This topic provides information related to filing reports with the IRS.
The servicer must also follow all procedures in Reporting to the IRS in F-1-24, Reporting to Third Parties for specific instructions pertaining to this topic.
This topic contains the following:
The IRS requires that information returns be filed when Fannie Mae (or a third party) acquires an interest in a property in full or partial satisfaction of the secured debt, or when Fannie Mae has reason to know that a property has been abandoned. The servicer must file IRS Forms 1099-A and 1099-C in accordance with IRS requirements on Fannie Mae’s behalf for
portfolio mortgage loans (including participation pool mortgage loans if Fannie Mae’s percentage ownership is 50% or greater) that Fannie Mae holds in its portfolio, and
MBS mortgage loans (including mortgage participations if the securitized portion of the whole mortgage loan is 50% or greater) that are not serviced under the regular servicing option.
The servicer must satisfy the reporting requirements for the “owner of record” (instead of on Fannie Mae’s behalf) for
participation pool mortgage loans held in Fannie Mae’s portfolio if Fannie Mae’s ownership interest is less than 50%,
mortgage participations in MBS pools if the securitized portion of the whole mortgage loan is less than 50%, and
most MBS mortgage loans serviced under the regular servicing option.
However, if the servicer did not perform its regular servicing obligation to purchase a delinquent MBS mortgage loan before the property was acquired, the servicer must file the information return on Fannie Mae’s behalf.
For purposes of filing these reports:
Fannie Mae (or the “owner of record”) acquires an interest in the property when any redemption period that follows a foreclosure sale ends without redemption rights being exercised (or when Fannie Mae accepts a Mortgage Release);
a third party — including the servicer of a first lien mortgage loan secured by a property that also has a subordinate lien, if the servicer bids an amount that is less than that required to satisfy both the first and second lien mortgage debts — acquires an interest in the property at the foreclosure sale; and
abandonment occurs when the servicer has “reason to know” from ”all facts and circumstances concerning the status of the property” that the borrower intended to discard or has permanently discarded the property from use.
The servicer will have an additional three months before its reporting obligation arises if it expects to begin foreclosure proceedings within the three months after it determines that abandonment has occurred.
If the IRS penalizes Fannie Mae because a servicer failed to file a required form—or filed an incorrect or late form—the servicer must reimburse Fannie Mae for any penalty fees the IRS assesses (unless it can document that it met the filing requirements).
When a form is filed on Fannie Mae’s behalf, the servicer must show Fannie Mae’s name, address, federal identification number (52-0883107), and include a legend stating that the information is being reported to the IRS.
The servicer that is able to report IRS Forms 1099-A information on magnetic media must do so on Fannie Mae’s behalf. However, a servicer must file the 1099-C electronically on Fannie Mae’s behalf.
The servicer must not file an IRS Form 1099-C for mortgage loans that Fannie Mae has assigned (or will assign) to vendors for collection. Fannie Mae will provide a list of accounts to servicers via email for which they must not send the IRS Form 1099-C. Notification will take place no later than January 5th of the year following the calendar year in which the foreclosure sale occurs.