All Forum Posts by: Brian Osgood

So here's my update, I finally got a copy of the 1099-C from Citimortgage. I called the attorney that sent me the letter and disputed the validity of the debt. I told them my account with Citimortgage has been closed, they issued me a 1099-C cancelling the debt, and I faxed them a copy. I verified they received the fax and they said an attorney would look it over and get back to me. I need to call back to see if that took care of everything.

The way I see it, you can't issue someone a 1099-C, which gets picked up as income, AND try to collect the outstanding balance. I'm pretty confident this letter was a mistake and meant to be sent prior to my closing.

I don't have the short sale disclosure statement with me now, but the general purpose of it seemed to inform the seller that this could happen and that the title company cannot be held responsible in any way.

As for the letter, here it is verbatim:

"According to the above referenced creditor, you have an outstanding debt in the amount shown above. The above referenced loan is accelerated.

Unless, within 30 days after receipt of this notice, you dispute the validity of the debt or any portion thereof, we will assume the debt is valid and will proceed in accordance with that assumption.

If, within 30 days of your receipt of this notice, you notify us in writing that the debt or any portion therof is disputed, we will obtain a verification of the debt or, if the debt is founded upon a judgement, a copy of the judgement, and we will mail to you a copy of such verification or judgement.

If the original creditor is different from the creditor named above, then upon your written request within 30 days of the receipt of this notice, we will provide you with the name and address of the original creditor.

YOU ARE PUT ON NOTICE THAT WE ARE ATTEMPTING TO COLLECT A CONSUMER DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE. THIS COMMUNICATION IS FROM A DEBT COLLECTOR.

You may direct payment to this office. Checks or money orders should be made payable to CITIMORTGAGE, INC. and mailed to : Law firm. Providing you with this payment information does not shorten you time to dispute this debt nor does it alter any of your rights as described above."

I'm curious if this letter was meant to be sent prior to us closing the sale. I got a call from Citimortgage asking for my address (I assumed it was to send the 1098/1099) shortly before I received this letter. To give you a timeline on how this whole deal transpired:

The original offer on the house was made in January 2009. I was splitting payments with my father-in-law and he lost his job in September 2008. We stopped making payments after April 2009 because he could no longer afford his half. The short sale process took so long we didn't close until 11/4/2009. Citimortgage began foreclosure proceedings and I had to make one last payment in November to become "current" so we could close. I never received anything in the mail regarding it being in foreclosure because I had moved and didn't give them my forwarding address.

I'm emailing a few real estate attorneys this morning to see what kind of advice they can offer.

In response to wheelhouse. They received $4,900 at closing so I was under the impression they were already settling for the almost 10%. The initial offer was for them to receive $3,000 and they countered back wanting $4,900. I believe my realtor and the buyer's realtor worked something out to cover the remaining $1,900 to get Citimortgage to agree/approve the short sale.

Another thing, when I called to get a copy of the 1098 and 1099C (haven't received it yet), the lady acknowledged there was a 1099C, so I'm a little confused as to how you can issue a 1099C and then also attempt to sue for the balance.

Yes I am familiar with it. I'm a tax accountant. I wanted to make sure that was the case and went through before we even agreed to go through with our short sale. Thank you for the replies everyone. Hopefully I can get in contact with an attorney on Monday and see where to go from there.

I have not received one yet, but I did call to request a copy of both the 1098 and 1099. If they sent one already, I'm sure it went to the other party involved. I haven't filed my return because I know those are out there. It's like pulling teeth for some reason trying to get copies.

I'll start with that and see what happens. I certainly cannot pay the $52K deficiency they claim. I guess if that turns out to be their intentions, bankruptcy would be my only choice. There were three parties involved with this deal (me, my now ex-wife, and my ex-father-in-law). None of us could afford to pay the mortgage on our own, hence the short sale. Thanks for the advice.

Well, I was looking over my closing documents and there is a "short sale disclosure and agreement". A portion of the document says "Seller understand agrees as follows: 1. If the lender releases its lien against the property in exchange for payment of an amount less than the entire indebtedness owed, then the remaining deficiency may still be owed by the seller. A release of the lien may not release seller's obligation to pay the remaining indebtedness."

I've heard of lenders suing for the remaining balance even after the short sale is complete and it appears this may be the approach Citimortgage is taking with me. I guess I should just start out by responding saying the property has been sold?

Hello all,

So I'm looking for some advice here. My house was sold as a short sale, we closed on 11/4/09 and there was a first (Washington Mutual, now Chase) and second (Citimortgage) lienholder involved. I recently received a letter from an attorney in regards to the remaining balance on the Citimortgage note. The letter says I have an outstanding balance and must respond within 30 days of receiving the letter as to the validity of the debt. If I don't respond, they will assume the debt is valid and proceed in accordance with that assumption, etc. Any advice on what I should do? What response exactly are they looking for? Please help! Thanks in advance!

Brian