Foreclosure and Fair Market Value

[ballmich]

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?

Any thoughts or suggestions would be appreciated...

[Mr. Knowitall]

What actions can you take against whom, for what? Assuming this was your primary residence, you don't have tax liability. You haven't said anything about a deficiency judgment. You haven't told us about the nature of the litigation "refuting a claim", or why the FMV on the 1099-A would have any relevance to the litigation.