Foreclosure & Fair Market Value

I had a home foreclose in August 2009, thus I received a 1099-A. Actually, I received a 1099-A and a 1099-C for the same amount, so that is a little confusing, but I understand that the 1099-A is the correct tax document that should have been sent out. So we’ll just go with that for purposes of this post.

The 1099-A shows my outstanding mortgage at time of foreclosure, approximately $191k. It also, in box 4, shows a Fair Market Value (“FMV”) of the Property of $105k.

Well, where the hell did they get this FMV from? Consider this: My foreclosed property re-sold in November 2009, less than 3 months after the foreclosure, at a price of $180k. So three months after the foreclosure someone paid $75k more than the 1099’s listed FMV... I’m pretty sure that there isn’t anywhere in the country where real estate spiked over 70% over a three month period of time in 2009, least of all in Sacramento, CA.

Now how about this, I have an appraisal from May 2009, about 3 months before the foreclosure. The appraisal was ordered by the defendant in a lawsuit (I was the plaintiff) and was specifically for the purpose of refuting a claim that I had for loss of value on the property. So suffice to say, the appraisal was skewed to the downward side of the valuation range. The appraisal states the property was worth $150k as of May 2009.

Recap: 1099 states that as of 8/09 FMV was $105k
Re-Sold: Purchased out of foreclosure in 11/09 for $180k
Appraisal: On the low end valued at $150k as of 5/09

What recourse do I have here for the lender being so punitive on their estimate of the FMV of the home at foreclosure? There is very clear evidence that this isn’t an accurate FMV at all. What kind of impact does this have on my taxes????

What actions can or should I take here?

If you have evidences would show the fair market value to be more than what is mentioned in the form you may consider disputing the FMV. Usually, the amount for which the property was sold should appear as FMV on the 1099-a form.

The amount the property sold for at the court house steps? Or the amount that it was re-sold for once it became bank owned? The $180k is the price that I think someone bought it for from the bank. And that sale is public record and indisputable.

Sorry, that was my response above... I guess I wasn't logged in.

I decided to write to Wells Fargo and Freddie Mac (the owner of the note), to request that they change the FMV on the 1099c and 1099a to reflect the actual sale of the property at $180k.

I'll update the thread if/when they respond.

Mich, it might have happened that the property value had dropped to 105k when the lender had appraised the value during the time of foreclosing it. So it would be the amount that would be listed in the1099-A form since the propety went back to the bank.

I don't have a copy of "their" appraisal, so I can't say what they had it appraised at. But I do have a copy of an appraisal performed three months before the foreclosure. THREE MONTHS. AND I know what the home re-sold for to another person three months after the bank became the owner. THREE MONTHS.

So here's the time line. My appraisals is as of June 2009 (appraised as of May 2009) and shows a minimum value of $150k. Foreclosure was in August 2009 with a listed FMV of $105k per the 1099-C. Re-sold by the bank to an individual in November 2009 for $180k. There is a 6 month time frame there, and I guarantee the market didn't plunge for three months then rebound 70% three months later. This is the Sacramento market and the majority of the real estate depreciation took place in 2007, 2008 and was leveling out in 2009.

Sorry, that was my message above...