Exceptions to IRS Form 1099-C Reporting

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 BorrowerBorrowerPerson 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 BorrowerBorrowerPerson who is the obligor per the Note. is released from a 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. as long as the remaining BorrowersBorrowersPerson who is the obligor per the Note. are liable for the full UPBUPBUnpaid Principal Balance of 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. .

Guarantor or surety.  A guarantor or surety (i.e., any GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other Mortgage Loan guaranty. or Key PrincipalKey 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 GuarantyNon-Recourse GuarantyGuaranty executed by a Key Principal on Form 4501 series or Form 6015 series, or approved by Fannie Mae. or a Payment GuarantyPayment GuarantyGuaranty executed by a Key Principal on Form 4502 series or Form 6020 series, or approved by Fannie Mae. ) is not a BorrowerBorrowerPerson who is the obligor per the Note. for purposes of the debt cancellation reporting requirements, so IRS Form 1099-C is never required.