If a 2nd Mortgage holder issues a 1099C on a house because there is not enough equity to foreclose, is the 2nd mortgage no longer valid? 2 Answers as of April 04, 2013

How do I get the mortgage removed from title?I'm still in the house and had to claim the full mortgage as income on my tax return. Since they issued a 1099C to me I'm assuming they can't collect the funds from me any longer and since I own the house they can't take my asset to pay off the mortgage since they claimed they gave the funds to me as income. Thanks for your responses.

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Danville Law Group | Scott Jordan
Unfortunately, no, as long as the lien exists against title, the bank can collect against you again.
Answer Applies to: California
Replied: 4/4/2013
Frank Law Group, P.C.
Frank Law Group, P.C. | David E. Frank
You are correct, but you will likely need to get the lender to issue a re conveyance of the mortgage to get it off title (at least if your property is in CA), and if they refuse, you will need to file a quiet title lawsuit (for which you will need a lawyer). Also, check with a tax accountant familiar with debt forgiveness tax issues, as you may be able to avoid the tax liability on the phantom gain.
Answer Applies to: California
Replied: 4/4/2013
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