to know that such circumstances have changed when the Mortgage LoanMortgage 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. is cancelled.