I have a 2nd lien that we are near foreclosure sale (in Florida). However, borrower hired attorney (not surprised) & attorney claims that since borrower received 1099 from lender in 2010 that lien was released.
My attorney is not so savvy with jr liens. Their attorney is not savvy with foreclosure, notes, etc.
The lender was PNC. There was not a 'release' filed by PNC. But that's not sufficient to the attorney.
Anyone in this space knows that many, many especially the big lenders issued 1099's to 'write-off' their liens. How can I get or what can I use to provide better proof that 1099 was only a write off?
The borrower attorney is now filing a lawsuit to include us (note holder), PNC & anyone else associated with the note claiming it is invalid. All this is doing is racking up attorney fees & delaying the inevitable.
Of course if I could get an email or letter from someone with PNC that would make a world of difference.
want more info - connect with me.
There isn't much you can do to avoid litigation but make sure your attorney knows what he's talking about.
Charge off and release are two different concepts. They aren't even arguing that it was paid off (where you'd simply ask them for proof).
You'll most likely win the case but as you mentioned, litigation fees and wasted time will hurt.
Did PNC own both mortgages? That seems to confuse a lot of borrowers / attorneys.
Any Mortgagee who forgives any amount of principal is required by law to issue a 1099. The forgiveness of principal is an income event for the borrower and the 1099 is what they must include in their tax filings. The 1099 is not issued to write off the loan but rather because the loan or a portion thereof was forgiven a 1099 must be issued.
That is also not the entire idea of a write off. A write off doesn't need to include the borrower at all and thus no 1099. As an asset manager, I can write off any investment or portion there of and that doesn't also mean the collect-ability is void. It does however mean that certainly the portion which was was forgiven can no longer be collected. The point here is forgiveness, which requires a 1099, is a write off but not all write offs are forgiveness.
That said: - What is the amount on the 1099?
What the defense is attempting to do is bring about the idea that there is no debt at all to collect. It was 'all' forgiven (which would be evidenced by the 1099). If there is not debt, there is no note. There is no note, the security interest is no longer enforceable either. They would make those claims and likely ask for the mortgage to quieted on title.
It is not a good sign the borrower's defense has now also turned to offense. Take that seriously.
A core idea here is having a security interest doesn't also mean having a debt to collect.