Enter $1 as the Outstanding Mortgage Principal balance on the first 1098, the one from the lender you no longer have or use.
Enter the actual Outstanding Mortgage Principal showing in Box 2 of the current lender's 1098.
The above approach will keep the program from "double-counting" your outstanding mortgage principal balance. This will not have any effect on your tax calculation and will not generate an error in either TurboTax or with the IRS,
From an economic perspective, it is accurate - you owed virtually nothing on the first mortgage (the one that was transferred to a new loan servicer or refinanced out of existence).
There are many places in TurboTax where you must make a non-zero entry, primarily to let the program know that you answered the question and that the answer makes some sense.
In this case, entering "$1" tells the program that you didn't forget to answer the question and that you had at least some amount of a mortgage loan balance to justify claiming an interest deduction.
What do I do if I have multiple 1098s from refinancing my home debt?
