Current solution: My advice right now is to enter only the existing balance with the open mortgage and lender as of December 31st (current mortgage) in your Form 1098 entry. Because of the limitation on the mortgage interest deduction you should put $0 or $1 in the other Forms 1098 entry. This will solve the problem and technically the IRS does not require that you fill out 1098s because they are not required to go with the tax return. This should resolve your issue and you have your documentation which in all likelihood you will not be asked to provide it later.
After review this does provide the correct results for now and you will be able to move forward to complete your tax return. If you are using TurboTax Desktop continue to update each time you use it.
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