Upcoming Foreclosures

Fannie Mae bought my foreclosure for more than owed. Will I get a 1099?

I bought an investment property to flip in 2005 for $250000. Put 20% down so I owed $200000 In 2009 it went into foreclosure and was sold. The buyer was Fannie Mae and they paid $250000 for it. It seems they bought it for more than what I owed. I can't imagine foreclosure fees and penalties would be more than $50000. I later noticed that Fannie Mae sold the property for $139000 taking a loss of $111,000. Will I get a 1099 from my lender or Fannie Mae? It seems they are buying up properties at inflated prices to help out the banks. So, does this mean that Fannie Mae will issue me a 1099? How can they if they purchased it from my lender for more than I owed? My lender wouldn't be able to issue a 1099 since they recouped their losses and Fannie Mae has nothing to do with me? I'm confused.

Public Comments

1. You will get a 1099 for the forgiven loss, and you WILL need to claim such as income for the year in which the foreclosure occurred. The Mortgage Debt Forgiveness Act of 2007 only exempts income taxation on foreclosure losses on primary residences. Investment properties are not included. Your 1099 should reflect the difference between the outstanding principal you owed vs the actual sale price, plus any costs incurred in the foreclosure. That amounts to $61,000 plus foreclosure fees.
2. Fannie Mae brought it at auction for amt that was owed on the loan this includes whatever fees and penalties that have accumulated on loan since it went in default. You should get notice from the your lender directly who you got the loan through, not Fannie Mae. The loan security was sold to Fannie Mae to secure the loan from your lender so that they (lender) could loan you the money to purchase your investment property. I advise you to talk to foreclosure lawyer in your state to find out what next steps you would need to take as well as your tax preparer.